Understand and interpret the characteristics of severity distributions.
Free SOA Exam ASTAM (Advanced Short-Term Actuarial Mathematics) lesson in Severity Models. 9 min read, ~1,325 words.
Severity is a non-negative, right-skewed continuous random variable; characterize it by,, and the hazard. Light-tailed families (gamma, Weibull ) have all moments; heavy-tailed families (Pareto, lognormal, Weibull ) have explosive or infinite tails. A tail is heavy when the MGF fails to exist or the hazard tends to zero; a...
Read the full lesson, free →
Worked examples and practice. Free with a free account, no card.
What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 1c
Browse all free Exam ASTAM lessons or jump into free Exam ASTAM practice questions.