LOSSES RATIO MUST BE PREDICTABLE - PART 2

GREETING INSURANCE ,
See you soon in our website " Closer to Insurance " . We will discuss further on our previous website Losses Should Predictive Ratios . In the first part discussed the appraiser values ​​a loss or loss rates in order to provide payment when a loss occurs that is represented through the Loss rate ( loss ratio ) . This time we will continue the discussion about the important concepts in the world of insurance is the law of large numbers ( the law of large numbers ) .
The concept is important in determining the probability of this is the law of large numbers ( the law of large numbers ) . According to the law of large numbers , the more the number of observations were made ​​on an event , the more likely that these observations resulted in estimates of the true probability . For example , if you flip a coin , the coin falls with the possibility of being on the front is 50-50 , and this probability can be estimated .
Two or even 12 tosses , not necessarily produce the same results between the front and rear of the coin . But if you flip the coin 1000 times , you can expect a possible result of the face 500 and the possibility of the back above the 500 also . Melampar The more often your coins , you will be able to observe a clear mekain number is above the face , and the back is above are the same , and you are getting close to determining a true possibility .
Law of large numbers applied to the insurance company as a prediction of future possible losses on the day . The insurance company collects specific information about a group of people , in order to recognize patterns that have suffered losses . Based on this information , the insurance company can predict the amount of loss that will arise on the type of group that is similar to the more accurate .
So the insurance company can predict the amount to be dying , disabled, or sick of that group . Within a few years , insurance companies have noted how much insured that died at each age . Then the insurance companies to compare this data with the data of the national population by noting age died .
Guided by these statistics the insurance company can arrange the tables that show exactly that of a large group of people ( 100,000 or more ) , how many people died in each age . This table is called mortality tables that describe the rate of death , or the possibility of death by age . Insurance companies can also mengembagkan same table , called Table morbidity that describes the level of accident or onset of pain experienced by a group of people , who are categorized by age .
By using tables mortakita and morbidity tables , insurance companies can predict the value of the loss, a decent set premiums and ready to pay the claim . By this means the insurance companies use statistics to set premiums , or better known as "Pricing Life Insurance " ( specify rate Life Insurance Premium ) .
See you again on the last discussion of the nature of insurance that loss is not catastrophic .

GREETING INSURANCE
NATURE OF INSURANCE

    1. Losses must contain uncertainty .
    2. Losses should be limited .
    3. Loss must be significant ( mean ) .
    4. The ratio of the loss must be predictable .
    5. Loss is not a disaster for the party .