These are projects posted by the students of Dr. Gove Allen at Brigham Young University. These students have taken one semester-long course on VBA and generally have had no prior programming experience

Thursday, December 10, 2015

Decision Model to Help Evaluate Reinsurance Proposals

Reinsurance is insurance for insurance companies to mitigate risk, and minimize the amount of cash reserves an insurance company needs to hold. Similar to standard health insurance, reinsurance has a premium, deductible, and a maximum.  Companies send proposals for reinsurance to my current employment (an insurance company) and my department evaluates these proposals using mathematics, such as expected values, calculus, and probability theory. As a check to these calculations we simulate what we think will happen using resampling techniques in excel. I built a dynamic decision support system that evaluates and analyzes reinsurance proposals using Monte Carlo simulations, or resampling, in excel; i.e., created a model that decides the reinsurance proposal to accept.

The model does the following based on the inputs registered: (1) It calculates the premium of reinsurance, (2) it calculates the end payout of the reinsurance company, (3) it calculates the amount the insurance company is responsible for, (4) it calculates the amount saved by purchasing reinsurance and (5) provides analysis of the output.

Based off the analysis the user can make the decision on which reinsurance to purchase, or to not purchase reinsurance at all.

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