IAI Actuarial Core Principles · Actuarial Statistics · Generalised linear models
A Poisson log-link GLM for claim frequency gives a coefficient of 0.30 for 'urban' relative to the base level 'rural'. Holding other factors fixed, the expected claim frequency for urban policies is how many times that of rural policies (to 2 decimal places)?
Urban policies have about 1.35 times the claim frequency of rural ones. In a log-link model the multiplicative relativity is the exponential of the coefficient, and e to the power 0.30 is approximately 1.35.
- A1.35Correct
- B1.30
- C0.74
- D1.03
- 0.30
Explanation
With a log link, the relativity is exp(0.30) = 1.3499, about 1.35. Option 1.30 wrongly adds the coefficient to 1 as if the link were identity. Option 0.74 is exp(-0.30), the wrong sign.
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