Studies from J.M.P. Sanchez and Colleagues Provide New Data on Risk Model Validation (On modeling zero-inflated insurance data)

By a News Reporter-Staff News Editor at Journal of Technology -- A new study on Risk Model Validation is now available. According to news originating from Granada, Spain, by VerticalNews correspondents, research stated, "Generalized linear models (GLMs) that use a regression procedure to fit relationships between predictor and target variables are widely used in risk insurance data. It is crucial to detect the risk factors that significatively affect the number of claims, as this will eventually allow the insurer to fix premiums more precisely."

Our news journalists obtained a quote from the research, "We pay attention to power series distributions, instead of the exponential family, and develop a Bayesian methodology as an alternative to traditionally used maximum-likelihood-based methods. We use sampling-based methods in order to detect relevant risk factors in an automobile insurance data set. This new model allows us to incorporate the presence of an excessive number of zero counts and overdispersion phenomena (where the variance is larger than the mean). Then, we validate this model by comparing the results with other standard and Bayesian models. As part of the process of validation, information criteria such as the deviance information criterion (DIC), Akaike information criterion (AIC) and Bayesian information criterion (BIC) have been considered. For real data collected from 2004 to 2005 in an Australian insurance company, an example is provided using the Markov chain Monte Carlo method; this is developed using the WinBUGS package."

According to the news editors, the research concluded: "The results show that the new Bayesian method outperforms the previous models."

For more information on this research see: On modeling zero-inflated insurance data. Journal of Risk Model Validation, 2016;10(4):23-37. Journal of Risk Model Validation can be contacted at: Incisive Media, Haymarket House, 28-29 Haymarket, London, SW1Y 4RX, England.

The news correspondents report that additional information may be obtained from J.M.P. Sanchez, Fac Ciencias Econ & Empresariales, Granada 18071, Spain.

Keywords for this news article include: Granada, Spain, Europe, Risk Model Validation, Risk and Prevention.

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