Introductory Topics
INT-1 Introduction to Data Management 101
Session panelists will address basic issues behind data management, issues of privacy and confidentiality, the actuarial standards concerning data
quality, issues concerning how to control the data, and the need to be concerned about data quality.
Moderator: Arthur R. Cadorine, Insurance Services Office, Inc.
Panelists: Donald M. Wulf, Illinois Department of Insurance
Alan J. Hapke, Aspect, Inc.
Joan M. Klucarich, Fireman's Fund Insurance Companies
INT-2 Basic Techniques for an Overall Indication
Covering the basic foundations of the ratemaking process, this session's topics include data organization for premium and losses, data adjustments such
as current leveling, loss development and trending, and the determination of the expense provision. Specific techniques applicable to the personal lines will
be presented with emphasis on automobile and homeowners insurance.
(Not intended for those preparing for the new Part 5
Exam.)
Moderator: Marlene D. Orr, Guy Carpenter & Company, Inc. of Pennsylvania
Panelist: Linda Kay Torkelson, Allstate Research and Planning Center
INT-3
Introduction to Ratemaking Relativities
This session will present an overview of the concepts and techniques that are important in determining various relativities in insurance pricing. In addition
to the general concepts, the session will present several examples of particular techniques that are used by actuaries in determining various relativities.
Panelist: Patrick B. Woods, Insurance Services Office, Inc.
INT-4
The Indication—Is That Your Final Answer?
Inexperienced actuaries believe that their work is complete once the indication has been developed. But in reality, this is just the first step. The indication
is just that, an indication, not a final answer. The actuary must interpret the indication for its validity as a projection. Were there any anomalies in the data
that distort the indication? Are there any changes, or planned changes, in practice that would affect the indication? Then the actuary must evaluate the
marketplace and competitive position, including impact on customer retention, agent's reaction, and potential adverse selection. This gives an alternative view
of how much rate one could take. Finally, the actuary must evaluate alternative means to affect revenue that can address the indication, other than base
rate changes, such as expense modifications, underwriting guidelines, and the like.
Once an approach is determined, an actuary can also stress test the planned action though scenario modeling or other approaches. This panel will
develop these concepts through the use of various examples and alternative approaches.
Panelists: Mark J. Homan, The Hartford
Roger A. Schultz, Allstate Insurance Company
Data Management Topics
DAT-5 Standards in an E-Commerce World
In the last few years, some remarkable changes in technology have had a profound impact on the way the insurance industry gathers and uses data.
These changes are showing no signs of slowing down and are presenting a whole new set of problems and opportunities. Some of the old "rules" no longer
apply. This session will explore how technology is affecting the "data" world. It will explore:
Accelerated need for industry standards and how the industry is responding;
Impact of data warehouse and data mart technology;
New data quality concerns (is data cleansing a euphemism for "force coding?");
Opportunities for data sharing; and
Data privacy concerns.
Moderator: Gary Knoble, The Hartford
Panelists: Michael Gagne, The Hartford
TBD
DAT-6
Quantifying E-Commerce Risk
Since the advent of business being done over the Internet, e-commerce companies have been facing traditional P&C risks with new twists. For
example, business continuation claims can now be triggered by an e-mail that says, "I love you." Not only is this trigger new, but so is trying to determine the
damages for business with minimal revenue and market values in the billions. The panelists will discuss the risks that e-commerce sites face, present a methodology
to quantify the risks involved in running an e-commerce site, and use a real case study to demonstrate the methodology.
Moderator: David R. Chernick, Allstate Insurance Company
Panelists: Charles McClenahan, William M. Mercer/MMC Enterprise Risk
David Fishbaum, William M. Mercer/MMC Enterprise Risk
DAT-7
Catastrophe Models—Basic Approaches
and Uses
This session will discuss how catastrophe models provide simulated data to substitute for actual loss experience for lines of insurance that are low
frequency/high severity and for which credible loss experience is not available. Topics covered will include "universes" of possible events, damage functions and
financial loss calculations, and applications to financial and underwriting management.
Moderator: Randall E. Brubaker, Aon Re Services
Panelist: William R. Gardner, Impact Forcasting
DAT-8
The Effect of Emerging Information and Technology Capabilities on Basic Business Applications
More detailed information and more advanced (and user-friendly) technology is available to insurers and others to solicit, underwrite, and price
individual risks. These capabilities will become rapidly and continually updated in the future. Are the underwriting and rating strategies you help develop being
subverted by wrong and/or missing data? This panel will identify and discuss the impact of these new capabilities on today's business world.
