Lehmann Encourages Increased Research

Call Paper Winners Named at Ratemaking Seminar

NASHVILLE, Tn.—Speaking at the general session of the 1999 CAS Ratemaking Seminar, CAS President Steven G. Lehmann said that the CAS must sponsor the leading research, stimulate discussion, and share knowledge about the latest ratemaking techniques if it is going to stay at the forefront of property casualty/general insurance. More than 500 participants attended the seminar, held March 11-12, at the Opryland Hotel in Nashville, Tennessee. The seminar featured sessions on ratemaking and related issues as well as presentations from the Ratemaking and Data Management/Quality/Technology call paper programs.

"Things have really started to heat up in terms of new directions in ratemaking," said Lehmann. Among the new directions, Lehmann cited catastrophe pricing models as a must for proper pricing of property insurance today. He also credited data warehousing/data mining as allowing actuaries to bring more information to bear on ratemaking decisions than ever before. Other new directions included the use of DFA in ratemaking, new applications of general linear models, managed care, uses of scores in ratemaking, and risk loads.

Lehmann challenged the Committee on Ratemaking to sponsor areas of research "where the private market does not develop adequate statistical data for ratemaking." He encouraged research or experience studies in the areas of NPL sites, environmental and asbestos liability, new financial models for derivatives pricing, securitization, and other financial modeling areas.

Lehmann concluded his address touching on nontraditional areas of practice. "I want to see us develop these nontraditional practice areas while we are strong and growing—before we begin to see our numbers dwindling and practice areas showing signs of declining as the SOA is seeing right now," said Lehmann.

The Ratemaking Seminar also featured presentations of papers from two CAS-sponsored call paper programs. The CAS Committee on Ratemaking accepted four papers prepared in response to its call for papers. Keith D. Holler, David B. Sommer, and Geoff Trahair won the 1999 Ratemaking Prize for their paper "Something Old, Something New in Classification Ratemaking With a Novel Use of GLMs for Credit Insurance." Holler is with The Hartford in Hartford, Connecticut; Sommer is with Tillinghast-Towers Perrin in San Francisco, California and currently working in Brazil; and Trahair is with Tillinghast-Towers Perrin in Sydney, Australia.

Alan E. Wickman won the Management Data and Information Prize was for his paper "Insurance Data and Intellectual Property Issues." Wickman's paper was one of eight papers accepted from a call for Data Management/Quality/Technology Papers from the CAS Committee on Management Data and Information. Wickman is actuarial division administrator for the Nebraska Department of Insurance in Lincoln.

All papers accepted by both call paper programs are published in the Winter 1999 Forum.