A wise statistician once said: “All models are wrong, but some are useful.” The key to getting useful (accurate) model results is working with models that fit specific underwriting needs and making sure the models are regularly updated while employing qualitative analysis (in addition to the models’ quantitative analysis). Those are the opinions of experts interviewed for this article.
Executive Summary
The key to getting useful model results is working with models that fit specific underwriting needs and making sure the models are regularly updated while employing qualitative analysis (in addition to the models' quantitative analysis), say experts from KCC, Aon and Everest.Nevertheless, there are common complaints within the insurance industry that model outputs are inaccurate. Modeling experts provide some thoughts about how models are best used—with one CEO suggesting that if model results are inaccurate, it’s time to make a change. “It’s easier to complain than change,” said Karen Clark, chief executive officer of Karen Clark & Co. (KCC).
