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Rating Factor Selection and
Generalised Linear Modelling
Plurality is not to be posited without necessity.
—Ockham’s razor
An explanation should be as simple as possible, but not simpler.
—Albert Einstein (abridged)
In situations where a large amount of data is available, such as in personal lines insurance
(and, in some cases, in commercial lines insurance or reinsurance), it is possible to rate
policyholders according to their individual characteristics rather than with a one-size-ts-
all approach.
We are all familiar with this mechanism: the premium that you pay for your car insur-
ance will depend on your age, location, profession and so on. ...