RISK CLASSIFICATION BY FUZZY INFERENCE

Traditionally, policyholders in life insurance are classified in simpl e mortality tables, most often according to only a few risk characteri stics. Instead of a risk classification according to the numerical rat ing system, this article describes how to classify by using a fuzzy in ference methodology. By defining risk factors as fuzzy sets, it is sho wn that an insurer can utilize multiple prognostic factors that are im precise and vague. The presented fuzzy risk classification provides a more realistic way of modeling mortality risks since it allows for com pensations and interactions between multiple risk factors.