Author(s)

Gilbert Chambashi^1*, Wamulume Mushala², Clement Mwaanga², Chilayi Mayondi², Bupe Kolosa³, Levy K. Matindih³, Edwin Moyo³

¹Unicaf University, School of Business Studies, Lusaka, Zambia.
²Mulungushi University, Department of Business Studies, Kabwe, Zambia.
³Mulungushi University, Department of Mathematics and Statistics, Kabwe, Zambia.

In this paper, a formula for calculating a premium for reinsurance is presented. This formula was determined by incorporating a lognormal-burr probability distribution model into the PH-transform principle which is one of the risk-adjusted premium calculating principles. The lognormal-burr probability distribution model was selected, modelled, classified and validated as the best fitting model to 2016 GAM’s automobile insurance claims data among the eight candidates of composite lognormal probability distribution models. Then, the formula was applied in calculating reinsurance premiums for an automobile insurance branch under an excess of loss non-proportional reinsurance treaty.

Risk-Adjusted Premium Calculating Principle, PH-Transform Premium Principle, Composite Lognormal Models, Reinsurance Premium Formula, Excess of Loss Non-Proportional Reinsurance Treaty

Chambashi, G. , Mushala, W. , Mwaanga, C. , Mayondi, C. , Kolosa, B. , Matindih, L. and Moyo, E. (2023) Computation of Reinsurance Premiums by Incorporating a Composite Lognormal Model in a Risk-Adjusted Premium Principle. Journal of Mathematical Finance, 13, 1-16. doi: 10.4236/jmf.2023.131001.