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A Queueing Theoretic Approach to the Analysis of the Claims Payment Process
| Content Provider | Semantic Scholar |
|---|---|
| Author | Willmot, Gordon E. |
| Copyright Year | 1990 |
| Abstract | This paper represents an attempt to formulate a cohesive and consistent approach to the analysis of claim liabilities. Probabilistic tools from risk and queueing theory have been incorporated into a stochastic model that quantifies the variability inherent in such liabilities and at the same time reproduces intuitive results that may be arrived at from a deterministic standpoint. The model can be used to estimate various quantities of interest while providing a yardstick for measuring the accuracy of the estimates. Numerical examples illustrate the methodology. Section 1 describes the problem and reviews some results from probability and risk theory. The liability of unreported claims is the subject of Section 2, where the first two parts outline an intuitive model that is well suited for practical implementation, as is illustrated by numerical examples. More general approaches that take into account seasonality of claims incurral, inflation, business growth, variations in risk levels, and other factors are considered in the final part. The analysis of the liability of reported claims is considered in Section 3. This liability is shown to be statistically independent of the liability of unreported claims. A queueing theoretic approach to the modeling of the claim settlement process is proposed. In addition, models of various degrees of complexity are analyzed, and some numerical examples are provided. A recurring theme of this section is the approximate right tail behavior of the distribution of the liability of reported claims. Thus the amount needed to cover such liabilities can be estimated with a specified probability. In Section 4 analysis of the delay in claims processing is discussed. An example illustrates how this information can be used to help analyze the efficiency of the claims administration system. Again, an approximation technique is developed for the distribution of the delay. Section 5 discusses areas for future research. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.soa.org/library/research/transactions-of-society-of-actuaries/1990-95/1990/january/tsa90v4218.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