Moderator: James Surrago, Insurance Services Office, Inc.
Panelists: William M. Raichle, Insurance Services Office, Inc.
TBD
DAT-9
The Next Generation of Business Intelligence
Over the last decade, traditional data warehousing has been construed to be a poor investment, by and large due to the time and cost of implementation.
This assessment has prompted the move toward prepackaged data warehousing techniques and finely tuned analytic applications, not only in insurance but
across all spectrums of business. This panel will show how insurers can gain efficiencies, reduce risk, and increase speed in their decision support processes
more economically. The panelists, who have extensive experience in both actuarial and data warehousing technology, will also discuss the most recent trends
in analytic applications, including how insurers are receiving business intelligence value through Web-based and ASP solutions.
Moderator: Alan J. Hapke, ASPECT, Inc.
Panelists: Thomas Chesbrough, Thazar Solutions
James P. Streff, Streff Insurance Services
Financial and Dynamic Financial Analysis Topics
FIN-10 Risk & Return: Actuarial Considerations
This session is intended to discuss the essential elements of financial models used to gauge and measure risk and return and the corresponding actuarial considerations in reflecting fair rates of return in ratemaking. Specific approaches that will be discussed include market value, discounted cash flow, and internal rate of return models, with a focus on the attributes of a complete rate of return model. This session will discuss basic concepts, including considerations related to balance sheets, income statements, cash flows related to both policyholders and shareholders. Issues addressed will include policy year versus calendar year results, economic value vs. accounting statement value, measures of total return, surplus attribution vs. surplus allocation, actuarial vs. financial theory of risk, appropriate risk measures, regulatory issues, and federal income taxes.
Moderator: Robert F. Wolf, William M. Mercer/MMC Enterprise Risk
Panelists: Russell Bingham, The Hartford
TBD
FIN-11
Risk & Return: Parameter Estimation
Ok. We've addressed the considerations. Now how do we estimate the parameters? As the audience is expected to understand the actuarial considerations discussed in FIN-10 , this session will discuss how to estimate and reflect the parameters relating to financial models used to measure risk and return as well as discuss recent research activities related to the CAS Risk Premium Project. What investment yield should be assumed? Is CAPM alive and well as regards risk./return measures? What are alternative measures? How should federal income tax be reflected? (Should one use an after-tax discount rate or should one explicitly reflect federal income taxes in ratemaking?). How does one measure the cost of capital and how does one reflect it in ratemaking? These and
other issues will be addressed in this session.
Moderator: Robert F. Wolf, William M. Mercer/MMC Enterprise Risk
Panelists: David Appel, Milliman & Robertson, Inc.
Richard Derrig, Automobile Insurers Bureau of
Massachusetts
FIN-12
Profit and Contingencies in Ratemaking
This panel is intended to provide a forum for active audience participation and will include a panel discussion of an overview of the myriad of methodologies of how insurance profit reflected in ratemaking. An overview of regulatory mandated procedures will be discussed including the views of their inherent strengths and weaknesses. These procedures will be compared and contrasted to panelists views on the most appropriate methods and considerations. What is the best way to measure and reflect the cost of capital in the sense of the Principles of Ratemaking? How does one enhance shareholder value, stay competitive, comply to regulatory constraints, and comply to the statement of principles of ratemaking in a holistic manner? These and more issues will be explored during the course of the session. Two of the panelists are co-authors of the textbook titled Actuarial Considerations Regarding Risk and Return in Property-Casualty Insurance Pricing. Another panelist provides an overseas perspective.
Moderator: Oakley E. Van Slyke, Capital Management Technology
Panelists: Benedetto Conti, Winterthur International
Russell Bingham, The Hartford
FIN-13 Enterprise Risk Management and Ratemaking
This session will focus on the commercial insurance buyer and their decisions on risk financing as a function of the cost of risk financing (for example,
rates) and corresponding appetite for retaining risk.
Traditional risk management encompasses a narrow, silo-based risk identification process without any systematic understanding of correlation among
the risks of the corporation. Enterprise risk management, on the other hand, differs from traditional risk management in that it encompasses all four major
categories of risk: hazard, financial, operational, and strategic as a combined impact on the enterprise.
