The success of the general insurance industry over several hundred years is a tribute to the judgement and skill of generations of underwriters who were able to assess diverse risks and underwrite them without extensive statistical data. The business was profitable because the premiums were more than adequate and included substantial margins for contingencies.

The twentieth century brought risks of previously unimagined magnitude, and saw the development of fierce competition between insurers in markets which were better informed, severe rate-cutting, consumerism, government control of premium rates in certain classes of business, and other factors, all of which combined to make the underwriting of insurance in modern conditions extremely difficult. Bouts of high inflation have led to claim settlements considerably higher than those allowed for in the premiums. The rapid development of new technologies has meant that new risks, for which there is insufficient experience upon which to base rates, now comprise a larger proportion of all risks. Clients have become accustomed to change, and now expect to change their insurers whenever they can see an advantage in doing so. It is no longer possible, therefore, for an insurer to charge a premium which is obviously more than adequate, and remain in business.

The twentieth century has also seen the growth of statistical theory and practice from infancy to full maturity, and the development of sophisticated computers with huge storage capacities.