exposure rating vs experience rating and something about exposure curve

[hanshua]

What are the main differences between exposure rating and experience rating?


What an exposure curve is. What’s on the x-axis? What’s on the y-axis? How is this different from a severity curve for a given building?

 

[Sherwin]

What are the main differences between exposure rating and experience rating?


What an exposure curve is. What’s on the x-axis? What’s on the y-axis? How is this different from a severity curve for a given building?

Strictly speaking, Exposure rating is not only using the exposure curves. Any rating method using the industry data rather than the cedant's individual company data shall be called Exposure rating.

As to the exposure curve, the x-axis is the % of Sum Insured(or PML) and the y-axis is the % of the pure premium.

Suppose the F(x) is the cumulative probability function curve of the severity, then the exposure curve G(y) corresponding with F(x) is

G(y)= integral [1-F(x)]dx on the interval (0,y)

 

[hanshua]

Strictly speaking, Exposure rating is not only using the exposure curves. Any rating method using the industry data rather than the cedant's individual company data shall be called Exposure rating.

As to the exposure curve, the x-axis is the % of Sum Insured(or PML) and the y-axis is the % of the pure premium.

Suppose the F(x) is the cumulative probability function curve of the severity, then the exposure curve G(y) corresponding with F(x) is

G(y)= integral [1-F(x)]dx on the interval (0,y)

What the parameter “c” represents in the Swiss Re curves, and what it means to have a large value of c. How can you choose the right value of c for your property portfolio?

What is the standard input table for an exposure rating exercise in reinsurance?

What are the main uncertainties in an exposure rating exercise?