The panelists will describe several case studies in methodologies that attempt to optimize a corporation's risk management strategies given
considerations, among others, of cash and credit capacities, as well as market premium levels.
Moderator: Robert F. Wolf, William M. Mercer/MMC Enterprise Risk
Panelists: Barry A. Franklin, Aon Risk Consultants
Ken Zignorski, MMC Enterprise Risk
FIN-14
DFA Applications in Start Up Operations
How DFA can be used to assess capital needs, develop a strategic operating plan, and assist in obtaining regulatory approval for a start up operation are
the focus of this session. Considerations in these situations include: reinsurance needs, asset mix, new business penalty implications, policy retention
characteristics, and expense structures. This panel will examine several different perspectives and considerations on how DFA could be used in a start up operation.
Moderator: Thomas E. Hettinger, MHL/Paratus
Panelist: TBD
FIN-15
The Cost of Financing Insurance
This session will analyze how to use dynamic financial analysis to determine profitability targets for the various underwriting divisions of an insurance
company. The cost of financing an insurance company is defined to be the combined cost of capital, reinsurance, and options on a catastrophe index. This
analysis will develop an approach for allocating the cost of financing back to the individual underwriting divisions.
The original research on this topic, "The Cost of Financing Insurance_Version 1.0," is the CAS
Forum's first "virtual paper" and may be found
at www.casact.org/pubs/forum/00sforum/meyers/index.htm
.
Panelist: Glenn G. Meyers, Insurance Services Office, Inc.
Workers Compensation Topics
WCP-16 Basic Techniques for Workers Compensation
Basic techniques in workers compensation ratemaking, including a description of coverages, exposure bases, and databases will be covered in this
session. The panel will also review the essential components of a typical rate filing from the perspective of the National Council on Compensation Insurance,
other bureaus, and from the view of companies in loss cost jurisdictions.
Moderator: Richard B. Moncher, Protegrity Services, Inc.
Panelist: Andrew J. Doll, General Casualty Companies
WCP-17 Workers Compensation—Current Issues
Panelists will present an overview of the current state of the workers compensation line, including a review of financial results and recent trends, and
a discussion of where the line might be headed.
Moderator: Meredith Richardson, Royal & SunAlliance
Panelists: Robert G. Blanco, National Council on Compensation Insurance
Nancy R. Treitel, Liberty Mutual Group
WCP-18
Experience Rating—Current Challenges
Workers compensation experience rating plans in the National Council on Compensation Insurance and independent bureau states are at the center of
this session. Experience rating plans, their performance, and recent changes will be covered. The panel will also discuss performance results in terms of
plan predictive accuracy, equity across range of models, equity across range of risk sizes, and stakeholder satisfaction.
Moderator: William J. Miller, Tillinghast-Towers Perrin
Panelist: James R. Davis, National Council on Compensation Insurance
WCP-19
Ratemaking Implications of Managed Health Care on Workers Compensation
This session will examine a general process for most managed care workers compensation products. Some possible combinations of organizations that
can provide all the necessary components of a managed care program will be explored. Possible conflicts in motivations, incentives, and compensation
between these collaborations of service providers will also be discussed. The session will specifically focus on factors that influence workers compensation costs
for insurance companies participating in managed care programs.
Moderator: Nancy R. Treitel, Liberty Mutual Group
Panelists: Pamela Sealand Reale, Royal & SunAlliance
Philip S. Borba, Milliman and Robertson, Inc.
WCP-20
California Workers Compensation Update
Session attendees will study the current workers compensation environment in California. Information related to frequency and severity trends and the
factors driving those trends, key regulatory and legislative issues, current industry-wide results, and the impact of competitive rating on the California
insurance market will be discussed.
Moderator: David M. Bellusci, W. C. Insurance Rating Bureau of California
Panelist: Frank Neuhauser, University of California
Commercial Lines Topics
COM-21 Patients' Rights Liability Issues
Various emerging liability issues within the health care system have defined new legal responsibilities for medical professionals, health care providers,
and
managed care organizations. In this session, panelists will review recent changes in case law and legislation that have affected exposure under
traditional medical malpractice policies as well as other types of liability coverage. A practical case study illustrating the actuarial implications for assessing
coverage within a managed care organization will be provided. Additionally, panelists will review the history of patient rights laws affecting the liability of long-term
care providers, along with the corresponding impact this has had on the frequency and severity of liability claims for this unique provider group.
