When rating, insurers go 'back to the future.' (Property & Casualty Premium Rankings)

National Underwriter Property & Casualty-Risk & Benefits Management, May, 1989 by Bell, Linda L.

When Rating, Insurers Go `Back To The Future' The lesson that movie and television actor Michael J. Fox learned in the hit movie "Back to the Future" was that in order to control your destiny, you have to explore your past. When it comes to setting insurance rates, carriers--like Michael J.

Fox's character--are always going "back to the future" in order to obtain better control of their destiny. Insurers, by virtue of their actuarial foundations, operate in a time-warp of past and future. They systematically cull information about past claims experience and identify patterns of probability that they can superimpose on the future, and thus attain a measure of control over what is to come. The effect of the actuarial "timewarp" is powerful. Sometimes we...

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