I really need answers to these questions!
Why is premium trend using premium per Qtr and severity trend used rolling year ending qtr? see page 83 for premium trend and page 111 for severity trend.
Also why not fit a historical trend factor to the first step in 2 step premium trending, instead of getting all average premium to the same level? We don't do this for losses - even if we have two-step trending for severity, we pick a single trend factor for the historical and not just take the ratio of most recent to given AY...?
These two examples seem like inconsistencies. In the end we use the ratio of losses to premium for the indication, so why are we making different adjustments to each?? I am not saying you can't - I just want to know why so I can justify it.
Why is premium trend using premium per Qtr and severity trend used rolling year ending qtr? see page 83 for premium trend and page 111 for severity trend.
Also why not fit a historical trend factor to the first step in 2 step premium trending, instead of getting all average premium to the same level? We don't do this for losses - even if we have two-step trending for severity, we pick a single trend factor for the historical and not just take the ratio of most recent to given AY...?
These two examples seem like inconsistencies. In the end we use the ratio of losses to premium for the indication, so why are we making different adjustments to each?? I am not saying you can't - I just want to know why so I can justify it.
Premium / Severity Trend
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