97: Predictive Modeling: Too Much of a Good Thing?
A debate. Modern insurance is really just a formalized community risk sharing with an insurance company administering the process. This process depends on a collective view of risk. Hundreds of policyholders sign contracts that state that their collective cohort will make any policyholder, who has an unfortunate event, whole. It is this use of the collective that makes insurance work. And it is a miraculous financial instrument. But, modern reality is significantly different than the insurance nirvana outlined above. Today there is a strongly increased focus on individual equity that erodes the principles of collective risk sharing. Or, does the application of predictive modeling increase the power of the collective? Our two speakers will wrestle with these issues in a debate format.
