CAS Reinsurance Committee Issues Request for Proposals: Research Paper on Wildfire
The CAS Reinsurance Research Committee is issuing a Request for Proposals (RFP) for a research paper on wildfire.
Casualty Actuarial Society (CAS)
The CAS was organized in 1914 as a professional society for the promotion of actuarial and statistical science as applied to insurance other than life insurance, such as automobile, liability other than automobile, workers compensation, fire, homeowners, commercial multiple peril, and others. Such promotion is accomplished by communication with those affected by insurance, 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 8,600 actuaries worldwide, employed by insurance companies, industry advisory organizations, national brokers, accounting firms, educational institutions, state insurance departments, the federal government and independent consultants.
Reinsurance Research Committee
The Reinsurance Research Committee addresses actuarial issues related to property and casualty ceded and assumed reinsurance. The committee's charge includes furthering the development and dissemination of actuarial practice, theory, and principles of reinsurance; identifying topics for research and discussion; monitoring professional developments and regulatory activities; establishing liaisons with other organizations working in this area; and sponsoring panels, seminars, and other public forums on reinsurance issues.
Research Problem Description
In 2017 and 2018, wildfires in California resulted in an estimated $25B in insurance claims. Going forward, we can expect issues around the availability and affordability of good insurance coverage in areas that are more susceptible to this peril. The problem of reconciling human settlement patterns with the prevalence of natural disaster has precedent in the form of flood, hurricane and similar events. The risk from those perils has been addressed through a combination of private market, insurance-based solutions, as well as public policy responses through items like construction codes, requirements for insurance availability, publicly supported assesments of risk characteristics in the form of flood maps and the like. Finally, the public has also generated public-private insurance schemes to ensure availability and affordability of coverage for some perils.
This project looks to assess what lessons may be learned from the private market and public policy response to historical challenges referenced above.
Researchers may consider one or more of the following, non-exhaustive list of questions:
- Are there learnings from other Government sponsored programs like Flood and TRIA that can be applied to wildfire?
- Are there opportunities for capital market solutions similar to instruments like catastrophe bonds?
- What incentives – either public or within the free market – have generated appropriate, sustainable risk-taking from homeowners?
- How have national responses – the United States, Australia, Canada, others – varied with respect to the wildfire peril?
The research product should be accessible to actuary and non-actuary alike. That understood, the paper should provide sufficient data, conclusions, algorithms, or models to support an actuary who is pricing for this exposure. This should not be taken to mean that the paper will be authoritative and final, but that it will augment the actuary’s existing suite of methods.
Researchers are expected to make code supporting the research publicly available on the CAS’ GitHub site: github.com/casact. Every attempt should be made to use data which is available to the general public. Scripts used to harvest that information should be included with the research paper and made publicly available. If it is not possible to rely solely on publicly available data, researchers should provide simplified, exemplary – possibly synthetic – data which will enable a practicing actuary to replicate the major methodologies exhibited in the paper.
The paper should not make any recommendations about public policy and it should be written in such a way that such recommendations are unlikely to be inferred.
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 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 research.
The CAS contract will be awarded to the respondent who - in the judgment of the Climate Change Committee and entirely on the basis of their written proposal - is best able to perform the work as specified herein. If the committee determines that no proposal meets the requirements of the RFP, then no contract will be awarded.
Receipt of proposals will be acknowledged in a timely manner. Respondents who are not awarded the contract will be so informed shortly thereafter.
Interested researchers should submit their proposals and any questions to:
Brian A. Fannin, Research Actuary
Casualty Actuarial Society
Week of October 7, 2020
November 20, 2020
Question/expression of intent
December 11, 2020
December 31, 2020
January 15, 2021
Interested parties are welcome to submit questions about the RFP. All questions and responses will be circulated to those respondents who have submitted questions, or who have expressed their intent to submit by .
Compensation to researchers will be commensurate with the time required to carry out the work. Respondents should include an estimate of cost in their proposals. Total cost should not exceed $25,000.
Presentation, Ownership and Publication of Report
As a condition of selection, the CAS requires that all right, title, and interest, including copyright and patent, in and to the report be owned by the CAS. The selected researcher/research team must sign a formal research agreement that assigns all such rights to the CAS. In any publication of the report, the researcher(s) will receive appropriate credit with regard to authorship. The CAS may publish the report in its entirety, or any sections thereof, in any format and medium as it finds fit, including but not limited to CAS publications, and electronic versions such as on its Web site or physical storage media.
The researcher(s) should make every effort to be available to present the report at a CAS meeting or seminar.