Bailey and Simon Flashcards
1
Q
A
X
Y
B
A
A - 3+ years free
X - 2 years free
Y - 1 year free
B - No years free
2
Q
Why use EP instead of EE in Frequency?
A
Avoids maldistribution
aka possible exposure correlation when higher freq terrs produce more X,Y,B risks
3
Q
When is EP not appropriate for freq?
A
High freq terrs =/= high prem terrs
terr differentials not proper
4
Q
Why does relative credibility increase less than proportionally as length of period increases?
A
- Risks my be entering/exiting class
- Nature of formula Z=P/(P+K)
- Risks chance of accident varies over time
5
Q
Variation of Risks within Class
A
Higher ratio (Z_3+/Freq to EE) means higher variation of individual hazards
Means class more broadly defined
Credibility increases as variation within class increases
