Casualty Actuarial Society

CAS Spring Meeting Concurrent Sessions

2010 CAS Spring Meeting
May 23-26, 2010

Concurrent Sessions

C-1: A Perfect Storm For P/C Analytics

Monday, May 24, 1:30 p.m.-3:00 p.m., Edison Complex (Grande Hall/1st Floor)

Significant advances in seemingly disparate areas such as infrastructure technologies, data availability, algorithms, and analytical tools, have created a perfect storm for innovative applications of analytics in P&C insurance. Indeed, these advances have turned conventional analytical approaches on their heads. No longer is one limited to using just internal data – a plethora of external, useful data sources are increasingly available for use. Technology innovations now allow us to store and efficiently process much larger datasets than ever before imagined, and perhaps most importantly, tools are emerging that can leverage cutting-edge technologies (e.g., cloud computing) and innovative algorithms (e.g., text mining, network analysis, etc.), to enable types of analyses never before practical, or even possible. This session will explore specific opportunities afforded by the alignment of these advances while at the same time exploring the limitations of models.

    Virginia R. Prevosto, Vice President, Insurance Information Products and Analytics, Insurance Services Office
    Karthik Balakrishnan, Vice President, Analytics, ISO Innovative Analytics
    Louise Francis, Consulting Principal and Founder, Francis Analytics & Actuarial Data Mining Inc.

C-2: A Practical view on China P/C Insurance Market

Monday, May 24, 3:30 p.m.-5:00 p.m., Stuart (Lobby Level)

With an annual premium income of USD 42 Billion in 2009, China P/C insurance market is one of the dynamic insurance markets in the world. Though its root can go back to the early twentieth century, the fast development is only a story of the last decade. Like today’s business world in China, the China P/C insurance market has been developing fast and presents its uniqueness.

The presenters of the session, fellows of CAS, have worked and lived in China, and have first hand experience as actuaries in China. In addition to general topics such as trend and growth potential, they will also cover specific issues such as business conduct, accounting evolution, regulatory changes, P/C actuaries’ working status. Comparison between the North America and China P/C insurance markets will be discussed as well.

    Kevin Lee, Senior Vice President and National Leader, Aon Global Risk Consulting Canada
    Cathy Hwang, Consulting Actuary, Milliman Ltd.
    Xinxin (Alex) Xu, Vice President, Aon Global Risk Consulting Canada

C-3: An Introduction to Monte Carlo Markov Chain (MCMC) Methods for Bayesian Analysis

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Wilder Complex (Grande Hall/1st Floor)

For many years, actuaries have been using credibility formulas to incorporate prior information into ratemaking. Multi-dimensional analogues have yet to find mainstream applications. Recent developments in Bayesian statistics have the potential to remedy this. MCMC methods can be easily adapted to a multi-dimensional context. The session will begin with one and two dimensional parameter models. It will close with some multi-parameter loss reserve models. The examples will illustrate how MCMC methods can lead to quantification of both process and parameter risk.

    Glenn Meyers, ISO Innovative Analytics
    Frank A. Schmid, Director and Senior Economist, National Council on Compensation Insurance Actuarial and Economic Services

C-4: Applying ERM and Capital Modeling Principles to the CAS

Monday, May 24, 3:30 p.m.-5:00 p.m., Spreckels Complex (Grande Hall/1st Floor)

The application of Enterprise Risk Management (ERM) principles have increasingly been adopted by business organizations in the US and globally. For insurance companies, ERM principles are often coupled with economic capital models that more closely integrate risk and capital management. Simultaneously, the role of the actuary has expanded so that today many actuaries are seeking designations to provide service related to both ERM and economic capital modeling.

Over the last few years, the CAS has adopted these principles to itself as an organization as well. Much of this work has been conducted by the CAS Risk Management Committee (RMC). Examples of the principles adopted include risk identification, risk mitigation, and investment and capital modeling.

This session will present the work of the RMC, and illustrate both the application of ERM principles, and the role of actuaries practicing in ERM and capital modeling. Concepts presented will include the approach to identifying key risks facing the CAS and the actuarial profession, the development and adoption of risk mitigation strategies, as well as modeling to evaluate the CAS surplus position and investment strategy.

