The Function of Administrative Statistics in Casualty Insurance

Recent results in casualty insurance have been disappointing. Few companies can boast of an underwriting profit. In the beginning premium rates in various lines were set generally with a sufficient factor of safety to allow for the margin of error due to insufficient statistical bases for rates. These rates resulted frequently in from fair to large profits from underwriting. As experience statistics have accumulated they have been made the basis for future rates. But since from a variety of causes accident frequencies and average claim costs have tended to increase from year to year, since the past experience has included inevitably a large percentage of estimates based often on the hopes rather than the fears of the claim departments, the rates based on past experience have in many cases proven inadequate.