Hi there Could you please help? On page 8 Chapter 7, it mentions that "information technology must...group by risk characteristics - the lower the level of detail, the more specific the remedies available". I'm not too sure with what is meant by "the lower the level of detail, the more specific the remedies available". Could you please give an example illustrating what the core reading is getting at here? Are they saying that if data is split only by age and gender, then a very specific remedy for further stratification is to add e.g. occupation across the two existing factors only (as opposed to more than two factors). Thanks ever so much. Regards
Not sure what notes you are referring to! But by the look of your information, I can give you an example. Scenario: You have come across a decline in profit in your IP book over the last three year. You wonder what caused it. If you have only got data regarding age, sex and benefits, then you could discovered that you might have paid out a lot of benefits to 50yo male. Then you might only be able to suggest that the company should sell less policy to people around 50yo male. However, if your data capture more, like distribution channel, commission structure, occupation etc. You might be able to see that actually it was caused by a few occupations of that group of 50yo male due through several brokers. Then the remedy for the situation to improve profit would be something like stricter underwriting for policies from those brokers with that profile or have some discussion with the brokers rather than just stop selling to the whole group of 50yo male! As a result of a lower level of data captured, the more specific remedies are available.
