Sometimes the data in a particular territory is not enough to have full confidence or belief in the reliability of the data. When this is the case, a calculation of credibility will be made to show how much confidence there is in the data. The remaining confidence will be assigned to a set of data known as the complement. One common complement for territorial factors is the use of statewide data. When the data from a territory and the complement are combined it is known as the credibility weighted pure premium. Given the table below and the previously calculated pure premiums, what is the credibility weighted pure premium for territory 1?

Transcribed Image Text:

Territory 1 Territory 2 Territory 3 Territory 4 Territory 5 Houses 150 100 80 100 90 Losses Pure Premium Credibility 75,000 45,100 48,800 54,450 42,570 75% 50% 40% 50% 45% Credibility Weighted Pure Premium Territory 1 Territory 2 Territory 3 Territory 4 Territory 5 Houses 150 100 80 100 90 Losses Pure Premium Credibility 75,000 45,100 48,800 54,450 42,570 75% 50% 40% 50% 45% Credibility Weighted Pure Premium

Answer rating: 100% (QA)

The formula for calculating the credibility weighted ... View the full answer