Researchers’ from Huaibei Normal University Report Details of New Studies and Findings in the Area of Mathematics (Optimal Insurance Indemnity for the Insured with Low Risk Tolerance): Mathematics
Insurance Daily News
2022 NOV 24 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Current study results on mathematics have been published. According to news reporting originating from Huaibei Normal University by NewsRx correspondents, research stated, “This study focuses on the optimal insurance for the insured with low risk tolerance from the perspective of rank-dependent utility.”
Financial supporters for this research include Natural Science Foundation of Anhui Province.
The news reporters obtained a quote from the research from Huaibei Normal University: “Dissimilar to the widely employed assumption that the initial wealth of the insured can sufficiently cover any incurred premium and maximal possible loss, we assume that the policyholder may not possess sufficient initial wealth, thus exhibiting a low risk tolerance. Hence, we establish a corresponding insurance model in which the insured’s initial wealth is designed in such a manner that it only needs to cover the premium. Further, the model considers an introduced risk level that is less than the maximal possible loss. Owing to the lack of the condition of the sufficiency of initial wealth, the original optimization issue could not be converted into a canonical quantile-optimization issue, as usual, and the quantile formulation could not be obtained directly. To overcome this challenge, we apply the calculus of variations method employing a variable upper limit that is related to the maximal risk level. Further, the explicit optimal solution bearing Yaari’s dual criterion is given, demonstrating that the optimal insurance policy with sufficient initial wealth represents a special case.”
According to the news editors, the research concluded: “Finally, numerical examples are presented to compare the indemnity with different risk levels.”
For more information on this research see: Optimal Insurance Indemnity for the Insured with Low Risk Tolerance. Insurance Daily News, 2022,2022. (Insurance Daily News - https://www.hindawi.com/journals/jmath/). The publisher for Insurance Daily News is Hindawi Limited.