Introduction
Survival analysis is also referred to as the time-to-event analysis. It is a division of statistics which studies the extent of time needed before a specific event is going to happen. Life insurance companies primarily utilise the survival analysis to gauge how long the insured is going to be alive.
Apart from that, in the coming days, the survival analysis can also be used to predict the cancellation of the policy, chances of the insured not continuing or renewing the policy, and the time taken to lodge a policy claim. Insurance providers utilise results and reports from survival analysis to estimate the insurance premiums of the insured.
Understanding Survival Analysis
Survival analysis primarily originated in the field of biology and medicine. It leverages the healthcare professionals to estimate the death rate, chances of organ failure, and the onset of a particular disease. It is for this reason that some people associate survival analysis with negative developments.
Nevertheless, it may also be applied to positive events, such as estimating the day on which an individual would emerge with a new skill with utmost perfection from the day he or she starts training full-fledged. Over time, survival analysis is adapted extensively in the biotech sector, machine maintenance, marketing, economics, and many other fields apart from insurance.
Survival Analysis in Insurance
The analysts working in life insurance companies utilise survival analysis to characterise the cause of death at several ages when given the health conditions. With the help of these functions, computing the profitability of the chances of the insured outliving their insurance coverage becomes simple and straightforward. Insurers will then go onto estimating an appropriate insurance premium by considering the value of the possible payouts as per the insurance policy.
