Classifying Age Of Policyholders According To The Claim Rates In Iran

According to Note 1, Article 18 of Third Party Liability (TPL) Insurance Law 1395 (2016), Central Insurance of I. R. Iran (CII) in cooperation with Law Enforcement Force of I. R. Iran is obliged to work out to allow for the issuance of TPL policy based on the characteristics of the driver by the end of Sixth Five-Year Development Plan. As a result, in the premium calculation and the third party claims, the characteristics of the driver must be taken into account. Thus, using six-year data from an insurance company, the effect of the policyholders’ age on the incurred damages are investigated.In this study, initially, with the help of Kolmogorov-Smirnov two-sample test, the age distribution of the reckless policyholders and drivers were compared. The results indicated that ‘age’ characteristic plays a role in causing damages. Due to the age differences among policyholders and the four major vehicle types, the calculations were distinctively performed based on each set of vehicles. Using conditional probability, the possibility of damages caused by different age groups was measured. Furthermore, the decision tree model was developed based on the three registered characteristics of the policyholders including age, gender, and type of customer.The results indicated that among the passenger cars, trucks, and motorcycles, the probability of damages caused by policyholders having less than 22, 30, and 25 years of age is respectively considerably high. Thus, according to actuarial principles, these policyholders must reasonably pay more premiums. The results further showed that more than 50% of the claims that involved fatality in all types of vehicles were related to drivers that had no insurance policy. Therefore, several drivers that share the same vehicle must pay more premiums. The age characteristic of the policyholders does not have any significant effect on claims involving buses or vans.