    Aaron M. Halpert, Chair of the CAS Risk Management Committee
    Ann Conway, Consulting Actuary, Towers Watson

C-5: Balancing Rate Competitiveness and Rate Stability with Rating Tiers – A Case Study for Personal Auto Insurance

Monday, May 24, 1:30 p.m.-3:00 p.m., Hanover (Lobby Level)
Wednesday, May 26, 8:00 a.m.-9:30 a.m., Spreckels Complex (Grande Hall/1st Floor)

Since 1990s, the race in developing more complex insurance rating plans has helped insurance companies compete in the market place and avoiding adverse selection. However, it has also caused some challenges for the companies, especially on rate stability and regulatory compliance [1-3]. Some insurers have found that as they change or revise their rating plans, multiple rating products will be in production. Maintaining and managing different versions of rating plan in production is a difficult challenge that insurers contemplate. To avoid price disruption for renewal business, a new class plan typically is only implemented for new business.

One efficient approach, which has become popular in the industry lately, in managing the rate stability issue is to use rating tiers on top of a class plan. For example, as one or several new variables are considered for addition to a rating plan, they can be used for the rating tier without impacting the existing class plan. By doing so, we can keep the major portion of the class plan unchanged and limit the impact in the final rating through rating tiers. As a result, tier rating plans can be applied to both new business and renew business.

During this session, we present a case study demonstrating the advantages associated with rating tiers in balancing rate competitiveness and rate stability:

  • The case study will be based on actual personal auto industry data in Michigan.
  • We will explain, step by step, the process of developing the rating tiers using the industry data.
  • We will cover rating tier structure design and results. We will show how to set up the GLM pure premium and loss ratio models and the associated pseudo code programs to develop the rating tiers.
  • Finally, we will show how to manage and control price disruption through tier assignment or tier factor capping.

[1] Murphy, K. P., Brockman, M. J., Lee, P. K. W., “Using Generalized Linear Models to Build Dynamic Pricing Systems”, CAS Winter Discussion Forum, 2000, Casualty Actuarial Society.
[2] Warriner, W., “Finding a Balance between Rate Stability and Adverse Selection”, 2009 RPMS Seminar, Casualty Actuarial Society,
[3] White, J., “Project Management for Class Plan Project”, Spring 2008 CAS Meeting, Casualty Actuarial Society,

    Mo Masud, Senior Manager, Deloitte Consulting LLP
    Jun Yan, Manager, Deloitte Consulting LLP
    Bradley J. Lipic, Consultant, Advanced Analytics & Modeling, Deloitte Consulting LLP
    John White, Assistant Vice President and Actuary, The Hartford

C-6: California Workers Compensation - Where Do We Go Now?

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Wilder Complex (Grande Hall/1st Floor)

The legislative reforms of 2003-2004 have had a significant impact on the California workers compensation market, with average premium rates decreasing by more than 50% over the period. However, post-reform data shows sharp increases in medical costs, and recent decisions by the WCAB are also expected to increase indemnity costs. This session will focus on the post-reform California environment, and what those changes could mean for the market.

    Christian Lemay, Senior manager, Ernest & Young LLP
    David Bellusci, Senior Vice President and Chief Actuary, Workers Compensation Insurance Rating Bureau of California
    Alex Swedlow, Executive Vice-President, Research, California Workers' Compensation Institute

C-7: Chinese Drywall - Who Will Pay?

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Hanover (Lobby Level)

In the wake of the housing boom and hurricane activity a significant amount of drywall was imported from China between 2004 and 2007. There are numerous reports regarding corrosion to air conditioning, pipes and electrical wires as well as complaints about “rotton-egg” smell. Additionally, bodily injury claims such as headaches, respiratory problems, nausea, etc. have been reported. There are a significant number of legal issues regarding this exposure with a focus on which party is liable for the perceived damage. This session will discuss the issues surrounding Chinese drywall and the implications for the Property and Casualty Industry.

