C.5. Credibility

Question 1

3 necessary criteria for credibility

Answer 1

1. 0

Question 2

Classical and Buhlmann credibility formulas

Answer 2

Classical: Z = sqrt(n/N)
Buhlmann: Z = N/(N + K)

Question 3

6 desirable criteria for complement of credibility

Answer 3

1. Accurate
2. Unbiased
3. Statistically independent from base statistic (otherwise errors could compound)
4. Available (otherwise not practical)
5. Easy to compute (otherwise hard to justify)
6. Logical relationship to base (easy to justify to others)

Question 4

Loss costs of larger group that includes group being rated

Answer 4

A: accuracy, availability, easy to compute, can have logical relationship to base, could be independent
D: Likely biased, since there is a rason the subject group has been separated

Question 5

Rate change from larger group applied to present rates

Answer 5

Usually unbiased, generally available, easy to compute, independent, possibly accurate. May have logical relationship to subject experience

Question 6

Loss costs of a larger related group (does nto include group being rated)

Answer 6

Generally available, easy to compute, independent, possibly accurate. May have logical relationship, but likely biased

Question 7

Trended present rates

Answer 7

May or may not be accurate based of stability of indications. Is unbiased, readily available, easy to compute, logical relationship, but may or may not be independent

Question 8

Harwayne’s Method

Answer 8

Unbiased, accurate, mostly independent, available, logical relationship. Harder to compute so harder to explain logical relationship

Question 9

Competitor’s rates

Answer 9

Can be biased, inaccurate and difficult to obtain, but is independent, easy to compute, and has a logical relationship