S&P: Insurance Executives Say Powerful Models Have To Be Used With Common Sense

Publication Date: June 22, 2007
Advisen -- Catastrophe
Source: Market News Publishing US - MCGRAW HILL COMPANIES INC

"The increased prominence of predictive modeling tools over the past dozen years has generated reams of data that can help property/casualty insurers set prices, sharpen their underwriting criteria, and get a handle on market dynamics in everything from typhoons to auto coverage. But by itself, a computer model won't turn a weak insurer into a strong one, agreed three insurance executives at Standard & Poor's Ratings Services' Insurance 2007 conference, held June 3-5 in New York City. Without pricing discipline, a sound strategy, and an understanding of the market, predictive modeling is just another tool that can be used or misused. 'Discipline may be more important than all the modeling in the world,' said panelist Stephen L. Way, former CEO of HCC Insurance Holdings Inc. and founding partner of SLW International LLC. 'The best modeling is your own experience.'..."