An Application of Adjusted Zero-inflated Poisson Model to Zero Claims

Zero-inflation is a common phenomenon in non-life insurance and the most powerful tools to analysis it are the zero-inflated Poisson(ZIP) model and Hurdle model.Based on reasons about engendering the zero-inflation,this paper points out the drawbacks of zero-inflated Poisson model and Hurdle model.However,it is important for an insurer to distinguish the difference between zeroes.So,based on the ideas of zero-inflated Poisson model and Hurdle model,we give our definition of the adjusted zero-inflated Poisson(AZIP) model and use it to fit actual motor insurance data.Through analysing and comparing with zero-inflated Poisson model,the conclusion is that the adjusted zero-inflated Poisson model is more appropriate in dealing with the zeroes.