Classifying Insurance Risk using “Shrinkage” Estimation

The National Science Foundation awarded Analysis & Inference two consecutive grants to find new statistical methods for classifying risks taken on by insurers. A+I statisticians conducted research on state-of-the-art statistical analysis, focusing on (Bayesian) "shrinkage" estimation, to determine better ways to form classes of risks and to estimate the probabilities and amounts of claims arising from the classes. The work was recognized in publications of articles in top statistical journals.