ANALYSIS OF CREDIT CARD GROUP LIFE INSURANCE PREMIUM PRICE USING LOSS RATIO METHOD AND BLENDED RATING METHOD Albert Budy (a*), Lenny Suardi (b)
a) Faculty of Economics, Trisakti University, Jakarta, Indonesia
*albert.budy[at]ui.ac.id
b) Faculty of mathematics and science, Bandung Institute of Technology, Bandung, Indonesia
Abstract
Credit card life insurance in banking is included in the group insurance category. This study aims to estimate the calculation of advanced credit card insurance premiums. In calculating group insurance premiums, the experience rating method can be used to determine the number of claims that have occurred in the past. The method can also be used as the basis for calculating premiums in subsequent periods. The Loss Ratio method is one of the most frequently used experience rating methods. The method compares the number of losses/claims that occur with the premiums received by the insurance company. In calculating the expected claim cost rate of group insurance, an actuary can also use the blended rating method, which is a plan for determining premiums based on a manual rating that is adjusted to the experience rating. The sample of the study was credit card debtors from a private bank in Indonesia with an observation period between 2016 - 2019. The results showed that the estimated amount of continued premium from the previous 0.4% decreased to 0.25% - 0.26% based on the loss ratio method and to 0.22% - 0.31% based on the blended rating method.
Keywords: Loss Ratio- Permissible Loss Ratio- Loss Development Triangle- Credibility Factor- Rate Change Factor