    Rachel Boles, Consulting Actuary, Towers Perrin
    Rachel Boles, Consulting Actuary, Towers Watson
    Fred Karlinsky, Esquire, Colodny, Fass, Talenfeld, Karlinsky & Abate, P.A.
    Howard Taylor, Vice President, Claims, Munich Re America

C-8: Commutations - A Cedant's Perspective on Risk Load

Wednesday, May 26, 8:00 a.m.-9:30 a.m., Windsor Complex (Lobby Level)

Insurance companies enter into commutations with their reinsurers for many reasons – both at their request and the request of the reinsurer. Some of the reasons insurers may commute include collecting from a reinsurer that is impaired or in run-off, collecting from an reinsurer that disputes coverage or is otherwise obstructive in paying, accelerating the receipt of a profit commission, accelerating the recognition of GAAP income on retroactive contracts, or because the reinsurance contract included a mandatory commutation date. The reinsurer may commute to eliminate long tail liabilities – elimination of which can generate underwriting income or reduce RBC required by rating agencies; to reduce claims maintenance on long-tail contracts; or, at the request of the insurer, to maintain a good relationship with the cedant.

Just as the original reinsurance contract included a risk load for the reinsurer, insurers need a risk load to cover the risk of the reacquired liabilities.

This session will give examples of commutation scenarios to illustrate these points and look at the magnitude of risk load to reacquire the liabilities.

    Brian MacMahon, Senior Managing Actuary, Reinsurance, Liberty Mutual Insurance Company
    Erin Bellott, Reinsurance, Liberty Mutual Insurance Group
    Lori Julga, Consulting Actuary, Milliman Inc.

C-9: Credit Risk Special Interest Section

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Garden Room (Lobby Level)

The Credit Risk Special Interest Section (CRiSIS for short) will be conducting its annual in-person meeting at the 2010 CAS Spring meeting. Current members as well as non-members with an interest in credit risk are welcome to join us for this session. The CRiSIS was formed to promote discussion and the exchange of ideas on the subject of credit risk evaluation, to provide forums for such discussions to take place, and to advance the knowledge of actuarial science as applied to credit risk through both original research and surveys of members’ and subscribers’ collective knowledge. This meeting hopes to make progress on all of these goals by leading a discussion on the insights actuaries can offer to a non-actuarial finance audience for reserving and capital attribution methods for credit risk. Results of our discussion (which we welcome you to begin online prior to the meeting) may lead to a paper on that subject.

    David Ruhm, Chief Actuary, The First American Corporation
    Michael Schmitz, Principal and Consulting Actuary, Milliman, Inc.

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C-10: Do You Know the Rules of the Road?

Monday, May 24, 1:30 p.m.-3:00 p.m., Continental (Lobby Level)

Could you be pulled over by the "police" for an unsuspecting violation? Are you heading for an "accident"? Is your actuarial "license" in jeopardy of being suspended? Learn the rules of the actuarial road in this interactive session! You, the audience, will have the opportunity to vote for the best answer! Don't miss this fun way to reinforce the "rules" you are required to follow to maintain your "license"!!

This session may count as professional continuing education.

    Chad Wischmeyer, Managing Director, Oliver Wyman
    John Wade, Senior Consultant, Pinnacle Actuarial Resources, Inc.
    Juemin Zhang, Acutary, Millian, Inc.

C-11: Economic Capital Models

Monday, May 24, 1:30 p.m.-3:00 p.m., Garden Room (Lobby Level)
Tuesday, May 25, 10:00 a.m.-11:30 a.m., Edison Complex (Grande Hall/1st Floor)

Rating agencies and regulators have increased their focus on Economic Capital Models of late, and this issue has also been generating a lot of discussion in insurance circles. While some may believe the value derived from Economic Capital Models is minimal, it is too late to ignore them now, as regulators and rating agencies are requiring them. The concern now is making sure these models are developed intelligently.

