Credibility Theory is a branch of actuarial science that attempts to determine the extent to which data can be trusted to inform estimates of the future. While the concept of credibility is often associated with casualty actuaries, it is relevant to virtually all fields of actuarial endeavor. The academic literature on this subject is extensive, and includes several different approaches with a range of mathematical sophistication.

At RCL, we have been particularly mindful of credibility during the course of our VA industry studies, starting with our mortality study in 2007, our surrender study in 2008, and continuing with our benefit utilization study (in progress) in 2009. We believe that credibility theory has an important part to play in studies such as these, and in subsequent articles we will describe the considerations and approaches we used in applying credibility theory to our work.