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No model is going to be perfect and given that, you want errors that models make to be as uncorrelated as possible.

In the extreme case, if all firms use a single model that underestimates the risk of an event then that event occurring poses a threat to the entire industry.

With more models, each making different errors, only parts of the industry are exposed to each error. The more models, the smaller the number of affected firms and with reinsurance between firms the risk to the whole industry is much smaller.




The basic question is whether the reinsurance companies are properly capitalized given the homogeneity of risk taken on by the insurance companies they cover.

There can be a lot of modeling homogeneity without lots of unanticipated risk (e.g., natural disasters in disparate geographic regions).




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