Credibility of 10/20 Experience as Compared With 5/10 Experience

Because of the admission of larger amounts on individual claims into the losses, experience subject to limits of $10,000 per claim and $20,000 per accident will be subject to more fluctuations arising from the relatively infrequent large claims than experience subject to $5,000/10,000 limits. On the basis of a study of New York State private passenger car experience it is estimated that somewhat over 400/o, possibly 5076, more claims are needed for experience under the higher limits to have the same actuarial credibility as it would have under the lower limits.