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Credibility Theory
Credibility theory is a form of statistical inference used to forecast an uncertain future event developed by Thomas Bayes. It is employed to combine multiple estimates into a summary estimate that takes into account information on the accuracy of the initial estimates. This is typically used by actuaries working for insurance companies when determining the premium values. For example, in group health insurance an insurer is interested in calculating the risk premium, RP, (i.e. the theoretical expected claims amount) for a particular employer in the coming year. The insurer will likely have an estimate of historical overall claims experience, x, as well as a more specific estimate for the employer in question, y. Assigning a credibility factor, z, to the overall claims experience (and the reciprocal to employer experience) allows the insurer to get a more accurate estimate of the risk premium in the following manner: RP = xz + y(1-z).The credibility factor is derived by calculati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Institutional Theory
In sociology and organizational studies, institutional theory is a theory on the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for social behavior. Different components of institutional theory explain how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse. Overview In defining institutions, according to William Richard Scott (1995, 235), there is "no single and universally agreed definition of an 'institution' in the institutional school of thought." Scott (1995:33, 2001:48) asserts that: According to Scott (2008), institutional theory is "a widely accepted theoretical posture that emphasizes productivity, ethics, and legitimacy." Researchers building on this perspective emphasize that a key insight of institutional theory is ethics: rather than necessarily o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Sampling Error
In statistics, sampling errors are incurred when the statistical characteristics of a population are estimated from a subset, or sample, of that population. Since the sample does not include all members of the population, statistics of the sample (often known as estimators), such as means and quartiles, generally differ from the statistics of the entire population (known as parameters). The difference between the sample statistic and population parameter is considered the sampling error.Sarndal, Swenson, and Wretman (1992), Model Assisted Survey Sampling, Springer-Verlag, For example, if one measures the height of a thousand individuals from a population of one million, the average height of the thousand is typically not the same as the average height of all one million people in the country. Since sampling is almost always done to estimate population parameters that are unknown, by definition exact measurement of the sampling errors will not be possible; however they can often be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Casualty Actuarial Society
The Casualty Actuarial Society (CAS) is a professional society of actuaries specializing in property and casualty insurance. The two levels of CAS membership are Associate (ACAS) and Fellow (FCAS). Requirements for these levels of membership include a comprehensive series of exams. Topics covered in the exams include statistics, mathematics, finance, economics, insurance, enterprise risk management, and actuarial science. Another class of CAS membership, Affiliate, includes qualified actuaries who practice in property-casualty insurance but do not meet the qualifications to become an Associate or Fellow. History The society was founded in 1914 and originally named the Casualty Actuarial and Statistical Society. The present name was adopted in 1921. The society's first president was I. M. Rubinow, who played a key role in its formation. There were 97 founding members of the society. The CAS was at first primarily concerned with problems of workers compensation insurance, which w ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Weighted Mean
The weighted arithmetic mean is similar to an ordinary arithmetic mean (the most common type of average), except that instead of each of the data points contributing equally to the final average, some data points contribute more than others. The notion of weighted mean plays a role in descriptive statistics and also occurs in a more general form in several other areas of mathematics. If all the weights are equal, then the weighted mean is the same as the arithmetic mean. While weighted means generally behave in a similar fashion to arithmetic means, they do have a few counterintuitive properties, as captured for instance in Simpson's paradox. Examples Basic example Given two school with 20 students, one with 30 test grades in each class as follows: :Morning class = :Afternoon class = The mean for the morning class is 80 and the mean of the afternoon class is 90. The unweighted mean of the two means is 85. However, this does not account for the difference in number of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Adverse Selection
In economics, insurance, and risk management, adverse selection is a market situation where buyers and sellers have different information. The result is that participants with key information might participate selectively in trades at the expense of other parties who do not have the same information. In an ideal world, buyers should pay a price which reflects their willingness to pay and the value to them of the product or service, and sellers should sell at a price which reflects the quality of their goods and services. For example, a poor quality product should be inexpensive and a high quality product should have a high price. However, when one party holds information that the other party does not have, they have the opportunity to damage the other party by maximising self-utility, concealing relevant information, and perhaps even lying. Taking advantage of undisclosed information in an economic contract or trade of possession is known as adverse selection. This opportunity ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Insurance Contract
