So, apologies for naive questions, but then again that’s what this forum is for(and AO is a thing of the past).
Put yourself into the position of a ratemaking actuary. A revision for a line you’ve had in force for 5+ years is approaching, what can you do? I feel intimidated sometimes when making proposals, and am okay with getting feedback from internet strangers(though I’ve met one of you in person!)
• Base Rate only changes. This one is pretty straightforward. Change base rates with the goal of increasing or lowering prices equally for the entire line.
• One way analysis loss ratio supported changes. with credibility and a complement of no change, use relative loss ratio performance to increase or decrease relativities. This can be done to one segment or multiple, and you may, or may not adjust the premium for subsequent one way analysis. So if you make an adjustment to relativities in segment1, you may or may not use the proposed new premiums to support a one way analysis for segment 2. A one way analysis can include a base rate offset to rebalance or accomplish overall rate increase or decrease.
• limits/deductible analysis. This can be done through a loss ratio analysis, or using limited expected value/expected excess loss styles of analysis, and can follow with base rate changes to rebalance or accomplish overall rate increase or decrease.
• Modeling: This is a more complex process where multiple segments are revised through some modeling process(a GLM is not uncommon) to adjust rate in numerous segments while taking account the relationships between variables as defined by model assumptions.
• The CA DOI’s Sequential Analysis. I’ve not had to use this in practice so it’s not familiar to me.
And I’m concerned that’s about it. I realize there should be more in my toolkit, but I’m not sure what else there should be, and I like to be prepared for the situations where modeling isn’t something I have resources for, but want to be open to other changes in existing segments. Say you have a segment for which you have pure premiums for, would you implement just those pure premiums relativities? For example I wasn’t sure in a previous life if suggesting factors for vehicle age was actuarially sound. I want to not be limited in my thinking or awareness for what types of changes are typical or under the common scope of a rate revision(assuming regulatory approval and IT smooth implementation)
What else am I missing?