640 Class 9Bryan back-up material

640 Class 9Bryan back-up material - Alternative Techniques...

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Unformatted text preview: Alternative Techniques and Uses of Classification Roosevelt C. Mosley, Jr., FCAS MAAA Charles A. Bryan, FCAS, MAAA CAS Ratemaking Seminar 2002 Discussion Topics Classifications Methods New and alternative applications of classification methods Examples of applications of classification methods Principles of Sound Risk Classification System Reflect cost and experience differences on the basis of relevant risk characteristics Applied objectively and consistently Practical, cost-effective, and responsive to change Minimize anti-selection Reflect cost and experience differences based on relevant risk characteristics How do we determine which risk characteristics are important? How do we reflect the cost and experience differences between these risks? Historically speaking Relevant risk characteristics Historical experience Intuition Reflecting cost differences One way analysis (loss ratio, pure premium) Multi-way tables Mini multi-variate analysis Where we are today (for the most part) Relevant risk characteristics Historical experience Intuition Reflecting cost differences One way analysis (loss ratio, pure premium) Multi-way tables Mini multi-variate analysis Some companies are using new techniques Generalized Linear Models (GLMs) Chi-square Automatic Interaction Detector (CHAID) Classification and Regression Trees (CART) All are multivariate techniques! Why use multivariate analysis?Why use multivariate analysis?...
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This note was uploaded on 07/17/2008 for the course BUSFIN 640 taught by Professor Krempley during the Winter '08 term at Ohio State.

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640 Class 9Bryan back-up material - Alternative Techniques...

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