Insurance Rates With Minimum Bias [Discussion]

Mr. Bailey has again contributed significantly to our Proceedings with the ideas presented in this paper. The ratemaking technique suggested is designed to utilize to the fullest the predictability inherent in the data of each subdivision created by a multiple classification system. Mr. Bailey accomplishes this maximum utilization by producing all sets of adjustments, or relativities, simultaneously. These adjustments may be either cents or percents or a mixture of both, whichever is indicated by tests for minimum bias. Such a technique represents a significant improvement over the common practice of determining percentage relativities for the divisions of each classification, the appropriate relativity from each class then being applied one on top of another to arrive at the final adjustment for a subdivision.