meep (meep) wrote,

Bye bye bye

I noticed I have a hole in my boyband collection... and then I realized I like only 2 *NSYNC songs, so the hole ain't that big.

Help for the lazy: Someone decoded Jason Fox's message in the comics today. Where I originally saw it (free registration required) -- better link from kueh: from the FoxTrot community.

Some interesting (if that's the term for it) stuff is going on in Turkey right now. Recently, a judge was shot in his courtroom by some Islamist, and there's been a resulting reaction against Turkey's current Islamist government. I've been following the action on the Corner at NRO (One recent post here). Anyway, it shall be interesting to see how this shakes out.

Good use of a pseudorandom number generator. Those of my friends still teaching may want to try this technique out.

Insurance premium price-gouging? Ha. I don't think the guy even talks about the level of regulation that insurance companies face. The insurance industry is one of the few industries that I agree needs to be regulated by the government, but not because they might set their prices too high -- it's because they could try to set their premiums too low. The primary purpose of insurance regulation is making sure insurance companies stay solvent so they can pay off legitimate claims; it's too easy to undercut other companies on price if you intend to take the money and run before any sizeable claims are made (cf the Anglo-Bengalee Mutual Assurance Company in Martin Chuzzlewit). The most vulnerable types of insurance to insolvency are ones where claims are infrequent but huge (like various liability policies. And the companies that had property insurance on the World Trade Center.) The companies may be collecting premiums for years before having to make a claim, and you've got to make sure that claims reserves are building up in safe investments, rather than getting doled out to execs and shareholders. Even mutual insurance companies have to be careful (where policyholders = shareholders) -- you can't have one set of policyholders accruing benefits too fast, being subsidized by a different bloc of policyholders. This is why actuaries get paid so much (and yes, actuaries can be sued for malpractice) -- part of our job is to set prices/reserves to assure reasonable solvency.

You've got to make sure that the companies accumulate sufficient reserves in the case of large, sporadic claim events, which is dependent on the frequency and severity distribution of claims as well as the investment performance of reserves. Life insurance (my biz) is a little more predictable than property/casualty/liability insurance (what's being discussed in the article), but we still have to think about catastrophes like a pandemic and the like. And we've got to keep money in rather liquid, safe (and low-yielding) investments to cover some of these possibilities. And you've got to realize that "catastrophe" is dependent on the insurance product.

One thing I've tried to get people to freak out about at work is potential medical breakthroughs that will push up life expectancy of people currently aged 65 from mid-80s to mid-90s. What's crazy is that it wouldn't necessarily take much to improve mortality there. Oh, and why would we freak out? Because our main, billion-dollar biz is in annuities. People living 10 extra years in retirement won't only screw up Social Security, you know. It's also an opportunity to come up with some new annuity products, not just a freak-out possibility. In any case, one of the jobs of actuaries is to think up worst-case scenarios, try to gauge how likely these scenarios are (really tough part), and put a number on how much such a situation would cost the company.

I've been thinking of going into P&C insurance, or maybe reinsurance, if I ever get bored in the annuities biz. But annuities are going to be hot for the next couple decades, I believe, so I'm going to stick with this for now.

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