We are pleased to share with you our first FAQctuary of the year on "How to assess broker's performances in an elementary way?"; written by Michel Denuit and Julien Trufin.
In order to rate intermediaries, Detralytics has developed a credibility model separating pure randomness from structural differences in loss ratios. The output results in a reliability index quantifying the confidence one can place on underwriting experience for a particular intermediary (based on the credibility coefficient) and a performance index assessing the quality of the intermediary’s production (based on the credibility predictor of individual random effects). In this note, an elementary approach is proposed, treating the broker’s efficiency level as a fixed effect (rather than a random effect in credibility). This provides the actuary with a preliminary ranking pointing to the ineffective intermediaries.
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