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Its all about making links.
Making links is easy if you “know how it works”.
Of course, it’s harder to quantify the proposed effect on exposure uncertainty. Probabilistic methods may not be 100% accurate, but they do ensure a systematic and responsive analysis of the type expected under solvency 2 pillar 2. New knowledge can always make a contribution to that assessment.
There will always be innovation that wasn’t spotted. Many insurers were surprised and challenged by the growth in asbestos related claims, by deafness claims, by VWF claims but these were all predictable had probabilistic methods been employed. For example, our probabilistic approach would have identified VWF as a major source of IBNR and future claims 14 years before insurers in the UK began to settle claims. The narrative approach favoured at the time was conditioned by a very paternalistic view of the rights and powers of individuals.
There will always be events that couldn’t be spotted. Unfortunately, this latter has become a culturally accepted image of emerging risks. Rather than adopt a rational approach which includes innovative thinking, it is considered that “stuff happens” so put something aside for a rainy day.