Exam 8: Validate the rating algorithm after fitting the model
A fitted model and an implemented rating plan can differ because of rounding, normalisation, constraints or interactions. Validation should check the entire algorithm and its portfolio impact, not just coefficient significance.
Worked example or practice scenario
A fitted relativity is normalised against one reference class, while a production table uses another. Copying coefficients directly can shift the overall rate level. Test representative risks and reconcile aggregate indicated versus implemented premium on a common exposure set.
Try this next
Prepare an original test set covering boundaries, missing values, rare classes and interactions. Record the off-balance and the selected normalisation. The current Exam 8 outline emphasises classification and individual-risk applications; use the sitting’s actual outline for scope.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.