An application on risk and premium calculation of fire insurance

Abstract

Fire insurance is a type of insurance that guarantees private and commercial purposed buildings together with household goods against unintentional fire, thunder and explosion as well as other damages resultig from these. Despite the fire insurance is the oldest insurance branch, it is not grown up in our country. The reasons of this situation are that fair premium rates could not being determined and most accurate risk analysis could not being made. While determining fair premium rates, probability of risk realisation is important too besides structural properties and material value of the building. For this reason, the topic of determinig to fire insurance premium and probability of risk realisation was studied as close to real situation. While calculation of differentiating risk, analytic hierarchy process that flexible method was used. Obtained risk scores and other factors which affecting premium are was combined. Thus, suitable premium rates for building was achieved. Risk and premium points were calculated for 230 houses in three different cities by the developed method.