Here’s what we know about what lies ahead: nothing. Nothing at all. Events are largely unpredictable far into
the future; people much more so at any
remove. Earthquakes happen without
much warning; life is a minestrone.
To quote George Carlin: “We’re
all here on a big rock, zippin’ around a
bad star for no good reason. We don’t
know where we came from, we don’t
know where we’re going, we don’t
know how long it’s gonna last, and we
have to keep going to the bathroom.
And on top of that, the whole thing is
Despite which, forecasting is a basic
requirement of any business — and in
four industries that come immediately
to mind, it’s the entire business.
Weather forecasting is the weakest
one. The bouncy weather girl hasn’t
been selected for her brains or
inside knowledge, because, generally
speaking, she has neither.
Polling is another, although its
reputation lies in ruin following
a recent stunning series of wrong
forecasts. Brexit. The British economy
post-Brexit. Trump. Events have
proven beyond the forecasting abilities
of pollsters and economists, for that
matter. The dismal science indeed.
Bookmaking fares better — not
the art of printing and binding, but
the science of knowing which horse
or team will win the race or the game
(Trump foxed even those guys). The
“bookies” (or the OTB or what have
you) make a solid living forecasting the
outcome of complex events.
So do insurers. What is insurance if
not the ability to accurately forecast life
spans and accident probabilities?
Which begs the question: What do
the pollsters do wrong that insurance
does right? Easy enough to discern. It’s
the clause in every insurance contract
that says that if you lied on your
application in any meaningful way, the
policy is invalid. Simple.
Pollsters must rely on the answers
they are given. Many of them phrase
their questions to derive desired
answers. I know this to be true,
because I been politically polled. What
was wanted was not the truth, but
con;rmation of the pollsters’ biases.
Insurers want the truth, the whole
truth and, quite literally, nothing but
the truth. Not the post-truth or the
alternative truth. A smoker who claims
to abstain is warping beyond repair the
forecasts on which premiums are based.
The citizen who says she intends to vote
Clinton, because she is embarrassed
to admit to liking Trump, can lie with
impunity. Many of them did, apparently.
Horse racing, football and all sports
on which wagers are laid also rely on
the integrity of the players, the of;cials
and the supervising bodies. That’s why a
drugged athlete offends our sense of fair
play. Without that, all bets are off.
My truth may differ from yours, but
the smart forecasting industries dial
that out of the equation. That’s why
insurance companies have billions and
why there are at least two legalized
betting shops on every high street in
Martin Luther King put it best:
Peace if possible, truth at all costs. &
ROGER CROMBIE is a United Kingdom-
based columnist for Risk & Insurance®. He
can be reached at firstname.lastname@example.org. Great American Insurance Group, 301 E. Fourth St., Cincinnati, OH 45202. Coverage description is summarized. Policies are underwritten by Great American Insurance Company, Great American
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