Judgmental Topics In P&C Companies: Findings from a Prediction Survey

By Joseph Lo, Nita Patel, Alan Calder

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Abstract

Interaction with actuarial models by both actuaries and non-actuaries is inevitable and requires careful study so that these models may better serve their purpose. Yet empirical and scientific investigations into how experts make their judgments are rarely reported in actuarial science literature. This paper discusses findings from a prediction survey, whose 120 respondents in a global Property and Casualty (“P&C”) company were nearly evenly split between underwriters and analysts (e.g., actuaries, risk managers, and finance). The hypothesis that underwriters and analysts tend to give different quantitative judgments under similar levels of information and incentivization was tested. Of the four one-step prediction problems, none gave evidence to support this hypothesis.

Keywords: Expert judgment, cognitive heuristics, cognitive biases, availability heuristic, outliers

Citation

Lo, Joseph, Nita Patel, and Alan Calder, "Judgmental Topics In P&C Companies: Findings from a Prediction Survey," Variance 9:1, 2015, pp. 101-113.

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Mission Statement

Variance (ISSN 1940-6452) is a peer-reviewed journal published by the Casualty Actuarial Society to disseminate work of interest to casualty actuaries worldwide. The focus of Variance is original practical and theoretical research in casualty actuarial science. Significant survey or similar articles are also considered for publication. Membership in the Casualty Actuarial Society is not a prerequisite for submitting papers to the journal and submissions by non-CAS members is encouraged.