MQP 2000-Credibility Analysis for Automobile Cession Strategies

In Massachusetts, every person is guaranteed automobile insurance at state-determined rates. Insurance companies cannot deny coverage, but can cede the policy to an agency called CAR. Insurance companies need good estimates for expected loss on a policy in order to make the best cession decision. The cession decision is difficult to make where data is sparse. This project describes two ways that a company can use loss data to obtain better predictions for in groups with sparse data.