CAS Research Council Issues Request for Proposals: Evaluate the Reserving Impact of the COVID-19 Pandemic - Deadline Extended to June 10
The CAS Research Council is issuing a Request for Proposals (RFP) to evaluate the reserving impact of the COVID-19 pandemic.
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.
The CAS Research Council
The CAS Research Council was formed in 2021 to prioritize the research needs of the general insurance actuarial community. This work will augment the existing work of standing research working groups which focus on specific practice areas like ratemaking, reserving, reinsurance, and risk analysis. The operational oversight of projects will be designated to a project oversight group (POG) made up of CAS staff and volunteers.
Research Problem Description
Beginning in 2020 and continuing through the present, the COVID-19 pandemic had a profound impact on society. Most immediately, economic activity slowed substantially in calendar years 2020 and 2021. This will have a number of impacts. For one, reserve patterns will be distorted. Calendar year distortions mean that accident years are not independent, which is one of the key assumptions in many loss reserving methods. There are techniques which attempt to correct for these phenomena. We are curious to see whether they are appropriate for these particular time periods and the overwhelming set of changes which occurred.
In addition, there have been significant changes in the operation of civil courts. This impacts the timing of judgments, but likely also has an impact on legal strategy, jury disposition, and ultimate cost of claims. Are there strategies that actuaries may deploy to try and assess the impact of disruption in the civil courts such that reserve estimates are sound?
Change in economic activity will also generate a different claim frequency and severity profile beginning in 2020. Evidence points to reduced amounts of vehicle traffic, but there is also evidence that cars were driven faster and produced more severe accidents. There were and are likely other factors which speak to changing loss generation and settlement patterns.
One further consideration would be the way that the COVID-19 pandemic could redefine claim latency. Court interpretations ten or twenty years in the future could affect coverages that are currently in place, much like the industry found itself liable for significant liability for asbestos or pollution in the 1970s and 1980s. Should companies fashion a provision for those claim scenarios and – if so – how should they determine the amount of such provisions?
The end product of the research should be a paper, saved as (or converted to) a Microsoft Word file. The length should be sufficient to give meaningful, practical guidance to practitioners in a way that is concise yet complete. This typically means a paper of 15-50 pages. Those page counts should be regarded as rough guidelines only.
Where actuarial/statistical methods are used, they should have sound foundations, rooted in established principles. With that understood, the techniques within a method should be intelligible to an actuary working in reserving. Moreover, a method’s output should be explainable to insurance industry decision makers who may not have the experience or education of an actuary.
Any accompanying code examples will be shared on the CAS GitHub site (https://github.com/casact). All material on GitHub is released under the Mozilla Public License, version 2.0 (https://www.mozilla.org/en-US/MPL/2.0/).
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 Reinsurance Research Committee and entirely based on 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 informed shortly thereafter.
Interested researchers should submit their proposals and any questions to:
Brian A. Fannin, Research Actuary
Casualty Actuarial Society
Interested parties are welcome to submit questions about the RFP. All questions and responses will be circulated to all who submit a proposal.
Week of April 4
May 13, 2022
June 10, 2022
June 24, 2022
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 $30,000.
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.