loss potential. That is the {page 2} equity contribution of experience=
rating."
I agree with your interpretation, but I think that it is explicit in th=
e
article.
In Venter's paper, he states two primary purposes of experience rating
plan: Satefy incentive and predictive accuracy. He later on states tha=
t
satefy incentive value can not be used to defined equity. Does he impl=
y
that predictive accuracy can be used to defined equity? I'd like to say=
yes, because although he didn't stated that explicitly, some arguments=
in his paper seem to support that view. Comments?
---Yin
=