On Some Essential Properties of a Tariff Class

The celebration of the Casualty Actuarial Society's Golden Jubilee at first seemed an excellent occasion for discussing certain aspects of credibility theory. There is a pertinent reason for that. Credibility theory is a branch of actuarial science created and developed by our American colleagues with the object of justifying the techniques of rating non-life risks. We have, however, abandoned our original project, because the problems of experience rating and credibility theory will be discussed at the next ASTIN Colloquium which will be held at Lucerne in 1965. But the principal reason is more fundamental. In effect the primary problem in the insurance industry is "to be able to meet the expenses resulting from the arrival of claims"; the secondary problem, (because it is in fact complementary) is "the practical realization of the assembly of resources to meet the obligations of the assurer." This second problem, which includes both the problem of rating and the problem of reassurance is from a logical point of view dependent on the first. The first defines the basic fact "what must one expect?" - the second poses the question "how can one prepare for it?"