How do insurance companies use descriptive statistics and probability distributions to project health and car insurance premiums? In regards to age, why is there an inverse relationship between the two premiums?
How do insurance co use descriptive statistics %26amp; probability dist. to project health %26amp; car insuranc premiums?
Ultimately the insurance company charges more when it is at risk of having to pay out. I didn't realize that insurance was inverse for health and auto, but I can see why it would be. First, to understand this concept you have to suspend the want to point out the exceptions. This being statements like, "I knew a guy that had a heart attack at 20." Statistically, things such as heart attacks in your 20s don't happen often. That being said, it might be easily shown that as your age increases your risk of sickness. Now also bear in mind that the insurance company is concerned with "how much" moreso than "how often." They are a company so they watch the bottom line. In youth you may be sick, but most likely it will not cost much. A prescription vs. surgery etc. Now coming to car insurance: It is easily shown that the younger the driver the worse the accident might be. This shows why young males are most often the worst to ensure. Statistically, the young male is prone to accidents and usually might be involved in some of the most not less expensive accidents. Older drivers tend to go slower and when there is an accident it is usually not as severe.
If you want some more information, I would check out...
http://insurance.123thebest.info/
Take care.
Reply:IT is all different for each company. All the stats and data they use is to estimate risk. Each company has a different formula. But most use driving record, credit "profile", insurance history and about 20 other stats that all are varied. The best thing to is ask your agent what the quote is based upon if you are concerned about how they came to the risk factor.
Reply:like the court "systems" in the USA
They don"t - - - - - -
And if they due it's buy a jury thats never been behind bars
Reply:Sounds like a homework question. I use to have to do my own.
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