B and W constants

[ed999]

one question where they asked you to comment on the fact that B and W were constants. I didn't exactly reproduce the list from all 10 but simply said that if B and W were constants, the weight given to large insureds would be too high while the weight for smaller insureds to low...

do you think this makes sense???

[berad]

that's what I put down. I tried to compare the B & W's in the prior plan to the newer one.

[Jack Divine]

I agree - the loss variation in large insureds is greater than the law of large numbers indicates. Therefore, constant B&W values give too much weight to large insured experience, and not enough to small insureds.

[Avi]

Being that Z = (E+B)/(E+W), I said that holding B&W fixed and letting E get large brings Z close to 1, which gives too much experience to large insureds.

[lee]

Originally Posted by Avi

Being that Z = (E+B)/(E+W), I said that holding B&W fixed and letting E get large brings Z close to 1, which gives too much experience to large insureds.

Zp = E/E+B, Ze =E/E+K approaches 1, when E approaches infinity...
Large insured will be seft-insured.

Please check whether it is correct.