Predictive methods for calculating the non-life insurance premium

The determination of the premium to which insurance companies offer the policies is one of the most important phases of the insurance process, because the correct definition of premium allows the companies to meet the commitments taken with its policyholders and to guarantee an adequate remuneration of capital. The first step is to estimate the fair premium, i.e. the expected value of the total random compensation paid by the insurance company during the insured period, through the Generalized Linear Models. Once this initial premium is found, it is necessary to find the pure premium, adding a security load that guarantees a profit to the company. To find the optimal loading, various factors must be taken into account, such as the demand function, the competitors, the reputation of the company and the advent of the Internet. Finally, to find the final premium, the fixed loading and tax must then be added.