Keynes, somewhere: ‘the difficulty lies, not in the new ideas, but in escaping the old ones’.
Very true, and while I don’t want to blame actuaries too much, they have to take the blame for much of the present crisis. Their profession has grown up around the practice of forecasting future events over which we have little control in the present, indeed the whole point of insurance is to compensate for bad but unpreventable things happening. We don’t insure against stubbing our toe, for example. So actuaries are taught to assess the future value of health treatment, mortality, windstorms etc then discount at risk free, which is perfectly correct.
But it is perfectly false when the forecast tries to compete with what other people are forecasting. Can an actuary accurately predict the value of the FTSE at the end of 2025? No. The value of the FTSE at that date is itself a market forecast of the present value of future dividends in perpetuity. On what basis or evidence is the actuary forecasting this, and why are other rational people apparently ignoring this basis or evidence?