I guess I could make a billion dollars if I invented the predictive model that could predict the catastrophic events.
Per the article, catastrophes were …”39 percent of overall claim costs from 2004 to 2011.” Conversely, many people see predictive modeling, and insurance scoring, as the main reason insurance pricing is going up. In my mind, this does not make sense… IF the predictive model is based upon historical stats and trends,,,, and IF 39 percent of recent claims have come from Catastrophic events… how can a model based upon historical data be used to predict pricing to insure anomalies in history. In other words, if the news is “Worst tsunami in history,” then how is it that insurance companies are looking into history to set pricing?
By the way, I do generally support actuarial research into rate design. That said, I do see a glitch as it relates to property rates. I see the rise in Record Breaking Weather… as such, I foresee a rise in premiums. Sure, that makes sense…. but how can one quantify it? How can one use historical data to predict future premiums if a leading cause of claims is Record Breaking events? It seems to me that we are at the point where each UW is asked…. “Use your imagination to determine the maximum possible loss,,, and rate for that.”
I guess I could make a billion dollars if I invented the predictive model that could predict the catastrophic events.
Per the article, catastrophes were …”39 percent of overall claim costs from 2004 to 2011.” Conversely, many people see predictive modeling, and insurance scoring, as the main reason insurance pricing is going up. In my mind, this does not make sense… IF the predictive model is based upon historical stats and trends,,,, and IF 39 percent of recent claims have come from Catastrophic events… how can a model based upon historical data be used to predict pricing to insure anomalies in history. In other words, if the news is “Worst tsunami in history,” then how is it that insurance companies are looking into history to set pricing?
By the way, I do generally support actuarial research into rate design. That said, I do see a glitch as it relates to property rates. I see the rise in Record Breaking Weather… as such, I foresee a rise in premiums. Sure, that makes sense…. but how can one quantify it? How can one use historical data to predict future premiums if a leading cause of claims is Record Breaking events? It seems to me that we are at the point where each UW is asked…. “Use your imagination to determine the maximum possible loss,,, and rate for that.”