It is generally known that we look into the past in order to guess what the future will bring. The same is true in insurance. As we have, for example, to fix the premium in advance for a risk or a collective of risks, we naturally look at claims that occurred in the past on similar risks. We compile statistics to get an idea of the future claims potential. It is crucial that this picture be
... [Show full abstract] realistic because, if our judgement of the future claims load is too low, we will very probably suffer a loss. If, on the contrary, we are too pessimistic, we may lose business, e.g. where our competitors are cheaper.