Some Remarks on Credibility Model

Credibility theory is the most important method in experience rating. In this paper, the developing history of credibility theory is briefly described first and the difference between limited fluctuation credibility and greatest accuracy credibility is also stressed at the same time. Then, the theoretical bases of greatest accuracy credibility is analyzed with emphasis, and the intuitive idea leading to （adjusted） Buhlmann credibility model of single contract is explained in detail. After the procedure used to establish the basic assumptions for this model is shown, the concise formulas of credibility estimator for risk premium and prediction are given. Nowadays, the most fundamental Buhlmann-Straub credibility model can be regarded as combined by some independent （adjusted） Buhlmann credibility models of single contract which have same structure functions. This particular combining pattern makes it possible to estimate the unknown structure parameters of such model. Finally, the structural parameter estimation is introduced and the main advances in researches for credibility model are mentioned. The description of this paper is illustrative and no technical proofs are involved. The aim is to provide an intuitive and apparent approach to understand the credibility model.