The Credibility of the Pure Premium [Discussion]

Assuming that necessary data could be made available, the only argument against recognition of claim cost variation in credibility calculations seems to be one advanced by Mr. Perryman himself. He noted that the resulting 'great increases in credibility requirements could not very well be made in practice under present day conditions for they would greatly limit the employment of local data.' Mr. Perryman’s 'present day conditions' of 1932 are not, however, the 'present day conditions' of 1969. Messrs, Mayerson, Jones, and Bowers have refocused attention upon the question. and perhaps the argument will bear re-examination. The data problem should not prove insoluble if it once is decided that the hidden cost of deficient credibility standards exceeds the out-of-pocket incident to data collection and processing.