Risk Classification Statement of Principles¶
American Academy of Actuaries. (1980). Risk Classification Statement of Principles.
Cited by¶
1 citation across 1 artifact.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Majority-Dominated Aggregate Objective
- Insurance and actuarial pricing — pricing optimized on expected loss works in aggregate while systematically failing high-cost minority segments.
This sourceStates that actuarial pricing places each risk in a class whose premium matches its expected cost, so that pricing optimized on expected loss can systematically diverge for high-cost minority segments under coarse or constrained classification.
Supported in partVerified against the work's full text
Backs pricing by expected cost and class-level averages, but says nothing about systematically failing high-cost minority segments.
“Thus, there is an incentive for risk classifications, as used by competitive insurance programs, to become more refined and to more accurately reflect the differentials in expected costs among identifiable”
- Insurance and actuarial pricing — pricing optimized on expected loss works in aggregate while systematically failing high-cost minority segments.
Verification¶
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Registry ID ref:1bc77733b1ef · see in the full table