Forecasting Premium Adequacy to Claim Paid Ratio in Life Insurance Industry with COVID-19 Effect using Multilayer Perceptron Neural Network

Siti Maghfirotul Ulyah, Marisa Rifada, Elly Ana, Christopher Andreas, Ilma Amira Rahmayanti, Salsabylla Nada Apsariny

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

The Covid-19 pandemic has had a significant impact on the global economic system, including the insurance industry. In Indonesia, the performance of the life insurance industry experienced negative growth during 2020. Moreover, claim payments up to September 2020, particularly for life insurance products, have increased compared to the last year period. Maintaining the adequacy ratio of premiums to claim payments is very important to do to avoid the risk of failure to meet obligations (default) and maintain the sustainability of the insurance industry. Therefore, this study aims to predict the ratio of premium adequacy to payment of claims in the insurance industry in Indonesia with the effect of the COVID-19 pandemic. The method used in this study is the Artificial Neural Network multilayer perceptron. The fitted model has two hidden layers with lag 1 up to 3 and a dummy variable of COVID-19. The results show that the model fits the ratio data with an out-of-sample MSE of 0.027.

Original languageEnglish
Title of host publication3rd International Conference on Mathematics and Sciences, ICMSc 2021
Subtitle of host publicationA Brighter Future with Tropical Innovation in the Application of Industry 4.0
EditorsRudy Agung Nugroho, Veliyana Londong Allo, Meiliyani Siringoringo, Surya Prangga, Wahidah, Rahmiati Munir, Irfan Ashari Hiyahara
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735442146
DOIs
Publication statusPublished - 11 Oct 2022
Event3rd International Conference on Mathematics and Sciences 2021: A Brighter Future with Tropical Innovation in the Application of Industry 4.0, ICMSc 2021 - East Kalimantan, Indonesia
Duration: 12 Oct 202113 Oct 2021

Publication series

NameAIP Conference Proceedings
Volume2668
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference3rd International Conference on Mathematics and Sciences 2021: A Brighter Future with Tropical Innovation in the Application of Industry 4.0, ICMSc 2021
Country/TerritoryIndonesia
CityEast Kalimantan
Period12/10/2113/10/21

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