Practical Aspects of Credibility Theory Aiming the Hierarchical Model with Two-Levels
Journal Title: Revista Romana de Statistica - Year 2012, Vol 60, Issue 2
Abstract
It is an original paper, which shows how the hierarchical model with two levels, can be used to determine the linear non-homogeneous credibility premiums at the sector level and at the contract level. The fact that it is based on complicated mathematics, involving conditional expectations, shouldn’t bother the user more than it does when he applies statistical tools like SAS, GLIM, discriminant analysis, and scoring models. These techniques can be applied by anybody on his own field of endeavor, whether it is economic, medical, insurance, or accounting. We give a rather explicit description of the input data for the used hierarchical model of Jewell, only to show that in practical situations there will always be enough data to apply credibility theory to a real insurance portfolio.
Authors and Affiliations
Virginia ATANASIU, Daniela Mihaela VLADU
Keywords
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