Credibility and Automobile Rate Making

Recent developments in automobile rate making have again raised the question of credibility, or reliability of experience. Specifically, the question is, how large an exposure is necessary to give a dependable pure premium ? How reliable is experience in the present rating territories? How shall this reliability be measured ? The subject of reliable experience needs no introduction to the members of this Society. Beginning with the first meeting in 1914, various phases of the problem have been covered almost every year since that time. This paper has no claim to originality of subject matter and theory, but merely proposes certain tests in the application of the credibility formula as it has developed.