Actuarial Applications in Catastrophe Reinsurance, [Discussion]

Actuarial literature is filled with technical studies of varying complexity, but few of these emphasize the importance of consistency in the actuary’s work. On the life insurance side, few actuaries would directly recognize that consistency in the results is perhaps the most important reason for using the traditional life insurance actuarial model. All of them should agree that the process of system control afforded by that model the multi-faceted analysis of ‘expense, mortality, lapse, investment and the role of contractual provision in both the estimation of earnings and the setting of dividends-relies heavily on the use of studies of these variables defined consistently with their use in the model itself. Most life actuaries might even agree that such consistency is a prerequisite for “equity.” But I doubt that they would take one additional step with me to hold consistency to be more important than the precise level of any of the individual parameters. Yet I think that this is the case, and that it is exemplified by the case that Mr. Simon has chosen for this paper.