AN INTRODUCTION TO CREDIBILITY THEORY

Credibility Theory is one of the cornerstones of actuarial science as applied to casualty and property insurance. Although the literature of this theory is extensive, there is no elementary introduction at present available. Nearly all the numerous papers 1 bearing on credibility theory which have appeared in the Proceedings of the Casualty Actuarial Society are difficult to follow without a knowledge of the subject and many of them are very long and involve fairly abstruse mathematics. At the request of the Educational Committee of the Society, the author has prepared this introduction to provide actuaries and others interested in credibility theory with a framework into which they can fit these papers so that they can better appreciate the large body of research which has been carried out in this field. The author has tried to keep mathematics to a minimum and has concentrated on principles rather than details. It must be stressed that this is merely an introduction to the subject and it is only by studying the many original papers that a full comprehension of the subject can be obtained.