EconPapers    
Economics at your fingertips  
 

Selection bias and auditing policies for insurance claims

Mercedes Ayuso, Montserrat Guillen () and Jean Pinquet ()

Post-Print from HAL

Abstract: Selection bias results from a discrepancy between the range of estimation of a statistical model and its range of application. This is the case for fraud risk models, which are estimated on audited claims but applied on incoming claims in the design of auditing strategies. Now audited claims are a minority within the parent sample since they are chosen after a severe selection performed by claims adjusters. This paper presents a statistical approach which counteracts selection bias without using a random auditing strategy. A two equation model on audit and fraud (a bivariate probit model with censoring) is estimated on a sample of claims where the experts are left free to take the audit decision. The expected overestimation of fraud risk derived from a single equation model is corrected. Results are rather close to those obtained with a random auditing strategy, at the expense of some instability with respect to the regression components set. Then we compare auditing policies derived from the different approaches.

Date: 2007
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00243035
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Published in The Journal of Risk and Insurance, 2007, 74 (2), pp.425-440

Downloads: (external link)
https://hal.archives-ouvertes.fr/hal-00243035/document (application/pdf)

Related works:
Journal Article: Selection Bias and Auditing Policies for Insurance Claims (2007) Downloads
Working Paper: Selection bias and auditing policies for insurance claims (2007)
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:hal:journl:hal-00243035

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2019-10-26
Handle: RePEc:hal:journl:hal-00243035