CAS Exam 5 Spring 2014, Question 9
Study guide: Exam 5
An insurer is considering using credit score to further segment its homeowners book of business. The insurer has developed a generalized linear model to evaluate different variables' contribution to expected frequency of wind claims.
The following diagnostic chart displays the results of a countrywide analysis performed on one year of data from a generalized linear model:
Using the generalized linear model output, as well as other considerations, justify whether the insurer should add credit score to the homeowners rating plan for the wind peril.
Part a (2 points)
Answer this question and see the worked solution