Relationship to Other Mechanisms
نویسنده
چکیده
Risk classification involves concepts similar to those in ratemaking (Chapter 3) and individual risk rating (Chapter 4). Actuaries use risk classification primarily in ratemaking when there is not sufficient information to estimate a price for a given individual. In order to derive a price, individuals who are expected to have the same costs are grouped together. The actuary then calculates a price for the group and assumes that the price is applicable to all members of the group. This, in simple terms, is the substance of risk classification.
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