The Study Of Automobile Actuarial And Risk Control

With Chinese economic development, automobiles become more and more common in China. Automobile insurance has become a vital one in our modern society and an increasing sum of people begin to pay attention to it. In the past few years, the premium from automobile insurance has taken up more than sixty percent of the total premium form property insurance. Whether the operation of the automobile insurance is healthy or unhealthy will exert a direct impact on the commercial benefit of insurance companies and also on the healthy development of Chinese property insurance market. Since January 1st 2003, China Insurance Regulator Commission (CIRC) has made a reform to the clauses of automobile insurance rate. The old automobile insurance premium rate clauses used for years are now no longer in use. Automobile insurance premium rate totally becomes marketable. The new rate system changed the situation of all kinds of automobiles share one insurance rate, different automobile type, different automobile condition, different areas and different people in social status-they all use different rate according to their own situation. Thus the scope for the policy applicant to choose increased. While the reform of automobile insurance is going deeper and deeper, lots of problems occur. The most two outstanding problems are about two aspects. One is how to effectively introduce developed international Actuarial technique into the practice of Chinese insurance industry. The other is how to construct the risk control mode and system of insurance industry under Chinese current situation and the various, complicated and changeable character of the risk factor. This dissertation mainly studies these two aspects. Actuarial technique mainly involves pricing insurance products properly,abstracting the liability capital rightly, arranging reinsurance suitably, managing solvency effectively and controlling early warning to insurance company bankruptcy. Insurance Actuarial is based on mess risk theory, using probability and math statistical method to study every rule and development of risk operation and management tache. It is a subject that can help insurance companies make scientific decision and solve problems. It also provides the insurance company with high level management. Considering that Chinese automobile data is relatively complete and the developed countries Actuarial technique is mature, this dissertation chose automobile Actuarial to study. The study of risk control mainly use sixσmanagement system for reference. Through the improvement of traditional risk management mode, it constructs the whole risk management system on the basis of sixσrisk management mode. This greatly helps insurance companies control the influences of all kinds of risk factor and helps the whole system improving and completing by itself. This dissertation is divided into six chapter. In chapter one, the background and meaning of how and why to choose this project is introduced. The method to study this project is also provided. Chapter two consists of four parts: One: Low of large numbers. Two: Pure premium calculation method. Three: Security loading and Expense loading. Four: Most optimize BMS. Insurance industry makes the randomicity of every applicant's claim size counteract each other through gathering the risk of all applicants. Thus, the must quantity rule which low of large number opened out appears. Pure premium calculation method mainly talks about the spread of the claim number and claim amount. It also discusses the effect that inflation, deductions and limit of indemnity has made on actual pure premium. Security loading and Expense loading mainly point out all kinds of risk premium calculation theory and different premium calculation used in different condition. Here two more expense loading forms are introduced. There are horizontal expense loading and linear expense loading. In the most optimized BMS analysis, the optimized BMS and fair BMS have been proved by using Bays theorem. At the same time, the impact which claim amount exerts on the subsequent premium set up has been studied. Chapter three mainly involves three aspects. They are reserve for future claims, claim reserve and risk control of claim reserve. Reserve is the most important subject in debt. It is the fund that insurance companies set up according to its current or future business. Because of the character that the insurance companies must charge the money in advance and then give the money later, it must draw reserve. Future liability mainly uses ratio method to compare and analyse the traditional and current method of calculating reserve for future claim. In this chapter, the lack of reserve for future claim system has been pointed out. We can control the risk factors which influence the right abstraction of claim reserve through two aspects. One is the management of the unresolved payment cases. The other is precise estimated management of the unresolved payment cases. Whether the draw of reserve is right will directly affect the benefit and the product price of insurance companies. Further more, it will affect the solvency of insurance companies. It is very meaningful to consolidate the management of reserve , for it can enhance the operation ability of insurance company and improve the ability of management department. In chapter four, real cases analysis on automobile insurance products has been made by using the datum form December 26,2000 to December 25,2001 of a certain subsidiary of CPIC.Two important ways has been introduced. Insurance reserve has been estimate and calculated by using Chain Ladder and the automobile insurance products has been priced by using average claim size. In this chapter, the lack of the Chain Ladder and one way analysis have been point out. How to improve the lack is also introduce in this chapter. In chapter five, minimum solvency line is calculated by means of solvency line ratio method. On the basis of supposing that loss ratio belongs to a certain spread and according to a truth that if an insurance company wants to survive a strong competition, its income mustexceed its expenditure, the ratio relationship in loss ratio, cost ratio and solvency line ratio has been structured. The premium income method and indemnity payout method have been developed. In addition, the solvency line is tested in this chapter mainly by using the real datum of CPIC. Farny once said that the policy of an insurance company is the policy of solvency and solvency includes the ability to gain benefit, to develop and to control risk. Therefore, solvency is the vital one to an insurance company. Chapter six chiefly dissertates risk management system which is based on sixσ. This kind of risk management system overcomes the limitation of traditional risk management and helps automobile insurance face the variety and complication of all kinds of risks. This chapter is divided into two parts. One is exterior supervision and the other is interior control. Broadly speaking, exterior supervision consists of social supervision, industry self-discipline and government supervision. Interior control is based on 6σfive step improvement method. It relates to the design of organization structure and the design of early warning system.