Applied Actuarial Research Conference
Off To A Successful Start

by Don Mango, CAS Vice President-Research and Development

The first annual Applied Actuarial Research Conference (AARC) was held on March 8-9 at the University of Central Florida (UCF) in Orlando. UCF, SOA, CAS, Universal American Financial Corporation, and Lotter Actuarial Partners sponsored the AARC. Approximately 60 actuaries and some nonactuaries with insurance-related research interests attended. Based on the positive feedback, we expect to hold the event again in Orlando next year at the same time. The conference is unique in having both researchers from all practice areas and equal representation from academia and industry. It also had significant attendance from many actuarial students in UCF's growing actuarial science program.

The AARC kicked off with a discussion of the "Current State of Applied Actuarial Research." A quick look at the agenda for the first AARC shows the mix of papers on property/casualty, financial, group insurance and managed care, data mining, and retirement systems topics. Those interested in seeing the agenda can visit www.cas.ucf.edu/statistics/AARC2004.htm. Papers and presentations will also be posted on this site. Some interesting P&C papers presented include:

• "Applications of the Ruhm-Mango-Kreps Conditional Risk Algorithm" by David Ruhm, Donald Mango, and Rodney Kreps
• "Catastrophe Modeling and Component Rating for Property Insurance" by John Rollins
• "Using Adverse Development to Predict Workers Compensation Losses" by D. Sheppard

Why Should P&C Actuaries Care About Other Practice Areas' Research?

A good question! When you take a closer look, you find techniques and topics that cross all practice areas. One practice may be ahead of the others in innovation or solutions. Examples of shared areas of interest include classification ratemaking (life insurance uses surprisingly few variables), interest rates and economic scenarios (the CAS is currently cosponsoring a funded research project on economic scenario generation with the SOA), medical inflation, managed care (the CAS even has a Health and Managed Care Issues Committee), and pensions (an important element of workers compensation).

P&C actuaries should take a look at the following AARC papers from other practice areas:

• "Insurance Applications of Fuzzy Logic" by A. Shapiro
• "Cost Effective Risk Management, Firm Value, and the Market" by C. Thompson
• "Modeling by Extreme Value Theory: Using Transformed GEV and GPD Distributions" by J. Han
• "Predicting Return to Work Using Data Mining" by B. Senesky

The Future of AARC

The AARC's potential looks promising, and the CAS will continue to support its growth and continued success. AARC is a unique opportunity for networking and idea sharing in a smaller, more concentrated forum. The exchange between academics and practitioners, and actuaries of all practice areas, is vitally important to the development of the profession. We hope to see you in Orlando next March!