October 2014
Intermediate to advanced
584 pages
22h 2m
English
Content preview from Pricing in General Insurance
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384 Pricing in General Insurance
In our farm example, we have used a ‘frost index’ loosely based on cumulative HDD over the
winter period but with an allowance for the compounding effect of a sequence of cold days, by
giving a larger weight to the HDD of day t if the HDD value for t − 1 was also positive.
23.2.6.1.5 Index Validation
This quest will yield an index that is the best we have been able to nd. The interesting
thing is that nding a good index may be quite difcult, and proving that it is the best
possible index may well be impossible, but once an index is proposed, it is quite straight-
forward to determine whether it is a good pro
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