Pricing in General Insurance

351Exposure Rating for Property

raggedness. In any case, it can be used exactly in the same way as a full-blown

severity model (Figure 21.8).

Producing an aggregate loss model across all bands:

5. Because we now have a frequency (A) and a severity (B) model, we can combine

them to produce an aggregate loss model in the usual way, as shown for example

in Chapter 6 (‘The scientic basis for pricing’).

6. Output: the aggregate loss distribution and the ceded/retained loss distribution as

needed, in the same format as the output of an experience rating exercise.

Note that if enough client losses are available, it may make sense to use the client’ ...