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Old 08-14-2018, 11:07 AM
UncleBocky UncleBocky is offline
Join Date: May 2009
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Default Aggregating Trend Experience

See attached excel file. I have two plans, each with different factors that predict the claim cost. When aggregating claims experience and breaking down the trend into different factors at an aggregate level, what's the best way to do this? Member-weighted? Claims-weighted? In the file I have a couple examples of ways to aggregate it if using a member-weighted approach, but unsure which method is better or if a claims-weighted approach should be used. Any help is appreciated.
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File Type: xlsx Aggregating Trends Example.xlsx (18.1 KB, 31 views)
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Old 08-14-2018, 02:04 PM
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packman packman is offline
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I think your option 2 is correct.
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Old 08-15-2018, 06:30 PM
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connordavoice connordavoice is offline
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So that I understand what's going on, I have a few questions.
I believe I understand that the Claims column refers to the number of claims in a given month, provided a certain Norm and a pair of factors. So what does the Norm refer to, expected number of claims? Are the values for the factors arbitrarily chosen in this example or is there a reason to them?
Aggregate seems very similar to an average, but weighted by number of members it appears. What perplexes me is the "Other" column in the second aggregate option. Is this another factor derived from the other material in option 2?
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Old 08-15-2018, 06:59 PM
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DoctorNo DoctorNo is offline
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The question I usually ask when doing this is: how is the result going to be used? If it's going to be used to influence claim costs, then there's your answer.
The opinions of Doctor No do not necessarily represent the opinions of mathematicians or consulting actuaries. Facts cited by Doctor No are not necessarily facts. Find me on Twitter: @NorrisDoug. If you send me a LinkedIn invitation, please let me know who you are (unless it's obvious how I know you).
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