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Modeling of financial condition of insurance company with usage of fuzzy logic tools

O. Olkhovska

It’s proposed in the article the system of indices of activity of insur-ance companies, which is based on the principles of transparency, comprehensiveness, accessibility, availability of statistical databases, and allows to diagnose insurers, which are stable, and whose finan-cial condition is close to critical. It’s grounded the necessity of further improvement of methodological and instrumental bases of modeling the financial condition of insurance companies, which consist in developing of response system that best meets the requirements of a particular situation. It is the reason of choice of fuzzy logic tools as mathematical basis for the construction of appropriate models. Built economic and mathematical model of bankruptcy diagnosis allows to classify the insurance companies into stable and potential bankrupts taking into account expert knowledge on insurance business, and provides the possibility to optimize their own parameters on real data. It’s proposed the algorithm for tuning the models, based on error-back-propagation method adapted for fuzzy logic models. As a result of tuning on statistical data it’s possible to optimize the parameters of the model, which allow functionally link the input variables (indica-tors of the insurance company) with the value of the result variable (the classes of financially stable insurers or potential bankrupts).

Keywords. Insurance company, financial state, modeling, fuzzy logic, diagnosis of bankruptcy, membership function, fuzzification, fuzzy knowledge base.

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