Moderator: Harold N. Schneider, Farmers Insurance Group
Panelists: Stephen C. Klein, Barger & Wolen, LLP
Richard B. Lord, Milliman & Robertson, Inc.
Theresa W. Bourdon, Aon Worldwide Actuarial Solutions
COM-22
Medical Malpractice—Advanced Topics
In discussing three important and timely advanced topics relating to medical malpractice insurance, the panel will first tackle the pricing of prepaid
tail coverage for physicians payable due to death, disability, or retirement. The second topic pertains to rating methods for hospitals and other
health-care facilities. The discussion will include alternative exposure bases (other than numbers of occupied beds and outpatient visits), classifications, experience
and schedule rating, and effects of aggregate limits.
The third topic will cover recent changes in the practice of medicine and the projected effects of those changes upon malpractice loss experience.
Some changes to be discussed will be the advent of telemedicine, the increased frequency of outpatient surgery, and the increased use of physicians' assistants
and extenders, sometimes without the direct supervision of physicians.
Moderator: Richard S. Biondi, Milliman & Robertson, Inc.
Panelists: William E. Burns, PHICO Group, Inc.
Thomas A. Ryan, Milliman & Robertson, Inc.
COM-23
Nonmedical Professional Liability
Unique ratemaking considerations of nonmedical professional liability coverages are the topic of this session. The calculation of rates for claims made,
extended reporting, and prior acts coverages, will be addressed, along with a discussion of the unique considerations involved in establishing
classification plans. Practical examples will be provided.
Moderator: Robert J. Larson, Royal & SunAlliance
Panelist: Denise R. Olson, CNA Insurance Companies
COM-24
Specialty Commercial Automobile Pricing
Beyond the standard market of contractors' pickup trucks, beer distributor trucks, and bakery panel vans, the commercial automobile line offers myriad
niche markets. This session will examine two of the most interesting specialty commercial automobile markets—public livery and trucking. We will examine some
of the terminology, classification systems, customer characteristics and motivations, and ratemaking techniques of these fascinating marketplaces. Come
find out what reefers, LTLs, bobtails, medallions, DOVs, and silver cars are and how they are priced.
Moderator: Robert J. Walling, MHL/Paratus
Panelist: Michael D. Brannon, Great West Casualty Company
David A. Christhilf, Empire Insurance Group
COM-25 Emerging Risks
Recently emerging liabilities (pollution, Internet liability) and contract structures (dual triggers such as casualty events that must occur concurrent
with financial misfortune, and multi-year policies) have presented unique challenges for actuaries. On the one hand, difficulties in pricing and reserving for
these unique exposures have caused insurers to shy away from accepting such exposure under traditional insurance policies and have made many insurers
hesitant to write such risks. On the other hand, the high degree of uncertainty that surrounds such liabilities creates a natural demand for coverage from
customers. The high customer demand and absence of a readily available market for such liabilities has created opportunities for the few willing to take such risks.
The panel will focus on bond default/capital market programs and Internet liability as two case histories to discuss how actuaries approach pricing
newly emerging liabilities and contract structures. Issues that will be addressed will include:
How is the absence of historical insurance data handled?
-
To what extent are models used?
How are models developed?
How are risk margins affected?
How are adverse economic or financial performance included in a rating analysis?
What are the accounting and jurisdictional issues involved with emerging risks?
Moderator: Philip D. Miller,
Tillinghast-Towers Perrin
Panelists: Andre Perez, Overseas Partners, Ltd.
Daniel T. Brandon, Zurich Re
COM-26
Pricing Large Insureds
Actuaries are faced with several challenges when pricing large accounts. Oftentimes, the account will have significant data to use in pricing. However, the
data are usually not fully credible and may not be reflective of future exposures. Therefore, in pricing large accounts, it is necessary to weigh individual client
data with industry data after appropriate adjustment. This session will discuss various approaches to blending account-specific data with industry data.
Moderator: Brian Z. Brown, Milliman & Robertson, Inc.
Panelists: Christopher J. Claus, American Re Insurance Company
Stewart H. Gleason, Guy Carpenter & Company, Inc.
