Reinventing Risk Classification--A Set Theory Approach

Risk Classification represents one of the most important and controversial topics of actuarial science. It is covered broadly throughout the Casualty Actuarial Society's exam syllabus. The importance and persistence of this topic is also reflected in the long array of papers that permeate the casualty actuarial literature. Most of the recent work on Risk Classification has focused on automobile insurance coverage, which is principally responsible for bringing the issue into the public debate. However, Risk Classification impacts on all types of insurance coverage and has ramifications beyond the world of insurance.