The Model Ajar: Building Rationality Infrastructures Within Insurance Organizations

10 Pages Posted: 7 Oct 2018

See all articles by Andreas Tsanakas

Andreas Tsanakas

Bayes Business School (formerly Cass), City, University of London

Laure Cabantous

Cass Business School, City University London

Date Written: January 29, 2018

Abstract

Internal capital models are increasingly used across the insurance business, including reinsurance optimization, risk appetite and business planning. While this expansion is well documented, less is known about what modelers do in practice, in order to embed capital models within their organisations. To address this question, we interviewed 31 insurance practitioners; primarily modelers, but also underwriters and board members – working in London Market insurance firms, as well as regulators. We found that modelers facilitate the embedding of the internal model in two ways: they keep the model ajar, by selectively ‘opening’ it to stakeholders; and they create a model that is flexible enough to be consistent with multiple conceptions of uncertainty.

Suggested Citation

Tsanakas, Andreas and Cabantous, Laure, The Model Ajar: Building Rationality Infrastructures Within Insurance Organizations (January 29, 2018). Available at SSRN: https://ssrn.com/abstract=3249607 or http://dx.doi.org/10.2139/ssrn.3249607

Andreas Tsanakas (Contact Author)

Bayes Business School (formerly Cass), City, University of London ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Laure Cabantous

Cass Business School, City University London ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

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