The regression tree shown below was produced from a dataset of auto claim payments. Age Category (agecat: 1, 2, 3, 4, 5, 6) and Vehicle Age (veh_age: 1, 2,3,4) are both predictor variables, and log of claim amount (LCA) is the dependent variable.
Consider three autos I, II, III:
- An Auto in Age Category 1 and Vehicle Age 4
- An Auto in Age Category 5 and Vehicle Age 5
- An Auto in Age Category 5 and Vehicle Age 3
Rank the estimated LCA of Autos I, II, and
- LCA(I) < LCA(II) < LCA(III)
- LCA(I) < LCA(III) < LCA(II)
- LCA(II) < LCA(I) < LCA(III)
- LCA(II) < LCA(III) < LCA(I)
- LCA(III) < LCA(II) < LCA(I)
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
