[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Mix of Business**
## Definition
==Mix of Business== refers to the composition of an insurance portfolio across various dimensions such as coverage types, territories, industry classes, policy limits, or customer segments.
## Examples of Mix Changes
- Geographic distribution shifts
- Industry mix changes
- Limit profile changes
- Deductible distribution
- Coverage type mix
- Customer segment shifts
## Impact on Reserving
```
When mix changes:
- Average loss costs shift
- Development patterns affected
- Historical experience less relevant
- May need:
* Segmented analysis
* Adjusted development factors
* Separate projections by segment
```
## Adjustments
- Segment data by mix component
- Develop each segment separately
- Weight by current mix
- Apply to current exposures
## Example
```
Auto Portfolio Mix Shift:
Historical:
- 60% liability, 40% physical damage
- Average severity: $3,500
Current:
- 70% liability, 30% physical damage
- Average severity increasing (more liability)
Impact: Development patterns may differ
Need to reflect current mix in projections
```
## Related Concepts
- [[Underwriting Changes#Definition]]
- [[Marketing Changes#Definition]]
## References
- Friedland, Chapter 1