Posterior Distribution of Health Insurance: Basis for Determining Credibility Factor and Premium. Evidence from Ghana

Abstract

It is always important to determine distribution of insurance claims in order to estimate future expected values. This study seeks to determine the posterior distribution using Bayesian credibility theory. Secondary data collected from Dormaa Municipal Health Insurance Scheme and Dormaa Presbyterian Hospital was analyzed using the Statistical Package for Social Science (SPSS), Excel spreadsheet, and Easy fit by applying Bayesian credibility theory through descriptive analysis and frequency distribution.

It was found that the data submitted by 28 health facilities to Dormaa Municipal Health Insurance Scheme follows Normal Distribution and the sample claims from Dormaa Presbyterian Hospital follows lognormal distribution. The posterior distribution for the municipal health Insurance Scheme was also found to be normal distribution.