Actuarial Applications in Catastrophe Reinsurance, [Discussion]

First, let me commend Mr. Simon on a thought provoking paper in an area which has received very little attention in our Proceedings. When first asked to review this paper, 1 was something less than enthusiastic. I had initially expected the paper to present a methodology for pricing catastrophe reinsurance treaties and, in this context, it did not seem particularly remarkable that Mr. Simon was able to calculate the probability of a claim in a particular year given the premium, a fixed severity and an assumption regarding the frequency distribution for a particular reinsurance treaty. It was only after rereading the paper that I was able to appreciate the benefits of a technique for testing the logical consistency of the assumptions underlying the pricing of catastrophe treaties.