COM-27
Alternative Market Pricing
The last decade has shown a trend toward a more informed insurance purchaser. Small businesses, in particular, have become more informed about
their insurance risks and costs and have shown an increased willingness to retain more risk. One symptom of this change is an ever growing alternative market.
The alternative market, once primarily the domain of jumbo self-insureds, has welcomed an increasing number and variety of smaller insureds. As the number
and variety of group self-insureds and captive insurance companies has grown, the line between the traditional and alternative markets has blurred.
This session will examine the benefits and disadvantages of the alternative market, some of the organizational structures that exist in the alternative
market, and approaches to pricing for users of alternative risk mechanisms
Moderator: Joe Herbers, MHL/Paratus
Panelists: Gregory K. Myers, Am-Re Global Risk Services
Thomas E. Hettinger, MHL/Paratus
COM-28 Product Development
Product development is one role outside of the traditional pricing and loss reserving functions in which the actuary can make a substantial contribution.
This session is designed to illustrate applications in personal and commercial lines.
Moderator: Scott D. Vandermyde, Ernst & Young LLP
Panelists: Beth E. Fitzgerald, Insurance Services Office, Inc.
Kevin E. Kelso, Farmers Insurance Group
COM-29
Package Pricing for Small Commercial Accounts
This session will discuss the multiperil insurance product as it specifically relates to smaller commercial accounts. Often the small business does not
generate enough premium to qualify for the individual rating plans that larger risks enjoy. The panel will discuss how large carriers approach their smaller
commercial accounts.
Moderator: Scott D. Vandermyde, Ernst & Young LLP
Panelists: Kathleen A. McMonigle, The Hartford
TBD
Personal Lines Topics
PL-30 Sport Utility Vehicles and Auto Insurance Costs
The popularity of SUVs over the past several years has resulted in a marked shift in the size and weight of vehicles on the road. Recent studies may point
to increasing liability costs associated with SUVs. This panel will present a discussion of the current pricing issues related to SUVs—both liability and
physical damage—including related factors such as the type of driver associated with SUVs. The Highway Loss Data Institute's crash test video will also be shown.
Moderator: Jerry W. Rapp, State Farm Fire & Casualty Company
Panelist: Kim Hazelbaker, Highway Loss Data Institute
PL-31
The Use of Credit History in
Underwriting/Pricing
Public and private databases have made more demographic data available to insurance companies. Research has shown that while some of this data
may appear to have no causal relationship to insured losses, it may have significant predictive value. Credit history, in particular, has drawn significant
attention by insurance companies, regulators, and consumer groups.
Recent actuarial literature demonstrates the value of using credit information in homeowner and private passenger automobile risk selection. Credit
bureaus have also developed scoring models to assist insurers in their risk selection.
Consumer groups, however, are concerned that use of credit will have a disparaging impact on low income consumers who can least afford insurance.
The NAIC continues their work on this issue as state insurance departments begin to develop regulations on when and how credit information may be used
for insurance underwriting and pricing. The panelists will discuss the issues surrounding the use of credit information in a question and answer debate format.
Moderator: Alan M. Hines, PricewaterhouseCoopers LLP
Panelists: Mona Carter, Commonwealth of Kentucky Department of Insurance
Steven R. Sheffey, Allstate Insurance Company
Eddy Lo, Fair Isaac & Company
PL-32
Alternative Techniques and Uses of Classification Ratemaking
New data and methods have enabled many companies to conduct more thorough class plan analyses, with implications beyond pricing. This session
will discuss both the techniques being used and the ways in which companies are making use of the results. The discussion of techniques will include
generalized linear models and classification and regression trees (for example, CHAID, CART) and will focus on practical applications to insurance. The discussion of
uses will draw upon one company's actual experiences in putting the results of a comprehensive class plan review into action.
Moderator: Mark W. Scully, Tillinghast-Towers Perrin
Panelist: Judith M. Feldmeier, AAA Michigan
PL-33
Moving Beyond the Theory: Applications of Generalized Linear Modeling
Generalized Linear Modeling (GLM) is not a new concept; it has been well covered in actuarial literature. However, with increasing computer power
and software that makes GLM simpler and faster to implement, many new uses have come about. This session will discuss the basic elements of using GLM
to remove the bias in indicated rating factors, but will move beyond these concepts into other uses that have been developed. These uses include
renewal modeling, developing proprietary credit scores, and determining lifetime customer values. The session will cover the basic concepts of these uses as well
as how companies can implement and benefit from these applications.
