Underwriting Betas - The Shadows of Ghosts [Discussion]

For fifteen years, academicians peering into insurance ratemaking have led us on a chase of underwriting betas, in pursuit of economic and normative notions of “equilibrium rates of return” and “fair rates of return.” Underwriting betas, we were told, would elevate actuarial ratemaking to financial pricing—if only we could grasp hold of these will-o’-the-wisp emanations from modern portfolio theory. Now Tom Kozik tells us: “Leave the chase, for these betas are ghosts.”