CAS Exam 8 Practice Questions - CAS Exam 8 Advanced Ratemaking Exam

In classification ratemaking, what is the primary advantage of multivariate methods over one-way (univariate) analyses?

Multivariate methods always produce smaller standard errors than one-way analyses Multivariate methods correctly account for correlations among rating variables and avoid double-counting Multivariate methods do not require credibility weighting Multivariate methods eliminate the need for off-balance corrections

Correct Answer:

Multivariate methods correctly account for correlations among rating variables and avoid double-counting

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