Hi
My company wants to review and possibly update the approach we use to assign weights between the tariff premium (premium based on GLM model etc.) and the experience premium (premium based on claims experience of the individual fleet). We're looking into models such as the Buhlmann Strauss (amongst others) but I'm not sure if there is an agreed/preferred approach out there to determine the standard for full credibility (as well as the minimum threshold below which the individual experience of the fleet is not taken into account). Our current approach in relation to this is a standard for full credibility of 650 vehicle years (over the last 5 years). This would mean that if a fleet policy has had 130 vehicles in its fleet each year for the last 5 years it's technical premium would be based entirely on its claims experience. No reference to claim numbers or amounts is taken into account in deterring the standard for full credibility, just exposure. My manager feels this is on the low side and I'm inclined to agree but I don't have any robust argument to make this point.
The minimum threshold we use is 6 vehicle years (over the last 5 years) but perhaps this is also on the low side?
Does anyone have any insight into this or know of a good resource that covers this topic.
My last company used 1000 vehicles years.
Any advice on this would be appreciated.
Many thanks.
M
My company wants to review and possibly update the approach we use to assign weights between the tariff premium (premium based on GLM model etc.) and the experience premium (premium based on claims experience of the individual fleet). We're looking into models such as the Buhlmann Strauss (amongst others) but I'm not sure if there is an agreed/preferred approach out there to determine the standard for full credibility (as well as the minimum threshold below which the individual experience of the fleet is not taken into account). Our current approach in relation to this is a standard for full credibility of 650 vehicle years (over the last 5 years). This would mean that if a fleet policy has had 130 vehicles in its fleet each year for the last 5 years it's technical premium would be based entirely on its claims experience. No reference to claim numbers or amounts is taken into account in deterring the standard for full credibility, just exposure. My manager feels this is on the low side and I'm inclined to agree but I don't have any robust argument to make this point.
The minimum threshold we use is 6 vehicle years (over the last 5 years) but perhaps this is also on the low side?
Does anyone have any insight into this or know of a good resource that covers this topic.
My last company used 1000 vehicles years.
Any advice on this would be appreciated.
Many thanks.
M
Standard for Full Credibility