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J. Risk Financial Manag. 2017, 10(4), 22; https://doi.org/10.3390/jrfm10040022

Intelligent Decision Support in Proportional–Stop-Loss Reinsurance Using Multiple Attribute Decision-Making (MADM)

Department of Industrial Systems Engineering and Management, Faculty of Engineering, National University of Singapore, Singapore 117576, Singapore
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Received: 8 July 2017 / Revised: 17 November 2017 / Accepted: 17 November 2017 / Published: 28 November 2017
(This article belongs to the Special Issue Risk Management Based on Intelligent Information Processing)
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Abstract

This article addresses the possibility of incorporating intelligent decision support systems into reinsurance decision-making. This involves the insurance company and the reinsurance company, and is negotiated through reinsurance intermediaries. The article proposes a decision flow to model the reinsurance design and selection process. This article focuses on adopting more than one optimality criteria under a more generic combinational design of commonly used reinsurance products, i.e., proportional reinsurance and stop-loss reinsurance. In terms of methodology, the significant contribution of the study the incorporation of the well-established decision analysis tool multiple-attribute decision-making (MADM) into the modelling of reinsurance selection. To illustrate the feasibility of incorporating intelligent decision supporting systems in the reinsurance market, the study includes a numerical case study using the simulation software @Risk in modeling insurance claims, as well as programming in MATLAB to realize MADM. A list of managerial implications could be drawn from the case study results. Most importantly, when choosing the most appropriate type of reinsurance, insurance companies should base their decisions on multiple measurements instead of single-criteria decision-making models so that their decisions may be more robust. View Full-Text
Keywords: multi-attribute decision-making; reinsurance; proportional reinsurance; non-proportional reinsurance; TOPSIS multi-attribute decision-making; reinsurance; proportional reinsurance; non-proportional reinsurance; TOPSIS
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Wang, S.J.X.; Poh, K.L. Intelligent Decision Support in Proportional–Stop-Loss Reinsurance Using Multiple Attribute Decision-Making (MADM). J. Risk Financial Manag. 2017, 10, 22.

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