This session discussion will cover:

  1. A high level discussion on Economic Capital Models:
    • What is an Economic Capital model? How does it fit into ERM?
    • A discussion of the rating agency models (Best and S&P) and the regulatory models (NAIC RBC, Bermuda, Solvency II)
    • The view of the investment community (Do investors care if a company has an internally developed Economic Capital model? Do they care about BCAR or RBC measures? Do they even know what these mean?)
  2. What do actuaries who work on Economic Capital models need to think about?
  3. How can Economic Capital Models be used to manage a firm?
    Kevin Madigan, Consulting Actuary, Pinnacle Actuarial Resources, Inc.
    Eugene Connell, Senior Vice President and Chief Actuary, Erie Insurance Group
    Stefan Holzberger, Assistant Vice President – Rating Criteria and Rating Relations, A.M. Best Company
    Alan Seeley, Chief Property/Casualty Actuary. New Mexico Insurance Division
    Mark Verheyen, Vice President, CNA Insurance Companies

C-12: Florida Legislative Issues: Challenges and Opportunities

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Hanover (Lobby Level)

Florida has always been a challenging state with respect to property/casualty insurance due to its geographical location, demographics and diversity. In recent years the insurance market has faced an increase in challenges in the wake of natural catastrophes and politics. This session will begin with a discussion of the politics that have shaped the regulatory and legislative environments, the impacts of such with respect to the property market and concerns with the state’s Cat Fund, residual market and overall capacity and concentration trends. Scrutiny of the property insurance market, particularly homeowners, will be discussed as well as the impact this has on other lines of business. Finally, the panel will conclude on what the future could hold for Florida with predictions for change in the political landscape.

    Sheri Scott, Actuary, Milliman, Inc.
    Michele Balady, Second Vice President Business Insurance, Government Relations, Travelers
    Fred Karlinsky, Esquire, Colodny, Fass, Talenfeld, Karlinsky & Abate, P.A.

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C-13: Instructional Approach to Variance Models: Munich Chain Ladder/Capital Allocation

Monday, May 24, 3:30 p.m.-5:00 p.m., Wilder Complex (Grande Hall/1st Floor)

In this hands-on session we will walk through the mechanics of two models. The models are 1) the Munch Chain Ladder (Quarg and Mack) and Capital Allocation (Bodoff) published in recent issues of Variance. The purpose of the session is to bridge the gap between theory and practice. We will discuss the pros/cons of using each model, and review case studies using real data. While we will review the theory, the sessions are designed to provide a hands-on focus on using the models. For example, how can you use the Munich Chain Ladder model to improve reserve estimates? How does the model compare to other models for the same application. What other real life obstacles do you run into when using these methods? The goal is to help you develop the confidence and desire to go back and begin using these models in your process in addition to your other techniques.

Please note that participants will be expected to have their Laptops with them.

    Leslie Marlo, Director, KPMG LLP
    Louise Francis, Consulting Principal and Founder, Francis Analytics & Actuarial Data Mining Inc.
    Neil Bodoff, Senior Vice President, Willis Re, Inc.

C-14: Insurance Cycles: Are They Predictable?

Wednesday, May 26, 8:00 a.m.-9:30 a.m., Garden Room (Lobby Level)

Are insurance cycles predictable? Do we behave differently after the lessons learned from previous cycles?

The first speaker Steven Weisbart will make a retrospective analysis of his 2008 CAS Spring Meeting presentation on Market and Cycle, comparing what he predicted with what actually occurred.

The second speaker Joseph Monaghan will comment on market behavior. Is the insurance market more disciplined now or are the same dominating forces making the history repeat itself?

    Benoit Carrier, Vice President and Casualty Pricing Manager, Zurich North America
    Joseph V. Monaghan IV, Senior Managing Director, AON Benfield
    Steven N. Weisbart, Vice President and Chief Economist, Insurance Information Institute

C-15: Litigation Changes and Their Impact on General Liability

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Windsor Complex (Lobby Level)
Wednesday, May 26, 8:00 a.m.-9:30 a.m., Hanover (Lobby Level)

How has the legal climate changed during the past few years? Will we see a trend toward more favorable or unfavorable conditions for defendant companies and their insurers? How has the recent recession and financial crisis had an impact on tort trends? How can insurers protect their products from unanticipated (and under-funded) exposures?

