Is "Probable Maximum Loss" (PML) a Useful Concept? [Discussion]

The author’s treatment of the Probable Maximum Loss concept is both interesting and thought-provoking from an underwriter’s viewpoint. It is a subject of great importance because a clear understanding of PML and its application can spell the difference between profit or loss, success or disaster, in the property insurance line. Mr. McGuinness aptly establishes this fact in his reference to the large losses at the oil refinery in Louisiana and the exhibition building in Chicago, Illinois. No one can debate the serious outcome of the reported deficiencies in the PML factors in such instances and I suggest these two examples could be multiplied many times in any year although, fortunately, to a considerably less extent. Nevertheless, while I agree with the author’s approach to achieve the purpose of the paper, i.e., showing how PML can be made a useful and valuable tool, I find myself dissenting with or questioning the validity of a number of statements.