Risk Distribution Inference

wilsonchan18wilsonchan18
in CIA.FCT

Hi,

It says Stochastic FCT Model is more appropriate when risk distribution are easily inferred.
May I know what does "easily inferred" mean?

Thanks and Warm Regards,
Wilson

Comments

  • Staff-T1Staff-T1

    It means when the risk distribution can easily be fit to some prior assumed distribution (i.e. gamma, tweedie, etc) As an example of a hard to fit distribution, you would not be able to do stochastic modelling on an XOL line of business which has no losses in the past 20 years

  • wilsonchan18wilsonchan18

    I see, thanks :)

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