Multidimensional credibility premium: Application to JKN (Jaminan Kesehatan Nasional)

Credibility theory is widely used in determining premium in insurance, such as general insurance, life insurance, and reinsurance using historical data. In this paper, a multidimensional credibility model is developed from the Buhlmann-Straub credibility model with inflation factor in the model. Buhlmann-Straub’s inhomogeneous and homogeneous credibility estimators are developed to be multidimensional credibility. Furthermore, the estimation of a structural parameter is investigated to determine credibility premium. This methodology is applied to estimate the credibility premium in Social Health Insurance in Indonesia or JKN (Jaminan Kesehatan Nasional). The premium of social health insurance is paid regularly by participants, employers, and the government for the health insurance program. Therefore, a good model is used to determine the premium based on the source of the funds.Credibility theory is widely used in determining premium in insurance, such as general insurance, life insurance, and reinsurance using historical data. In this paper, a multidimensional credibility model is developed from the Buhlmann-Straub credibility model with inflation factor in the model. Buhlmann-Straub’s inhomogeneous and homogeneous credibility estimators are developed to be multidimensional credibility. Furthermore, the estimation of a structural parameter is investigated to determine credibility premium. This methodology is applied to estimate the credibility premium in Social Health Insurance in Indonesia or JKN (Jaminan Kesehatan Nasional). The premium of social health insurance is paid regularly by participants, employers, and the government for the health insurance program. Therefore, a good model is used to determine the premium based on the source of the funds.