Ordinal Classification Method for the Evaluation Of Thai Non-life Insurance Companies

TL;DR

This paper introduces an ordinal classification model to assess the financial health of Thai non-life insurance companies, aiding regulators in early warning and policy formulation.

Contribution

It develops an efficient ordinal classifier specifically designed for evaluating insurance companies' financial solidity, enhancing regulatory decision-making.

Findings

Effective classification of companies into four financial health categories

Supports early detection of potential insolvencies

Assists policymakers in creating solvency guidelines

Abstract

This paper proposes a use of an ordinal classifier to evaluate the financial solidity of non-life insurance companies as strong, moderate, weak, and insolvency. This study constructed an efficient classification model that can be used by regulators to evaluate the financial solidity and to determine the priority of further examination as an early warning system. The proposed model is beneficial to policy-makers to create guidelines for the solvency regulations and roles of the government in protecting the public against insolvency.