Hierarchical Bayesian Regression with PyMC: When Groups Share Strength

A multi-line insurer writes auto, home, commercial property, and a dozen other policy types under one roof. Some lines see thousands of claims a year; others might see 50. Every actuary faces the same dilemma: train a separate pricing model for each line and the small ones are pure noise, or pool everything together and pretend a warehouse fire looks like a fender bender. Either way, you lose. Hierarchical Bayesian regression offers a third way. Each group gets its own parameters, but those para