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  #1  
Old 12-14-2009, 04:34 PM
mementO mementO is offline
 
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Default Task 6

plz anyone can elaborate following points regarding task 6;

1) Why experienced base PMPM is higher than expected and wht it means to petwell?
2) How can we calculate trend as the data given is just for 1 year.

urgent response is required.

Thanks.
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Old 12-14-2009, 04:37 PM
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what method can be used for smoothing the age factor in task 6??
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Old 12-14-2009, 04:42 PM
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higher experience PMPM costs probably mean less profitability for Petwell... Experience came in higher than expected could mean there were unusual circumstance in costs this past year - higher than expected trend - higher utilization, etc.

As for dealing with age factors in task 6, you should probably talk about how credible the data is this year and, if you don't feel it's credible enough, is there a way of applying a partial credibility factor to reflect both what was used for last year's pricing along with what we actually experienced this past year.
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Old 12-14-2009, 07:00 PM
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Do we need to calculate this credibility factor to be applied? If yes, how to?

Thanks.
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Old 12-14-2009, 07:05 PM
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Take any approach you think is reasonable and justify it. You only have so much data, so you need to suggest some kind of trend, regardless of how sophisticated your approach is. Don't get bogged down with credibility theory necessarily, just make a suggestion that you can articulate and do so in your write up.
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Old 12-15-2009, 01:43 PM
mementO mementO is offline
 
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Thank you very much!

Quote:
Originally Posted by Runner-JRBS View Post
higher experience PMPM costs probably mean less profitability for Petwell... Experience came in higher than expected could mean there were unusual circumstance in costs this past year - higher than expected trend - higher utilization, etc.

As for dealing with age factors in task 6, you should probably talk about how credible the data is this year and, if you don't feel it's credible enough, is there a way of applying a partial credibility factor to reflect both what was used for last year's pricing along with what we actually experienced this past year.
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Old 12-15-2009, 08:04 PM
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Quote:
Originally Posted by tomorrow never knows View Post
Take any approach you think is reasonable and justify it. You only have so much data, so you need to suggest some kind of trend, regardless of how sophisticated your approach is. Don't get bogged down with credibility theory necessarily, just make a suggestion that you can articulate and do so in your write up.
Thanks tomorrow.

When i looked in the previous assignments and examples, either the credibility factor is given or the formula looks too simple (EOM 7) and I dont know where the formula come from. :S

Thanks anyway. Will do my best!
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