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Credibility theory. Credibility theory is a branch of actuarial mathematics concerned with determining risk premiums. [1] To achieve this, it uses mathematical models in an effort to forecast the (expected) number of insurance claims based on past observations.
Bühlmann model. In credibility theory, a branch of study in actuarial science, the Bühlmann model is a random effects model (or "variance components model" or hierarchical linear model) used to determine the appropriate premium for a group of insurance contracts. The model is named after Hans Bühlmann who first published a description in 1967.
Adverse selection. In economics, insurance, and risk management, adverse selection is a market situation where asymmetric information results in a party taking advantage of undisclosed information to benefit more from a contract or trade. In an ideal world, buyers should pay a price which reflects their willingness to pay and the value to them ...
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an ...
Credibility comprises the objective and subjective components of the believability of a source or message. Credibility dates back to Aristotle theory of Rhetoric. Aristotle defines rhetoric as the ability to see what is possibly persuasive in every situation. He divided the means of persuasion into three categories, namely Ethos (the source's ...
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, pension, finance, investment and other industries and professions. Actuaries are professionals trained in this discipline. In many countries, actuaries must demonstrate their competence by passing a series of rigorous professional ...
Nyman's model was developed by John A. Nyman beginning in 1999 and presents an alternative view of moral hazard in the context of private health insurance in the United States. Nyman is a professor of Economics at the University of Minnesota. His theory proposes that private health insurance is purchased because consumers want to transfer ...
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical ...