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Posts feedBusiness benefits of statistical models
In a recent meeting I was asked by a reinsurer what the advantages were of using statistical models in his business. The reinsurer knew about the greater analytical power of survival models, but he wanted more.
Residual concerns
One of the most important means of checking a model's fit is to look at the residuals, i.e. the standardised differences between the actual data observed and what the model predicts. One common definition, known as the Pearson residual, is as follows: