When Insurers or Risk Managers Use Frequency and Severity to Project

question 21

Multiple Choice

When insurers or risk managers use frequency and severity to project the future, they use trending techniques that apply to the loss distributions known to them.Identify the most commonly used tool to predict future losses and claims based on the past.

• A)Regression analysis
• B)ANOVA
• C)Factor analysis
• D)Chi square testing
• E)Analysis of covariance

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Definitions:

Self-determination theory

A psychological theory of motivation that emphasizes the importance of autonomy, competence, and relatedness in fostering well-being.

Basic psychological needs

Fundamental requirements for mental well-being, such as the need for autonomy, competence, and relatedness.

Autonomy

The ability or right of individuals to make their own choices and control their own lives.

Integrity

The quality of being honest and having strong moral principles; moral uprightness.