victorandjenny

03-14-2012, 12:43 PM

In WM Chapter 3, it says manual pages in rate filing can be used to estimate overall average premium level. I do not know exactly what the authors mean. My understanding is like the following:

In the rating manual, there is base rate for each coverage, limit factors, deductible factors and so on. If we assume we know the distribution of policyholder's coverages, limits, deductibles and so on, we can have a rough idea about the average premium level. It can be very very rough, because the distribution can be very different from our assumption, and if we consider territorial factors and tier factors can be very different from 1.0, our estimate will be far from accurate.

Do you have some good ideas to make the manual pages very helpful to estimate the overall average premium level?

In the rating manual, there is base rate for each coverage, limit factors, deductible factors and so on. If we assume we know the distribution of policyholder's coverages, limits, deductibles and so on, we can have a rough idea about the average premium level. It can be very very rough, because the distribution can be very different from our assumption, and if we consider territorial factors and tier factors can be very different from 1.0, our estimate will be far from accurate.

Do you have some good ideas to make the manual pages very helpful to estimate the overall average premium level?