Sholom's article including the discussions are very interesting in that,
his criticism later on are refuted by others. Thus, you need to know
according to whom the criticism are coming from. As far as what is the
real problems with the variance/std method, I think you need to read
through the discussions and keep the criticism that have not been
refuted.
For example, Philbrick has refuted Sholom's criticism that the
variance/std method look at insured's risk not insurer's risk. Bault
later on partially disagree with Philbrick's comments by stating that
individual's variance's contribution to marginal aggregate variance is
order dependent. And he then later on derive a new method to apply
Philbrick's idea. Therefore, the first criticisms is not really valid
in practice.
---Yin
----------
From: Amy.Hoffman@reliancenational.com
To: studygroup9@lists.casact.org
Subject: Feldblum
Date: Tuesday, October 06, 1998 12:03PM
I have a question about Feldblum's 3 criticisms of the standard
deviation/variance methods of determining risk loads.
Criticism #2 is that they determine "only relative risk, not absolute
risk".
Criticism #3 is that "these methods determine relative standard
deviation
or relative variance, not relative risk."
Don't these statements contradict each other? Am I missing something?
Any
clarification would be appreciated.
Thanks.