Ratemaking Data Flashcards
Two types of internal data involved in a ratemaking analysis
- Risk information
2. Accounting information
Risk information
exposures, premium, claim counts, losses and explanatory characteristics about the policy or the claim
Accounting information
underwriting expenses and ULAE (available only at an aggregate level)
How are information about policy exposure and premium recorded
- a policy database
2. a claim database
Policy database
defined according to records (i.e., individual policies or some further subdivision of the policy) and fields (i.e., explanatory information about the record)
Policy database: home owner insurance
a record may be a home for an annual policy period
Policy database: U.S. workers compensation insurance
rating is based on the payroll of relevant industry classifications so separate records are often maintained at the classification level
Policy database: personal auto insurance
separate records are created for each coverage, each individual auto on a policy, and each individual operator on each auto
How many records should be created for auto policy insurance two drivers on two cars for six coverages
24
Typical fields for each record
- Policy identifier
- Risk identifier
- Relevant dates
- Premium
- Exposure
- Characteristics
What is “characteristics” in record fields?
Include rating variables, underwriting variables, and any other available information regarding the risk represented by the record
Three general objectives applied to aggregating data for ratemaking purposes
- Accurately match losses and premium for the policy
- Use the most recent data available
- Minimize the cost of data collection and retrieval
other third-party data examples
economic, geo-demographic, credit data