This panel will provide an update on the litigation environment and its affect on general liability exposures.

    Terri Kremenski, Consulting Actuary, Towers Watson
    Patrick Hanlon, Lecturer in Residence, University of California – Berkely School of Law
    Damon T. Lay, Actuary and Product Manager, Farmer’s Insurance Group

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C-16: Marrying Underwriter Intuition and Predictive Analytics - A Workers’ Compensation Perspective

Monday, May 24, 1:30 p.m.-3:00 p.m., Spreckels Complex (Grande Hall/1st Floor)

As Predictive Analytics and GLM increase in popularity there is an increasing challenge associated with optimizing the acceptance and integration of these new techniques into sound underwriting processes and decision making structures. All too often these new tools are met by underwriters with the same skepticism as any other challenge to their established intuitive norms for risk selection.

This presentation will discuss how both actuaries and underwriters can engage each other in cooperative ways through predictive analytic endeavors to both sharpen the underwriters’ intuition and skill at risk selection and increase the real-world business case perspective of the predictive modeler. It will explore why no predictive model can be sustained in a vacuum as well as why no underwriter should address any predictive modeling project with anything less than a strong enthusiasm for the insights that can be garnered through the process. Finally, the presentation will give examples of how predictive models can help to mitigate some standard intuitive underwriting decision traps and how an underwriters intuition into the daily use cases for a predictive model can help stave off degradation of model stability.

    Gaetan Veilleux, Senior Director of Predictive Analytics, Valen Technologies
    Joel Appelbaum, Chief Risk Officer, Zurich Insurance
    Ken Schroeder, Vice President, Commercial Underwriting, Auto-Owners Insurance Company

C-17: Measuring the Economic Value of Risk Classification

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Spreckels Complex (Grande Hall/1st Floor)

When building predictive models for risk classification, an initial instinct for many would be to evaluate a model by a goodness of fit statistic. This session will discuss ways to evaluate risk classification models from an economic perspective. The basic idea of risk classification from an economic perspective is to identify risks where using the current classification significantly risks are either over or underpriced. The presenters will discuss properties of various economic measures of risk classification such as Value of Lift and the Gini index. They will then show how the measures perform with real predictive models.

    Glenn Meyers, ISO Innovative Analytics
    A. David Cummings, Vice President – Research, ISO Innovative Analytics
    Edward Frees, Professor - Actuarial Science, Risk Management and Insurance, University of Wisconsin, School of Business

C-18: Pay-As-You-Drive, Usage Based Auto Insurance – The New California Regulations

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Garden Room (Lobby Level)

What was the motivation behind the new California usage based auto insurance regulations? Will the regulations in their final form accomplish the original objectives? Will the new regulations give consumers more choice in their insurance buying decision with an opportunity to save money if they drive less? Will they simply mean more regulatory burden for insurers, or will they be seen as an opportunity for the early and innovative adopters? Join this panel of experts to discuss these and other questions on the new pay-drive regulations in California.

    Shawna Ackerman, Principal and Consultant, Pinnacle Actuarial Resources, Inc.
    Joel Laucher, Chief, Market Conduct Division, California Department of Insurance

C-19: Predictive Analytics: Moving from a Segmented to an Enterprise View

Monday, May 24, 3:30 p.m.-5:00 p.m., Garden Room (Lobby Level)

Predictive analytics is quickly becoming standard operating procedure within insurance companies. This holds true among actuaries working in pricing, with the majority of insurance companies using analytics in some manner in their risk pricing. Despite the advances in the use of predictive analytics, however, most analytic undertakings are line of business and functionally segmented, such that there could be numerous analytics efforts occurring completely independently with an insurer.

Insurance companies could benefit significantly from an analytics effort that is coordinated across an organization. Actuaries are well-positioned, given the growing experience in predictive analytics, to be a part of a team that translates analytics best practices to other areas, including claims, underwriting, and marketing.

