CAS Exam 5 Fall 2018, Question 9
Study guide: Exam 5
An auto insurer is evaluating the variable "number of vehicles" for inclusion in a rating plan. Given the following Generalized Linear Model (GLM) output:
- Number of vehicles chi-square percentage: 10%
Part a (1 point)
Fully justify whether number of vehicles should be included in the rating plan.
Part b (0.75 points)
Briefly discuss three challenges associated with performing GLM analysis on loss ratio data.
Part c (0.25 points)
GLM analysis is widely accepted in classification ratemaking. Briefly discuss one reason that univariate analysis may be more appropriate than GLM analysis.
Answer this question and see the worked solution