Modified Multiple Decrement Table and Its Credibility Based on Factor Characteristics

Abstract

The 2019 Indonesian Mortality Table IV (TMI IV) involved 52 life insurance companies in Indonesia during the study period from 2013 to 2017. From the data, there may be differences in the characteristics of company customers so that the use of TMI IV is not in accordance with these characteristics. In life insurance companies, there are types of coverage (causes), namely: NDPA, which means death due to illness or accident; PAD, which means reimbursement of medical expenses, and SRD, which is the cancellation of the policy so that the coverage ends. The Companies can construct a Life Table involving multiple causes called a Multiple Decrement (MD) Table. This table is modified into a Modified Multiple Decrement Table (MDT) by adding factors to the causes in the form of regions. The clustering of factors needs to be done to reduce the complexity of the calculation. Using the K-means method, the grouping of regions R1R9 is divided into the following: PAD causes (3 groups) and SRD (2 groups). MDT is obtained from the relationship between MD and the Associated Single Decrement (ASD). The Annual Exposure Method was used to calculate the probability of causes. Furthermore, extrapolation is performed on the probability of cause, for which there is no value, and graduation is performed on the less smooth probability of cause. Then, credibility theory is used to determine the credibility level of the industry. The industry-credible probability of cause has a value between the observed value and the industry value (TMI IV).