This session will discuss the issues that arise with a segmented view of analytics, including data problems, less than optimal model development, resource inefficiencies, and analytic initiatives that compete with each other. The session will also cover steps and considerations in establishing a coordinated analytics approach which makes efficient use of the data and coordinates model development and implementation.

    Robert Walling, Principal & Consulting Actuary, Pinnacle Actuarial Resources, Inc.
    Mark Gorman, Principal, Mark B. Gorman & Associates

C-20: Proposed New CAS Continuing Education Policy

Monday, May 24, 3:30 p.m.-5:00 p.m., Continental (Lobby Level)

At its May 2009 meeting, the CAS Board approved a motion stating that all CAS members should be subject to CPD requirements, with exceptions, and charged the Executive Council with development of the details of such a policy (for approval at a future Board meeting). The second exposure draft of this policy was released in November 2009, with a comment period that ended in January 2010.

Members of the drafting group of current and past EC members that is developing this policy (on behalf of the Board and EC) will present the latest status of this policy, including comments received on the November 2009 exposure draft and the latest version of the policy that reflects those comments. This session is intended to include an extensive dialog between the drafters of this policy and the audience. It will also be testing an Audience Response System to gauge the general audience reaction to a series of questions on the policy and related Continuing Education issues.

    Ralph Blanchard, Vice President and Actuary, Travelers
    Kenneth Quintilian, Vice President and Chief Actuary, Medical Liability Mutual Insurance Company
    Pat Teufel, Principal, KPMG LLP

C-21: Reserve Variability Calculations

Tuesday, May 25, 10:00 a.m.-11:30 a.m., Continental (Lobby Level)

This session will demonstrate reserve variability under a variety of methods. The ChainLadder package is a library of functions written in R to perform reserve variability calculations, including Mack, Munich Chain Ladder and Bootstrapping. The package has recently been extended with multivariate capability, which the authors will unveil at this meeting. Simple examples will illustrate the package's use as a pure calculation engine as well its integration with MS Office. Dave Clark's Curve Fitting method will also be demonstrated. This method uses maximum likelihood theory to model the distribution of loss development, estimate future loss emergence, and assess the variability around that estimate. It will be shown how using an exposure base to supplement the data in a development triangle can reduce variability. Practical estimation error and extrapolation issues will be discussed.

    Daniel Murphy, President, Trinostics
    Markus Gesmann, Manager, Lloyd's Analysis, Lloyd's
    Wayne Yanwei Zhang, Data Modeling Analyst, Statistical Research, CNA
    Jimmy Curcio Jr., Senior Actuarial Analyst, Specialty Markets Actuarial, Munich Reinsurance America

C-22: Risk Margins: Impacts to Pricing and Profitability

Monday, May 24, 1:30 p.m.-3:00 p.m., Wilder Complex (Grande Hall/1st Floor)

Risk margins are a topic of interest in the actuarial world due to international regulatory developments, such as IFRS and Solvency II, and heightened attention to uncertainty measurement and disclosure resulting from the recent financial crisis. Much of the discussion to date has been from the point of view of impacts to accounting frameworks and solvency monitoring. However, the inclusion of explicit risk margins in insurance liability valuation creates implications for pricing decisions and profitability measures. In this session, we will highlight some of the key considerations for pricing and profitability resulting from the inclusion of explicit risk margins in insurance company financials. We will also explore how these considerations may differ by line of business. As this is an emerging issue, we hope the discussion will encourage lively debate.

    Kelly Cusick, Deloitte Consulting LLP
    Robert Miccolis, Deloitte Consulting LLP
    Glenn Meyers, ISO Innovative Analytics

C-23: Solvency II and You

Monday, May 24, 1:30 p.m.-3:00 p.m., Stuart (Lobby Level)

This session will discuss the latest developments in Solvency II and how it will change what actuaries are doing world-wide. Panelists will highlight reasons why U.S. actuaries should pay attention now.

