Forecasting the Maximum Compensation Offer in the Automobile BI Claims Negotiation Process

Mercedes Ayuso and Miguel Santolino ()
Additional contact information
Miguel Santolino: University of Barcelona

Group Decision and Negotiation, 2012, vol. 21, issue 5, No 4, 663-676

Abstract: Abstract Most motor bodily injury claims are settled by negotiation, with fewer than 5% of cases going to court. A well-defined negotiation strategy is thus very useful for insurance companies. In this paper we assume that the monetary compensation awarded in court is the upper amount to be offered by the insurer in the negotiation process (reservation price). Using a real database, a log-linear model is implemented to estimate the maximal offer. Non-spherical disturbances are detected. Residual dependence occurs when various claims are settled in the same judicial verdict. Groupwise heteroscedasticity is due to the influence of the forensic valuation on the final compensation amount. An alternative approximation based on generalized inference theory is applied to estimate confidence intervals on variance components, since classical interval estimates may be unreliable for datasets with unbalanced structures.

Keywords: Decision support systems; Multivariate statistics; Bodily injury claims compensation; Negotiation process; Generalized confidence intervals; Reserve price (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://link.springer.com/10.1007/s10726-011-9241-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Forecasting the maximum compensation offer in the automobile BI claims negotiation proces (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:grdene:v:21:y:2012:i:5:d:10.1007_s10726-011-9241-y

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10726/PS2

DOI: 10.1007/s10726-011-9241-y

Access Statistics for this article

Group Decision and Negotiation is currently edited by Gregory E. Kersten

More articles in Group Decision and Negotiation from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().