PC360 gives us this. It’s so sticky with jargon to be barely readable.
Let me summarize the (2,300 word) article:
Claims data can teach underwriters about where claims come from and expose new drivers of claims cost. Analyzing claims databases is a good way of testing new hypotheses but, for organizational reasons, most companies aren’t great at this.
Yawn. Could have been written at any point in the last 300 years.
Next is a big discussion about how automated computer programs can correlate variables without the burden of actually ‘understanding’ the data.
[shields up! BS ALERT!]
My old man once spent some time learning about a stock picking technique which, to be perfectly honest, looked like garbage to me. But sometimes it worked!
I’d argue it’s complete luck. As they say, “even a broken watch is right twice a day”.
Narrative validation a powerful test for statistical conclusions: correlation is useless without a deep understanding for the causal mechanism. Unexplained, ‘dumb’ empirical relationships (describes all too much of medical research, imo) are too unreliable for me to back with cash.
If you don’t know how it works, how on earth do you know when it breaks?