    William Murphy, Principal and Consulting Actuary, Milliman Inc.
    Kendra Felisky, Director, Deloitte Consulting LLP
    Kathryn Morgan, Technical Specialist, Internal Models, Financial Services Authority

C-24: State of the Reinsurance Market

Monday, May 24, 3:30-5:00 p.m., Edison Complex (Grande Hall/1st Floor)

Early in 2010, the media had already “weighed in” on the January 1, 2010 renewals for the Reinsurance industry. Here is a sampling of the article headlines published very soon after January 1, 2010:

  • ADVISEN (daily service) January 11, 2010 --
    January renewals showed signs of the softening as reinsurers benefited from improved financial markets plus a lack of natural catastrophe claims in 2009. The three largest global reinsurance brokers -- Aon Benfield, Guy Carpenter & Co., and Willis Re -- said they all saw a drop in overall January renewal rates.
    “Retro pricing fell marginally, at the 1, January renewals”
  • BESTWEEK -- January 8, 2010
    “Reinsurers See Orderly, but SOFT January Renewals.”
  • BUSINESS INSURANCE -- January 11, 2010
    Fast-GROWING CAPACITY helps Lower P/C reinsurance rates
  • NATIONAL UNDERWRITER January 11, 2010
    “Reinsurance Rates Fall, but Discipline Cited”

With the benefit of four more months of “real” time to reflect and project, panelists will be discussing “what happened” with the January 1, 2010 reinsurance renewals and, more importantly, WHY, and where they see the reinsurance market heading in the immediate future as well as longer term..

    Nolan E. Asch, Principal, Reinsurance Division, ISO
    Kathy Garrigan, Senior Vice President and Actuary, Endurance Reinsurance Corporation of America
    Jonathan Hayes, Managing Director, Guy Carpenter & Co. LLC

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C-25: The CAS and You: A Resource for New Leaders

Monday, May 24, 1:30 p.m.-3:00 p.m., Windsor Complex (Lobby Level)

Do you think a CAS leadership position may be in your future? Are you a Chair or Vice-Chair of a CAS Committee or Task Force? This session is for you. Veteran CAS leaders will explain the vital role that Chairs play in accomplishing the CAS’s operational and strategic objectives. You will learn where your role fits in the CAS governance structure and what is required of you. You will also learn about the key resources that are available to help Chairs succeed and the secrets of getting things accomplished within the CAS.

    John J. Kollar, Immediate Past President and Board Chair
    Joanne Spalla, Past Member of the Board of Directors and Executive Council
    Patricia Teufel, Past Member of the Board of Directors and Executive Council

C-26: The Secret Language of Influence - Your Passport to Powerful Persuasion

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Continental (Lobby Level)
Wednesday, May 26, 8:00 a.m.-9:30 a.m., Continental (Lobby Level)

GOT INFLUENCE? How well do your words and phrases motivate (or de-motivate) others? Language training is the most neglected area of any management, leadership or business development program. Recent research from the world of psychology can help us increase the potency of our conversations. Useful for leading, managing and most critically, motivating others. This fun, interactive program will leave you wiser in your role as an executive, leader and manager and (most importantly) within your personal relationships.

  • Introduction to persuasive language patterns - how psychologists and linguists define influential language
  • Discover how to distinguish whether you should influence using “pain” or “gain.” Attendees will recognize how the other person is motivated either to attain goals or to solve problems. Each type of individual requires different dialogues to motivate them to action.
  • Identify whether you should offer evidence, testimonials or peer pressure to motivate specific individuals. Conversely, others make decisions based on their own beliefs and experiences and will not be influenced by endorsements, awards or accomplishments of yourself or your company. Uncover how you can influence each of these two distinct personalities.
  • There are five language patterns (you probably use regularly) that undermine influence. Master persuasion skills by raising awareness of words and phrases that can hurt your ability to communicate potently with employees, peers, buyers and personal relationships.
  • Wrap-up, call to action for newer, better language skills.
    Dan Seidman, President, Influence Coaching, Sales Autopsy, Inc.

