Archive for February 15th, 2010

How To Choose A Trend Factor

Monday, February 15th, 2010

Coin Flip

“The selection of a trend factor is often the most important component of rate indications and rate filings (and certainly always an important component). Indeed, it is often the first and primary number to be contested by, e.g., consumer advocates: presumably because of both its leverage impact, and the fact that the data itself frequently leaves room for multiple interpretations with divergent conclusions. I wish here to delineate the various considerations which go into choosing a trend number. As shall be seen, and as one might expect, the selection process is a synthesis of theoretical and practical considerations.”

Editor’s Note: This is an excerpt from “How to Choose a Trend Factor” by Israel Krakowski. For a complete copy of his White Paper write to RiskManager@sbcglobal.net