The Estimate And The Application Of The Adjustment Coefficient Based On Classical Actuarial Risk Model

The social impact of insurance company's ruin is huge. Insurance has a function of risk diversification. Through the function, the danger reached a full spread not only in space but also in time. Insurance has a function of compensation for loss. Insurance put together a premium to compensate for the contract the insured person for personal accident insurance, accident or caused economic loss, which is the loss of insurance compensation. Insurance also has social management functions. Insurance is not only compensation and perfecting the social security system, is also involved in social risk management, reducing disputes between members of the community. The bankruptcy of insurance companies will affect the play of the insurance function, thereby affect the stability of the whole community and economic developmentConsidering the practice of the international insurance industry, this paper analysis the main reasons for the insurance company bankruptcy from the theory: economic situation deteriorated, inadequate reserves, rapid expansion, excessive competition, and catastrophic risk, which is the main reason for inadequate reserves. If the reserve is not sufficient, the insurance company can not pay enough claim at the time of the claim . Over time, the insurance company will become bankrupt, as result of a lot of liabilities. Deteriorating economic situation led to the depreciation of assets, little the interest of investment, which cause that actual income is lower than that when the insurance product is pricing. As result of little income, the insurance company can not cover claims. In fact, the reason of bankruptcy is not exist singly, and they are always accompanied by a massive and influence each other, and finally led to the bankruptcy of insurance companies together.Next, this paper introduces a risk model, analysis and values the strengths and weaknesses of the different model, which focuses on analysis of the classical risk model. In the actual study, we don't tend to seek bankruptcy probability directly, but to estimate the adjustment coefficient of the risk model, because the adjustment coefficient is estimated to be less difficult than the bankruptcy probability. Based the classical risk model, the studies of bankruptcy are more mature, which is also very wide applications, such as economics, insurance, science, communication engineering, transportation, geology and sociology. Under certain conditions, we can derive perfect bankruptcy conclusion. For more realistic situation, we tend to weaken the conditions, then the classical risk model to approximate the actual risk model, and finally estimate of the adjustment coefficient, and further study how to improve the accuracy of estimates. In the estimation, the estimation used most commonly is the least squares and maximum likelihood estimation. The accuracy of the estimation is often a certain confidence level of the adjustment coefficient in the normal, given the confidence interval.Again, I joined the Bayesian theory and the Edgeworth approximation into the classical risk model and used Monte Carlo simulation for a number of data, analysis the model results. China's insurance industry has just started, which is lack of actual data of bankruptcy. The development of foreign insurance industry is relatively mature, and has accumulated a large number of bankruptcy data and bankruptcy experience. However, the actual situation of the insurance market are always differences in different countries, we can not copy data from other countries and only learn from experience in a certain range. Bayesian theory is a very useful tool. It provides specific methods that how to use foreign data. In addition, the central limit law provides a great convenience to handle large amounts of data, but its application will result in significant bias. Edgeworth amends the central limit law, which greatly improved the accuracy of our estimate.At last, we know that the initial capital, the interval of claims and the amount of each claim determine the probability of the bankruptcy, and then I give some suggestions for the insurance industry: to increase the diversity and regional insurance products to meet the diverse needs of the market; to strengthen nuclear security and Underwriting, improving the quality policy and control claim amount; to guarantee insurer reserves should be sufficient, credible, objective; accelerate the pace of re-insurance industry to control the risk of claims.