Moderator: Roosevelt C. Mosley, MHL/Paratus
Panelist: Eric D. Chen, 21st Century Insurance Group
Brett M. Nunes, MHL/Paratus
Karen E. Schmitt, Zurich Financial Services Group
PL-34
Retention Modeling
Policyholder retention is a key operational driver of profitability for property/casualty insurers. A small increase in retention can translate into a large
increase in profits and shareholder value. As companies increase the pace with which they change rate levels, it will be critical to understand the impact these
changes have on retention levels for key business segments.
This session will cover customer behavior modeling. One subset of customer behavior modeling is an innovative technique called "Agent-Based
Modeling," which can be used to model company, customer, competitor, and independent agent (if applicable) behavior in the face of changing rate levels/rate
structures. The goal of this technique is not only to optimize policyholder retention in response to rate action, but to optimize retention for the most desirable
business classes.
Moderator: Thomas P. Conway, Ernst & Young LLP
Panelists: Charles H. Boucek, Ernst & Young LLP
Lee M. Bowron, Independent Consultant
Donald E. Manis, Alfa Mutual Insurance Company
PL-35
Automobile Ratemaking in the U.S. and U.K.
The U.K. is the one market outside of North America where U.S. actuaries feel most at home. The actuarial training is the most similar to our own, the
business
culture is quite similar, and we do speak the same language. Underneath the surface similarities there are many differences to explore, such as the role of
rate regulation and product design. How do these differences affect the way that ratemaking is performed? This session is intended to give the CAS actuary a
view into how different actuarial work can be and to challenge our own ideas of actuarial fairness.
Moderator: Karen E. Schmitt, Zurich Financial Services Group
Panelists: Michael Brockman, English Matthews Brockman
Kevin E. Kelso, Farmers Insurance Group
PL-36
Current Issues in California
This panel will focus on current issues and ratemaking challenges in the California insurance market. Panelists will discuss the status of the regulations
for private passenger auto classification plans and the prior approval of rate filings. In addition, updates on the activities of the California legislature will
be provided.
Moderator: Shawna S. Ackerman, MHL/Paratus
Panelists: Bruce V. Patton, State of California Department of Insurance
TBD
PL-37
Nonstandard Auto Ratemaking
In the past, nonstandard auto insurers and the insurers in the preferred/standard market have been, for the most part, separate and distinct. Recently,
however, Progressive aggressively expanded into the preferred/standard market after decades as one of the premier nonstandard insurers. Other companies,
such as
Nationwide, are changing their rating plans to accommodate nearly all prospects. This panel will discuss whether the same ratemaking procedures can
be successfully used to determine rates for all segments of the market, from nonstandard to preferred.
Moderator: Wayne D. Holdredge, Tillinghast-Towers Perrin
Panelists: Gary S. Traicoff, The Progressive Corporation
Curtis M. Parker, Nationwide Insurance Company
PL-38
Pricing in a Product Management Environment
As more insurers move to product management organizational structures, questions arise about the actuary's role in pricing. The panelists, a product
manager, an actuary working in a product management environment, and an actuary who has worked as a product manager, will engage in a lively discussion
of the relationship between the actuary and the product manager, the potential conflicts, and how to resolve them.
Moderator: Frederick F. Cripe, Allstate Insurance Company
Panelists: John J. Javaruski, Kemper Auto & Home Insurance Company
Edward A. Biemer, Allstate Insurance Company
PL-39
The Incredible Shrinking Residual Market
Rate adequacy and other factors have contributed to unusually low residual market shares in both the automobile and workers compensation
insurance plans. This panel will discuss myriad issues surrounding ratemaking in the present environment of shrinking residual markets and the challenges
facing
actuaries as they work on balancing the needs of the regulatory environment and the insurance industry.
Moderator: John J. Winkleman Jr., AIPSO
Panelist: Thomas V. Daley, National Council on Compensation Insurance, Inc.
