Classification Ratemaking, Minimum Bias and GLMs

By Society of Actuaries · 2025

Study guide: Exam GI-301

A study note of the Education Committee of the Society of Actuaries, dated May 2025. It combines three articles written in 2013 for the discontinued General Insurance Applications Module of the General Insurance track: a review of classification ratemaking, a summary of the use of one-way relativities and the minimum bias method, and a look at the relationship between the minimum bias method and generalized linear models (GLMs).

On the syllabus

• Exam GI-301 — Outcomes 6a; section 4.

1 Introduction

2 Review of Classification Ratemaking

3 One-Way Relativities and the Minimum Bias Method

• 3.1 Minimum Bias Method

4 The Connection Between Minimum Bias and GLMs

• 4.1 Classification Ratemaking and the Poisson Case
• 4.2 Other GLMs and Bias Functions
• 4.2 Conclusions

Appendix: Connection Between Deviance and Exponential Family Function

Sources

• Classification Ratemaking, Minimum Bias and GLMs (SOA Study Note, May 2025) — the document: title page, table of contents, bookmarks and headings (the conclusions section is numbered 4.2 a second time in the original), and the introduction for the lead; the title page names no author, so the Society of Actuaries is given
• GI 301 Syllabus, Mar 2027/Jul 2027 (SOA) — the citation and the assignment (outcome 6a, section 4)