Zero-Inflated Generalized Poisson Regression Model and Its Application to Insurance Ratemaking

Poisson regression model is widely used in insurance classification ratemaking.When the data appear to be zero-inflated,zero-inflated poisson regression model will be applied,and the proportion parameter φ of structural zeros is usually supposed to be constant and not affected by rating factors.Nevertheless,this may deviate from reality.So we suppose some rating factors may have an effect on φ and propose a new zero-inflated generalized Poisson regression model,i.e., ZIGP(τ) model.At the end of the paper,we apply ZIGP(τ) model to a data set of automobile insurance loss and the result shows that the goodness-of-fit can be effectively improved,so it may result in a more reasonable insurance rate.