Fitting to Loss Distributions with Emphasis on Rating VariablesEmphasis on Rating Variables

This paper focuses on issues and methodologies for fitting alternative statistical models--probability distributions--to samples of insurance loss data. The interaction of parametric loss distributions, deductibles, policy limits and rating variables in the context of fitting distributions to losses are discussed. Fitted loss distributions serve an important function for the purpose of pricing insurance products. The procedures illustrated in this paper are based on a sample of insurance losses, and with lognormal as the underlying loss distribution.