The Census Method

One of the tenets of insurance rate making is that statistics should be developed on the broadest possible base. With simple classification systems and rating plans which were common to all companies, this ensured overall adequacy of the premiums charged and permitted companies to vie one with another to persuade agents to give them a larger share of the better business. This form of competition is rapidly being replaced by competition at the customer level. Rating plans are devised by individual companies to attract good business by offering lower rates where they can be justified. The development of these new rating plans requires many skills, not the least being the determination of the correct rate levels for new benefits and classification groups. The actuary has had to develop many new techniques and abandon some old tenets to solve these problems. The "broadest possible base" serves no purpose here except as a bench mark. The development of good rate indications from comparatively small bodies of data is a challenging problem. One facet of it is the rapid and convenient analysis of data with numerous classification breakdowns. This brief paper is concerned with this analysis and associated problems.