CREDIBILITY - PROBLEM SET 7

16. Since the numbers of exposures differs among exposure periods, we use non-parametricempirical Bayes estimation for the Buhlmann-Straub model. Under the Buhlmann-Straub model,there are 83exposure periods for policy holder (group) 3, for 3 œ "ß #ß ÞÞÞß < . For policyholder 3 andexposure period (year) 4, there are 7 34 exposure units (8 members for group 1 in year 1, etc.), and\ 34 represents the observed average claim per exposure unit (member) (for "cell" 3ß4) (96 forgroup 1 in year 1). In this case,