Research On Base Rate Analysis Method And Application In Life Insurance Company

As a result of the complexity of the operating environment and the long-term of life insurance business , as well as the predetermining of the experience data , life insurance companies must monitor and analyze the business risks continuously to enhance internal controlling and improve operating efficiency.The paper considered death index, withdraw rate and lapse rate as the indicators of base rate analysis. Average method and per policy method were constructed as two base rate analysis methods. Average method was on the basis of comparing the data, including the number of death , withdraw and lapse, at mid-year with average data of the beginning and the ending of the year, or the data at the beginning of the year. Per policy method was on the basis of the actuarial method of moment estimation about formal survival model in the case of sample data was incomplete, and introduced the concept of exposure to the calculation of death index, withdraw rate and lapse rate. As the calculation of the moment estimation on the survival model: mortality was defined as the number of death / exposures, I considered withdraw rate as number of withdraw / exposures, lapse rate as number of lapse / exposures. The paper used death index to do death analysis instead of mortality, death index was defined as the actual number of deaths/(exposures * expected mortality). In addition, for the base rate analysis, I not only did events number statistics, but also did death benefits or theoretical accumulated premium statistics, which made the statistical results more comprehensive. Then the per policy method was used to analyze death index, withdraw rate and lapse rate in a life insurance company. From individual case analysis, it concluded that men had higher death index than women in each policy year, the group insurance had the highest withdraw rate in the fourth year, the lapse rate of bank insurance began to increase from the third year, the product of periodical premium in bank insurance and non-long term product in personal life insurance had bad stability, the development was very lopsided in all branches. Finally, the paper demonstrated the value of the base rate analysis , linking the questions in per case analysis.