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In most cases, loss in non-life insurance is calculated based on claim severity and frequency and an assumption of independence. However, in some cases, claim severity depends upon the claim frequency. This paper presents the derivation of aggregate loss calculation by modeling claim severity and frequency as the assumption of independence is eliminated. The authors modeled average claim severity using claim frequency as the covariate to induce the dependence among them. For that purpose, we use the generalized linear model. After doing parameters estimation, we will obtain the calculated loss.
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