Richard B. Amundson, Minnesota Department of Commerce
Property Topics
PROP-40 Emerging Issues in Homeowners Insurance Ratemaking
Recent advances in technology and data are providing insurers with new tools to rate homeowners policies. Several elements of traditional auto rating
plans are beginning to make their way into homeowners rating plans, including looking at the homeowner as the risk and developing rates by coverage.
Other advances are more focused on property insurance, such as the increasing use of GIS technology to develop and verify geographic rating variables.
This session will present ways to look at these emerging types of rating plans, both from an actuarial standpoint and a social standpoint.
Moderator: Kathy A. Olcese, Allstate Insurance Company
Panelists: Rade T. Musulin, Florida Farm Bureau Insurance Companies
Rebecca R. Orsi, Allstate Insurance Company
PROP-41
Current Issues in Florida Property Insurance
The year 2001 will be very busy for Florida's property insurance market. Discussion of the arbitration decision awarding the Florida Windstorm
Underwriting Association a 96 percent rate increase in 2000 will await the legislature when it convenes for 60 days in March and April 2001. There will be a new
insurance commissioner in 2001 and scores of freshman legislators due to the implementation of term limits. Issues before them include restructuring of the
residual markets, proposals to make the office of insurance commissioner appointed, repeal of the arbitration process, and the creation of a state catastrophe
model. In addition, the Florida Insurance Council (FIC) will be working with the Department of Insurance (DOI) to improve the rate filing process. The panel
will discuss these issues and how various proposals may affect insurers doing business in Florida.
Panelists: M.L. "Butch" Dye, United Services Automobile Association
Rade T. Musulin, Florida Farm Bureau Insurance Companies
Steven D. Armstrong, Allstate Insurance Company
PROP-42
Incorporating Catastrophe Models in Property Ratemaking
This session will present some procedures for using the output from simulation models in property insurance lines. The treatment of hurricanes and
earthquakes will be reviewed from the perspectives of advisory organizations and companies with independent rate filings. The panelists will present
applications at both the statewide and the territorial levels.
Moderator: Debra L. Werland, United Services Automobile Association
Panelists: Edward J. Baum, Interinsurance Exchange of the Auto Club
Robert J. Curry, Insurance Services Office, Inc.
PROP-43
Weather Modeling Other than Hurricane
The catastrophe modeling arena is evolving to include new models for quantifying the impact of atmospheric conditions other than hurricane. The
first panelist will address the chilling ratemaking impacts of winter storms. The next speaker will present the complex interrelations of tornadoes, hail storms,
and straight-line wind and their impacts on ratemaking. Both panelists will expand the knowledge of ratemaking actuaries working in the challenging world
of evaluating natural catastrophes.
Moderator: John L. Tedeschi, Guy Carpenter & Company, Inc.
Panelists: David A. Lalonde, Applied Insurance Research
Graham R. Cook, Risk Management Solutions, Ltd.
Regulatory Topics
REG-44 Actuary as an Expert Witness
Today, the regulatory environment virtually guarantees that actuaries will serve as expert witnesses in administrative hearings concerning rate filings.
Other actuaries may be called upon to be experts in civil litigation on a wide variety of actuarial subjects. This session will explore the challenges for actuaries
as expert witnesses from two perspectives: the actuary who serves as the witness and the attorney who prepares or cross-examines them.
Moderator: Irene K. Bass, Bass & Khury
Panelist: Norma J. Brettell Esq., Massachusetts Division of Insurance
REG-45
Regulatory Issue 1
A follow-up to the second general session, Regulatory Issue 1
will discuss the emerging issues arising at the federal and state levels that could have a
major impact on the actuarial profession. Possible subjects include privacy activity, standards, and the impact of banks.
Moderator: TBD
Panelist: TBD
Reinsurance Topics
REI-46 Introduction to Reinsurance
This session covers the basic principles and functions related to reinsurance ratemaking. The session will emphasize a pragmatic view "beyond the
formulas," including cases depicting when what is nonquantitative or "invisible" is more important than the facts presented.
Moderator: Nolan E. Asch, Insurance Services Office, Inc.
REI-47
Introduction to Exposure and Experience Rating
This panel will examine the data required and the methods that are commonly employed in pricing excess of loss reinsurance treaties. Using a
game-like setting, the panelists will illustrate what reinsurers do in the "real" world. A link between experience and exposure rating will be shown by utilizing the
same set of data to provide continuity and a reconciliation of the methods.
