APPLYING FUZZY MATHEMATICS TO RISK ASSESSMENT IN INSURANCE INDUSTRY

As system structures are complex, and non-linearity, uncertainty, coincidence, variability, etc. occur, most dynamic systems are extremely difficult to model according to accurate and precise mathematical relations. Fuzzy mathematics (fuzzy logic, theory of fuzzy sets, etc.) can provide an appropriate alternative to exact mathematical modelling of systems or processes that are largely vague or too complex to be described by simple and clear mathematical formulas. Methods of the fuzzy system have been widely used in risk assessment and other segments of the theory and practice of insurance, such as classification, underwriting, projected liabilities, future and present value, pricing, asset allocation, cash flows, investments, and more. This paper gives an overview of the research and the possibility to apply fuzzy mathematics in insurance industry.

Key words: risk, fuzzy mathematics, insurance, actuarial, underwriting