Answer :
Final answer:
Frequency and severity are modeled separately in GLMs due to potential differences in influencing factors and for simplicity in estimation and evaluation. An example is insurance claim modeling, where different factors influence claim frequency and severity.
Explanation:
Frequency and severity are generally modeled separately in a Generalized Linear Model (GLM) for a couple of reasons. First, frequency and severity could have different influencing factors, and separating them allows for independent analysis. Second, it allows the steps of estimation and evaluation to be simplified, as it is easier to manage a simpler model than a joint model.
For example, in insurance claim modeling, the frequency of claims may be affected by factors such as the number of policies or the type of coverage, while the severity of claims could be influenced by the type of damage or location of the claim. By modeling these separately, we can better understand the individual impact of these factors.
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