Bailey and Simon

Question 1

A
X
Y
B

Answer 1

A - 3+ years free
X - 2 years free
Y - 1 year free
B - No years free

Question 2

Why use EP instead of EE in Frequency?

Answer 2

Avoids maldistribution
aka possible exposure correlation when higher freq terrs produce more X,Y,B risks

Question 3

When is EP not appropriate for freq?

Answer 3

High freq terrs =/= high prem terrs

terr differentials not proper

Question 4

Why does relative credibility increase less than proportionally as length of period increases?

Answer 4

1. Risks my be entering/exiting class
2. Nature of formula Z=P/(P+K)
3. Risks chance of accident varies over time

Question 5

Variation of Risks within Class

Answer 5

Higher ratio (Z_3+/Freq to EE) means higher variation of individual hazards

Means class more broadly defined

Credibility increases as variation within class increases