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Request for Proposals for An Expert Review of the Theory Development and Computer Software for Specific Allocations

02/27/2014 —

Request for Proposals for An Expert Review of the Theory Development and Computer Software for Specific Allocations
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The Project COTOR Report by George Zanjani and Daniel Bauer on The Allocation of Costs of Holding Capital as Attached

  1. Casualty Actuarial Society (CAS)
    The CAS was organized in 1914 as a professional society with the purpose of advancing the body of knowledge of actuarial science applied to property, casualty and similar risk exposures. This is accomplished through communication with the publics affected by insurance, the presentation and discussion of papers, attendance at seminars and workshops, collection of a library, research, and other means. The membership of the CAS includes over 4,000 actuaries employed by insurance companies, industry advisory organizations, national brokers, accounting firms, educational institutions, state insurance departments, the federal government, and independent consultants.
  2. Committee on Theory of Risk (COTOR)
    The Committee on Theory of Risk is charged with developing and demonstrating the utility of specific applications of the theory of risk to various lines of property and casualty insurance. The COTOR is sponsoring this research on behalf of the CAS.
  3. CAS Interest in the Subject
    COTOR has recently received and accepted a final report by George Zanjani and Daniel Bauer both of the Georgia State University Insurance Department faculty on the Allocation of the Costs of Holding Capital to Lines of Insurance. The reviewing subcommittee recommended that in view of the extensive theoretical development in the project paper and the extensive computer generated examples of allocation methods in MATLAB, there should be a detailed review of those two parts of the project report by outside experts under a contract with CAS. By virtue of the project contract, the CAS should now be owner of the computer program. A copy of the report is provided.
  4. Statement of the Request
    Insurance pricing techniques include a variety of methods used by actuaries to value the commitment of capital to insure payment of claims against policies issued in particular lines of insurance. The COTOR project report by Zanjani and Bauer provides an extensive review of current and potential allocation methods under a range of allocations methods and capital assumptions from the literature and actuarial practice. The purpose of this Request for Proposal (“RFP”) is to allow a detailed review of (1) the theoretical development of allocation methods and assumptions and (2) the computer program in MATLAB that produces the proportional allocations to lines of insurance under the several assumptions. COTOR would like to issue an RFP to that effect for a fee not to exceed $10,000.

    Project Schedule (Details negotiable)
    March 3, 2014 - Publish RFP
    March 24, 2014 - Review Plan and Qualifications due from Proposers
    April 18, 2014 - Final selection of research team
    May 23, 2014 - Progress report due from research team
    June 27, 2014 - First draft due.
    September 19, 2014 - Final draft due
    October 24, 2014 - Final Report produced and approved by COTOR

  5. Presentation, Ownership and Publication of Report
    The selected Experts will be required to sign a consulting agreement, which defines the terms, and conditions under which the work is performed, including an agreement to abide by any confidentiality agreement by Zanjani and Bauer with their data supplier.

    If asked, the Experts agree to be available to present a report concerning the project at a CAS meeting or seminar. If travel is required, reasonable expenses will be paid in addition to the compensation provided in the research contract.

    The CAS intends to own the report and the Allocation program and, perhaps, to make it available to members of the CAS and interested academic researchers and other third parties. The CAS may publish information about the Project and Review in the CAS Forum, Actuarial Review, or other CAS publication, including electronic versions such as on its Web Site or on compact discs, etc.
  6. Proposal Requirements
    Proposals should include a clear outline of the work that will be performed and the time frame in which it will be performed (including key dates). The more specific the proposal covers the goals the better. A cost estimate or range should accompany each proposal. The proposal should address the following: The proposal should be accompanied by the resumes of the researcher(s), indicating how their background, education, and experience bear on their qualifications to undertake the review. Receipt of proposals will be acknowledged in a timely manner. All decisions regarding the evaluation of responses to the RFP will be awarded entirely based on the information provided in the written proposals. The CAS will award the contract to the respondent who, in the judgment of the Committee on The Theory of Risk (COTOR), is best able to perform the work as specified herein. If it is determined that no proposal meets the requirements of the RFP, then no contract will be awarded. When a respondent is chosen by COTOR and the contract awarded, respondents not awarded the contract will be so informed shortly thereafter. Interested researchers should submit their proposals and any questions in writing to:
    • Casualty Actuarial Society
      Attention: Karen Sonnet, RFP COTOR
      4350 N. Fairfax Dr. Suite 250
      Arlington, VA 22203
      Phone: (703) 276-3100 ext. 762
      Fax: (703) 276-3108
      E-mail: ksonnet@casact.org
  7. Presentation, Ownership and Publication of Report
    The selected Experts will be required to sign a consulting agreement, which defines the terms, and conditions under which the work is performed, including an agreement to abide by any confidentiality agreement by Zanjani and Bauer with their data supplier.

    If asked, the Experts agree to be available to present a report concerning the project at a CAS meeting or seminar. If travel is required, reasonable expenses will be paid in addition to the compensation provided in the research contract. The CAS intends to own the report and the Allocation program and, perhaps, to make it available to members of the CAS and interested academic researchers and other third parties. The CAS may publish information about the Project and Review in the CAS Forum, Actuarial Review, or other CAS publication, including electronic versions such as on its Web Site or on compact discs, etc.

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