Hi everyone, I hope this is the right forum to ask this sort of question (as against SA3). So I am new to the R statistical package and I am currently doing a tariff analysis on vehicle insurance. I have started off with three covariates all of which are categorical. Covariates 1 and 2 each have two categories while covariate 3 has seven categories. My specified linear predictor: No. of claims ~ Covariate 1 + Covariate 2 + Covariate 3 + Offset My confusion is this: the results produce estimates for the three covariates. How do I then estimate the relativities particularly for the covariate with seven categories? For the covariates with only two categories, I have chosen one category as the baseline group. Can I then say the estimated parameter relates to the other category? Thanks in anticipation of a clear answer
Let's say: Covariate 1 is employed/unemployed. Covariate 2 is "never had a claim" / "has claimed before" Covariate 3 is "type of car". Now choose a baseline risk, say, "employed" and "never had a claim" and "car type 1". (See how I've chosen a baseline category for covariate 3 as well, otherwise, your relativities have nothing to "relate" to. This is the source of your confusion.)
