Briefs

LAS VEGAS - Property/casualty insurance actuaries should not be afraid to try alternative approaches to data mining as part of the predictive modeling process, lawyer and economist Ian Ayres told the Casualty Actuarial Society (CAS) Ratemaking Seminar.

In a keynote address, Ayres who is author of the book "Super Crunchers" noted that non-traditional approaches to predictive analysis, such as neural networks, may have a role for actuaries, subject to regulatory constraints.

"You should be thinking about trying alternative approaches, even if your central approach is general linear regression. Every once in a while I would try a neural network and see if your traditional approach is robust to alternative specifications," he said.

Ayres explained that as the size of datasets has increased, neural networks may be able to estimate many more parameters than traditionally accommodated by linear regression.

Ayres cited the example of a company called Epagogix and its ability to forecast the box office success of movies by using a neural network model.

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