Pricing in General Insurance

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14

Frequency Modelling: Selecting and

Calibrating a Frequency Model

The objective of frequency modelling is the production of a model that gives you the prob-

ability of a given number of losses occurring during a given period, such as the policy

period or a calendar year. As is the case with all models we use for pricing, the frequency

model may be based to a varying extent on past losses, but it is a prospective model, that

is, it tells you what the number of losses will be in the future. As such, loss experience will

have to be adapted to current circumstances before it can be used (Figure 14.1).

Figure 14.2 gives an example of how a frequency ...