Applications of Decisions under Uncertainty in the Case of Omniasig-Life Insurance S.A.

Abstract

Uncertainty is given because we don’t know the nature state event. The company can only estimate the demand of policies in order to estimate the received premiums. If the insurance company doesn’t choose correctly the alternative and the number and the damages will be greater then what it was estimated, then it will come to the point of not being able to pay all the damages. Because of the adverse selection, the insurer meets uncertainty in every day life. It is well known the fact that persons who have a higher risk of producing the insured event, they also have a higher inclination towards contracting insurance.

Keywords

• decision
• uncertainty
• decision process
• Bayes analysis
• probabilities
• adverse selection
• moral hazard