Collective and Individual Risk Models
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Severity, Frequency, and Aggregate Models. 7 min read, ~1,113 words.
Collective:.. Compound Poisson shortcut: (because ). Individual:. Fixed policyholders. Variance decomposition: process variance (severity variability) + mixing variance (frequency variability). Sum of independent compound Poissons is compound Poisson.
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 2i
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