Actuarial calculations with frailty models.
Wong, George Chung Ming.
Date of Issue2000
College of Business (Nanyang Business School)
The aim of this study is to find out whether heterogeneity in a population is significant enough to recommend the frailty model in pricing life insurance products. To accomplish this aim, the study uses two tests of hypotheses: the Kolmogorov-Smimov test and the Likelihood ratio test. The research arrives at the conclusion that the presence of heterogeneity in a population with respect to a specific risk category is insignificant and there is no need to recommend the frailty model for pricing life insurance products.
Nanyang Technological University