Moderator: Michael E. Angelina, Tillinghast-Towers Perrin
Panelist: Joy Y. Takahashi, ACE USA
Ira M. Kaplan, GeneralCologne Re
REI-48
Pitfalls in Reinsurance Pricing
This session will address problems that typically arise when evaluating different types of domestic and international reinsurance proposals. These issues
can often more dramatically affect the pricing than the data that is typically presented. Topics to be covered include usage of available data, policy limit
impacts, trending techniques, individual claim loss development, fitting loss distributions, and cessions-rated treaties.
Moderator: John W. Buchanan, St. Paul Re
Panelists: Michael E. Angelina, Tillinghast-Towers Perrin
David Skurnick, St. Paul Re
REI-49
International Property Reinsurance Pricing and Challenges
This panel will separately explore the current challenges in the property and casualty reinsurance marketplaces. Lack of quality information, changing
regulatory and economic environments, recent catastrophic events, and continuing challenging market conditions are common areas of concern.
This session will discuss various approaches to gathering suitable information for pricing, illustrating their inherent uncertainty, and applying them to
various international markets and changing situations.
Moderator: TBD
Panelist: James M. Maher, St. Paul Re
REI-50
International Casualty Reinsurance Pricing Challenges
Casualty exposures continue to grow throughout the world. Not only are global economies and regulatory environments changing and merging but
technology and communication are evolving at a rapidly increasing pace.
International casualty business exposures represent a particular pricing challenge to actuaries due to a lack of data and historical experience, and the
absence of reliable severity distributions. This session will address major casualty exposures throughout the world, the critical risk factors, and the nature of
the frequency and severity characteristics that are critical to reinsurance pricing.
Approaches taken by other actuarial organizations to these challenges will also be presented.
Moderator: Peter H. James, American Re-Insurance Company
Panelists: Paul Gates, Lane, Clark and Peacock
Richard L. Clinton, EQECAT, Inc.
REI-51
Securitization
This panel will provide an overview of insurance securitizations that have been completed to date. The discussion will include the structuring
transactions and delivering the product to investment markets. The session will also focus on the costs involved, the distinction between security based on actual
losses versus an index, basis risk considerations, and emerging accounting treatment. Creating a rateable security from other assets, pricing bonds, and
identifying future opportunities will also be reviewed.
Moderator: Stephen W. Philbrick, Swiss Re Investors, Inc.
Panelist: Charles Kerner, American Re-Insurance Company
REI-52
Credit Enhancement
Credit enhancement is a developing financial insurance product blending the realms of finance and reinsurance. This session will provide an overview of
the coverage, underwriting, and pricing of these transactions. Fundamental exposures and underwriting considerations will be reviewed, and the audience will
be taken through the basic steps of a sample transaction. Current pricing approaches will be presented, including a discussion of the data, methods,
assumptions, and final pricing considerations.
Moderator: Michael J. Belfatti, ACE Financial Solutions
Panelist: Patrick McCormick, American Re-Insurance Company
Scott Orr, American Re-Insurance
Special Topics
SPE-53 Professionalism in Ratemaking—Do I Really Want to Do That?
Session attendees will learn the objectives and will also get a brief description of the Committee on Professionalism Education, followed by
discussion/debate on some of the issues that an actuary might face while developing rates. Two CAS Fellows will discuss differences on what may or may not be
acceptable behavior when setting rates.
Moderator: Jeffrey L. Kucera, MHL/Paratus
Panelists: Richard J. Currie, American Re-Insurance Company
Roger A. Schultz, Allstate Insurance Company
SPE-54
Introduction to Credibility
In this session, credibility will be reviewed in the context of ratemaking concepts. Both classical and Bühlmann models will be described. The session
will include a review of variables affecting credibility, credibility formulas, and practical techniques for applying and increasing credibility.
Panelist: Paul J. Brehm, St. Paul Companies, Inc.
Ratemaking Research Call Papers and Data Management Call Papers
A number of papers have been developed in answer to a call by the Casualty Actuarial Society's Research Committee on Ratemaking and the Management
of Information and Data Committee. Selected papers will be presented and discussed by their authors during sessions at the 2001 Ratemaking Seminar.
The completed papers will be distributed in the 2001 Winter Edition of the CAS
Forum and will also be available on the CAS Web Site shortly before the
seminar.
