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Like many actuaries, I’ve spent a large part of my career designing and building—or using the results of—complicated models. Current developments in the regulatory and rating agency realms, as well as advances in technology, ensure that models will continue to play an important role in the P&C insurance industry. This could and should be very positive for the industry, but if we are not careful, it could perpetuate counterproductive behaviors. It is entirely possible that, as the use of models increases, so too will uncritical acceptance of the results they produce. This would be unfortunate, as models are most useful when users understand their proper role and limitations, maintain an appropriate level of skepticism toward them, and view their results as only one of many inputs to final decisions.


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