A Method to Include Multiple Years of Data in a Company's Rate Indication

It is the contention of this paper that the renewal retention ratio can be used in an ad hoc method to adjust indications to reflect the degree of stability. If an insurer has a stable book of business, as reflected by a high constant renewal retention ratio, the years used in the indication should be given similar weight. Unstable or low renewal retention ratios will cause older years to have less weight. In addition, as more years are added to an indication, the older years' data should have a decreasing influence on credibility. The renewal retention ratio can also measure this effect. Premium Analysis, Credibility