### Journals Information

DOI: 10.13189/aeb.2024.120101
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## Estimation of Individual Claims Reserves Using K Modes Cluster and Reserving by Detailed Conditioning

Yuciana Wilandari 1,2, Gunardi 1,*, Adhitya Ronnie Effendie 1
1 Department of Mathematics, Faculty of Mathematics and Natural Science, Universitas Gadjah Mada, Indonesia
2 Department of Statistics, Faculty of Science and Mathematics, Universitas Diponegoro, Indonesia

ABSTRACT

The estimation of claims reserves is of great importance to insurance companies. In liability insurance, payments for claims often take a long time to be made after the incident. To complete these payments, claims reserves are necessary. The individual claims reserve estimates provided by the individual run-off triangle provide information related to each policyholder's claims data, such as the ID claim, the occurrence period, the reporting period, the period of claims closed, and the payment data. To calculate individual claims reserve estimates, the Reserving by Detailed Conditioning (RDC) method is used. However, this method does not take into account the policyholder's personal information, such as age and gender. Therefore, in this article, the Cluster method is used. The aim of this research is to calculate individual claims reserve estimates using the RDC method and the K-Mode Clustering method. The K-mode clustering is used because the claims data used is health insurance data, which is in the form of categories. The data information from patients on health insurance includes gender, clinic, severity level, number of days of treatment, treatment class, type of return, and type of patient. The data was first grouped into 4 clusters, and then each cluster calculated its claims reserve estimate using the RDC method. The claims reserve estimates obtained were compared with individual claims reserve estimates without grouping using Mean Square Error Prediction (MSEP). The results of this article show that the estimated individual claims reserves using grouping have MSEP values that are smaller than the estimated individual claims reserves without grouping.

KEYWORDS
Individual Claims Reserve, Reserve by Detailed Conditioning, K Modes Cluster

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Yuciana Wilandari , Gunardi , Adhitya Ronnie Effendie , "Estimation of Individual Claims Reserves Using K Modes Cluster and Reserving by Detailed Conditioning," Advances in Economics and Business, Vol. 12, No. 1, pp. 1 - 7, 2024. DOI: 10.13189/aeb.2024.120101.

(b). APA Format:
Yuciana Wilandari , Gunardi , Adhitya Ronnie Effendie (2024). Estimation of Individual Claims Reserves Using K Modes Cluster and Reserving by Detailed Conditioning. Advances in Economics and Business, 12(1), 1 - 7. DOI: 10.13189/aeb.2024.120101.