Non-Life Insurance: Pricing

Massimiliano Maggioni and Giuseppe Turchetti
Additional contact information
Massimiliano Maggioni: University of Milano
Giuseppe Turchetti: Sant’Anna School of Advanced Studies

Chapter 11 in Fundamentals of the Insurance Business, 2024, pp 243-259 from Springer

Abstract: Abstract This chapter explains the approach for calculating a non-life insurance premium. The reader can follow the pricing procedure step by step. The method begins from the frequency of an event occurring and the average cost of loss events. These two factors contribute together to defining the first step, also called an equitable premium. A safety loading is then added to this first kind of premium. This kind of premium is defined as net premium and is the basis of insurance technique. During this chapter, other safety loadings are presented that by way of addition are added to the net premium. Each of these safety loadings has the purpose of covering management expenses and acquisition costs of contracts. At the end of this addition operation, it is possible to know the final value of the premium. In the paragraphs that follow, each of these components is analysed in detail. Multivariate analysis in determining the premium is explained: from the frequency to the equitable premium, from safety loading to additional charges, illustrating with simple examples the process adopted for their formulation.

Keywords: Statistical probability; Frequency; Law of large numbers; Mathematical expectation; Equitable premium; Problem of the ruin of the player; Subjective probability; Criterion of expected utility; Loss frequency index; Safety loading; Net premium; Multivariate analysis; Compound coefficient; Loading for acquisition expenses; Loading for collection expenses; Loading for management expenses; Loading for remuneration of own capital; Financial factor; Interest for instalments; Issue rights; Technical premium; Taxable premium; Gross premium (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:sptchp:978-3-319-52851-9_11

Ordering information: This item can be ordered from
http://www.springer.com/9783319528519

DOI: 10.1007/978-3-319-52851-9_11

Access Statistics for this chapter

More chapters in Springer Texts in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().