In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language. Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature boilerplate language which is similar across a wide variety of different types of insurance policies. Available through HeinOnline. The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer.Wollner KS. (1999). How to Draft and Interpret Insurance Policies. Casualty Risk Publishing LLC. In some cases, however, supplementary writings such as letters sent after ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Statistical Significance
In statistical hypothesis testing, a result has statistical significance when it is very unlikely to have occurred given the null hypothesis (simply by chance alone). More precisely, a study's defined significance level, denoted by \alpha, is the probability of the study rejecting the null hypothesis, given that the null hypothesis is true; and the ''p''-value of a result, ''p'', is the probability of obtaining a result at least as extreme, given that the null hypothesis is true. The result is statistically significant, by the standards of the study, when p \le \alpha. The significance level for a study is chosen before data collection, and is typically set to 5% or much lower—depending on the field of study. In any experiment or observation that involves drawing a sample from a population, there is always the possibility that an observed effect would have occurred due to sampling error alone. But if the ''p''-value of an observed effect is less than (or equal to) the significanc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Insurance
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 hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. The insurance transaction involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms. Furthermore, it usually involves something in which the insured has an insurable interest established by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bayesian Statistics
Bayesian statistics is a theory in the field of statistics based on the Bayesian interpretation of probability where probability expresses a ''degree of belief'' in an event. The degree of belief may be based on prior knowledge about the event, such as the results of previous experiments, or on personal beliefs about the event. This differs from a number of other interpretations of probability, such as the frequentist interpretation that views probability as the limit of the relative frequency of an event after many trials. Bayesian statistical methods use Bayes' theorem to compute and update probabilities after obtaining new data. Bayes' theorem describes the conditional probability of an event based on data as well as prior information or beliefs about the event or conditions related to the event. For example, in Bayesian inference, Bayes' theorem can be used to estimate the parameters of a probability distribution or statistical model. Since Bayesian statistics treats probabi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Thomas Bayes
Thomas Bayes ( ; 1701 7 April 1761) was an English statistician, philosopher and Presbyterian minister who is known for formulating a specific case of the theorem that bears his name: Bayes' theorem. Bayes never published what would become his most famous accomplishment; his notes were edited and published posthumously by Richard Price. Biography Thomas Bayes was the son of London Presbyterian minister Joshua Bayes, and was possibly born in Hertfordshire. He came from a prominent Nonconformist (Protestantism), nonconformist family from Sheffield. In 1719, he enrolled at the University of Edinburgh to study logic and theology. On his return around 1722, he assisted his father at the latter's chapel in London before moving to Royal Tunbridge Wells, Tunbridge Wells, Kent, around 1734. There he was minister of the Mount Sion Chapel, until 1752. He is known to have published two works in his lifetime, one theological and one mathematical: #''Divine Benevolence, or an Attempt to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Frequentist
Frequentist inference is a type of statistical inference based in frequentist probability, which treats “probability” in equivalent terms to “frequency” and draws conclusions from sample-data by means of emphasizing the frequency or proportion of findings in the data. Frequentist-inference underlies frequentist statistics, in which the well-established methodologies of statistical hypothesis testing and confidence intervals are founded. History of frequentist statistics The history of frequentist statistics is more recent than its prevailing philosophical rival, Bayesian statistics. Frequentist statistics were largely developed in the early 20th century and have recently developed to become the dominant paradigm in inferential statistics, while Bayesian statistics were invented in the 19th century. Despite this dominance, there is no agreement as to whether frequentism is better than Bayesian statistics, with a vocal minority of professionals studying statistical in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Statistical
Statistics (from German: ''Statistik'', "description of a state, a country") is the discipline that concerns the collection, organization, analysis, interpretation, and presentation of data. In applying statistics to a scientific, industrial, or social problem, it is conventional to begin with a statistical population or a statistical model to be studied. Populations can be diverse groups of people or objects such as "all people living in a country" or "every atom composing a crystal". Statistics deals with every aspect of data, including the planning of data collection in terms of the design of surveys and experiments.Dodge, Y. (2006) ''The Oxford Dictionary of Statistical Terms'', Oxford University Press. When census data cannot be collected, statisticians collect data by developing specific experiment designs and survey samples. Representative sampling assures that inferences and conclusions can reasonably extend from the sample to the population as a whole. An experim ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
