2014 Centennial Celebration and Annual Meeting
Credibility - A Unique Contribution from Casualty Actuaries
Then it will turn to ASOP 25 (Credibility Procedures), examining how professional standards play a role in the use of credibility and reviewing key changes to ASOP 25 recently adopted by the Actuarial Standards Board. Next, the evolution of credibility as utilized by the Workers Compensation Experience Rating plan will be traced over the last 100 years and the reasons for the success of this split plan will be discussed.
Finally, this session will take a fresh look at credibility, exploring questions such as whether high credibility is synonymous with low volatility, how the application of credibility reduces variance in the estimate of the mean, and whether or not splitting claims into primary and excess components leads to dramatic improvements in the estimate.
Attendees will benefit from a refresher review as well as some new ideas on applications and professional standards, and develop a greater appreciation of the unique contribution casualty actuaries have made developing the concept of credibility.