Q11
Hi, for part c), will any credit be given for the stating that 'if one class plan does a better job of identifying VHM, while also adjusting and minimizing EPV, then that plan should assign higher credibility to the risk compared to the other'?
Hi, for part c), will any credit be given for the stating that 'if one class plan does a better job of identifying VHM, while also adjusting and minimizing EPV, then that plan should assign higher credibility to the risk compared to the other'?
Comments
No, this answer would not receive credit because it appears to have the relationship round the wrong way.
A class plan that does a good job at identifying VHM and also adjusting and minimizing EPV is one which is highly refined so there is less variation between risks in the same class. This means that when we layer experience rating over the class plan there's less variation remaining to pick up on. That means we can't assign much credibility to the experience of a single car because it was all previously accounted for. So we should be assigning lower credibility to the experience rating, not higher.