Collective and Individual Risk Models
Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Severity, Frequency, and Aggregate Models. 13 min read, ~1,941 words.
Collective:, with and. Compound Poisson shortcut:, because. Individual: over a fixed policyholders, with. Individual variance (fixed benefit):, using rather than. Variance decomposition: process variance (severity variability) plus mixing variance (frequency variability). Sum of independent compound Poissons is itself compound Poisson. With identical policyholders, the individual model equals a collective model...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 2i
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