Pricing in General Insurance

341Exposure Rating for Property

By varying the variables b and g, we can simulate curves with different values of c, by

using the formula:

b = e

α+βc(1+c)

, g = e

(γ+δc)c

(21.18)

with α = 3.1, β = −0.15, γ = 0.78 and δ = 0.12 for the Swiss Re curves.

21.6 Build Your Own Exposure Curve

In some cases, you may feel that you have sufcient data to derive your own exposure

curve for a portfolio of properties. How do you go about producing an exposure curve?

The ingredients you need are

• A large number of claims for a portfolio of reasonably similar properties (such as

residential, commercial ofces, industrial plants)

• The MPL for the property involv ...