CAS Exam 5 Spring 2018, Question 13
Study guide: Exam 5
A company is implementing population density in its rating plan for a line of business. The company has three pieces of information.
- An analysis the company performed using a generalized linear model (GLM) on internal data only.
- The rating factors from a competitor's rate filing.
- The rating factors from an external industry benchmark.
| Population Density | Internal GLM | Competitor | Industry |
|---|---|---|---|
| Low | 1.5 | 0.9 | 0.4 |
| Medium | 1.0 | 1.0 | 1.0 |
| High | 1.3 | 1.1 | 1.6 |
Provide a recommendation for the low and high level rating factors given the chart above and the external rating factors.
Justify the recommendations considering:
- i. GLM diagnostics
- ii. Competitor
- iii. Industry benchmark
Part a (2 points)
Answer this question and see the worked solution