By Walter Wright
Padger Williams, who died earlier this year, is remembered for his warm, folksy manner. Here is what he had to say in the November 1985 Random Sampler.
I was just reading some of the recent pronouncements of my old singing-golfing buddy, Bob Hunter.
Seems that Bob and some of his consumerist friends think that those clever, price-fixing devils in the insurance industry got together and conspired to lose three or four billion dollars in surplus—just so they could get some rate increases.
Now I’m not ready to do battle with Bob about the relative sanity of vendors who sell their products for fifty to sixty percent of costs. But I am bothered by the implication that a five percent increase can return the industry to its normal obscene profit; that’s downright unactuarial, and that’s what bothers me.
Everyone, even an actuary, has the right to espouse any cause or take any position he wishes. But when the matter becomes technical, a special responsibility attaches, and we have to advance our opinions with care and factual support, as professionals.
Before we get too eager to point an accusing finger at some particular individual with whom we disagree, we should look at some of the bandwagons other actuaries have jumped on, with little thought and less substance.
Remember the small-car discounts? If the car was smaller, then the costs had to be less, and not a dissenting voice was raised. Now the statistics bear out clearly that in small cars, not only are the injuries greater but the property damage exceeds that of larger automobiles.
It’s true that competition was the breeding ground for giving auto insurance discounts to the owners of small cars. But actuaries should have been quicker to analyze the relative costs. Instead, we found ourselves stamping “approved” on a faulty theory…
I am suggesting that we should be actuarial in our analysis and proceed with professional caution before making statements about areas in which we are expected to have a special proficiency.
Other bandwagons will be coming along with various causes to be championed, everything from air bags to air pollution. Our insight doesn’t have to be perfect; it’s just that we have to exercise greater care because we are the professionals.
People still speak of actuaries with a certain amount of respect, even awe, because they view them as a breed apart.
As Kermit the Frog said, “It isn’t easy being green.” But we are, and we shouldn’t forget it.