Deriving credibility premiums under different bayesian methodology

Abstract

Credibility theory is a set of quantitative methods that allows an insurer to adjust future premiums based on past experience. Generally, the credibility expression obtained is written as a weighted sum of the sample mean and the collective premium, the premium to be charged to a collective of policyholders in a portfolio. The weighted factor is referred to as the credibility factor. In this paper, a review of credibility theory is presented and new credibility formulae are obtained in a simple and extensive Bayesian methodology.