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  #1  
Old 12-24-2017, 09:33 PM
Hari Seldon Hari Seldon is offline
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Default contiguous vs non contiguous territories?

Greetings,

Is there any actuarial literature that discuss the pros n cons of contiguous vs non contiguous territories? Contiguous territory definitions are more logical, as the predicted cost of one geographic unit should be similar, all else being equal, to another geographic unit. Contiguous territories are also going to be more appealing to regulators or other external parties.

The flip side to this is that all of our KPIs for non-contiguous territories may be superior. Specifically lower variance within territories and greater variance between territories. While it may not be logical, but if geographic code 1 has double the expected cost of geographic code 2, then the charge should be double, even if the zip codes are neighbors.

Is there any literature which discusses the merits of contiguous vs non contiguous territories? does it basically come to marketing/regulatory considerations vs improved predictable metrics?

Regards,

Hari Seldon
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Old 12-26-2017, 12:07 PM
v10 v10 is offline
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Maybe ISO has something on this in their territory filings? But I suspect contiguous territories are used to satisfy regulators and predictive accuracy isn't much of a consideration.
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Old 12-26-2017, 12:57 PM
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DeepPurple DeepPurple is offline
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First, what is KPI?

Second, Is there a limit on the territory count? If not, why not just have non-contig territories have the same rate, but call them different in the filing. A rose is a rose.
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Old 12-26-2017, 02:27 PM
oirg oirg is offline
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Quote:
Originally Posted by DeepPurple View Post
First, what is KPI?
Key Performance Indicatior
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