C-27: Umbrella: A Primary Insurer & Reinsurer's Perspective

Wednesday, May 26, 8:00 a.m.-9:30 a.m., Edison Complex (Grande Hall/1st Floor)

What does the Insurer and Reinsurer look at in the evaluation of an umbrella portfolio and what type of analyses are relevant for this unique line of business? The Primary Insurer perspective starts with the coverage, underwriting guidelines, pricing and profitability review. The reinsurer evaluation starts with the pre-quote underwriting audit, moves through a review of the underwriting and pricing guidelines, a detailed analysis of the submission, the underwriting/pricing analysis and a final quotation. The goal is to share a sense for the information and data collected, examined and evaluated for this line from both perspectives. The audience members will be given the opportunity to ask questions and share their own perspectives.

    James W. Larkin, Senior Vice President and Property Underwriting Manager, Property Underwriting, Munich Re America, Inc
    Russell Buckley, Head of Pricing – Reinsurance, Munich Re America, Inc
    Richard Woytus, Casualty Underwriter, Regional Clients, Munich Re America, Inc
    Garick Zillgitt, Vice President - Casualty, Commercial Lines, Fireman's Fund Insurance Co.

C-28: Updating the Berquist Sherman Paper: A Third of a Century Later

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Edison Complex (Grande Hall/1st Floor)

Much has changed since 1977. Talking to claims and underwriting, etc. has become even more critical, and the list of questions to ask has nearly doubled. The need for deeper understanding of recent development data is critical to more accurate ratemaking, as well. Dramatic case studies will be covered. Learn about the new text on basic reserving that has replaced eight major CAS reserving papers on the syllabus.

    Richard Sherman, President, Richard E. Sherman & Associates, Inc.
    Aaron Halpert, Principal, KPMG LLP
    Scott Weinstein, Principal, KPMG LLP

C-29: Using Predictive Analytics to Understand Your Claims Process

Wednesday, May 26, 8:00 a.m.-9:30 a.m., Wilder Complex (Grande Hall/1st Floor)

There are numerous applications of predictive modeling to the claims function. This session will discuss how predictive analytics has been used to understand and enhance the claims process. Applications that will be discussed include:

  • Estimating claim settlement values,
  • Estimating the impact of law changes on claim values,
  • Developing claims early warning systems,
  • Using internal company information to identify potentially fraudulent claims and
  • Managing the claims process

Examples and case studies will be shown to enhance the understanding of the practical challenges of not only modeling the claims process, but assembling data and developing implementation plans for claims analytics.

    Roosevelt Mosley, Principal & Consulting Actuary, Pinnacle Actuarial Resources, Inc.
    Stephen Swenson, Insurance Development Executive, SAS Institute Inc.

C-30: Workers Compensation Loss Development Tail

Monday, May 24, 3:30 p.m.-5:00 p.m., Windsor Complex (Lobby Level)

Little credible data exists for evaluating the shape of the WC tail beyond 30 years of development. This session's panelists will present their findings from applying two very different actuarial models to medical WC tail data from 30 to 65 years of development. Some key issues that will be addressed are:

  • Once inflation is adjusted out, do medical costs for permanently disabled claimants change noticeably as they age?
  • What kind of long term rate of medical cost escalation has been exhibited for medical payments to permanently disabled claimants in the tail?
    Thomas Struppeck, President, Longhorn Analytics
    Richard Sherman, President, Richard E. Sherman & Associates, Inc.
    Frank A. Schmid, Director and Senior Economist, National Council on Compensation Insurance, Actuarial and Economic Services

C-31: Workers Compensation: Medicare Reporting Requirements and Impact on Claims

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Spreckels Complex (Grande Hall/1st Floor)

Federal legislation known as “Section 111” enforces reporting requirements on insurers to ensure that Medicare remains the secondary payer of a workers compensation, no-fault or liability claim. This session will discuss the potential impact of that legislation on the ability of insurance entities to close workers compensation claims, and the consequential potential impact on workers compensation claim costs and actuarial analyses. The requirements could radically change the ability of insurers to settle the medical component of workers' compensation claims, in turn impacting reserving and loss development for workers compensation claims. This requirement may also have a disproportionate impact on larger claims, affecting the excess of loss costs as well as the ground-up loss costs for workers compensation.

    Christine Fleming, Milliman, Inc.
    Raymond Blanchfield, Vice President, Claims, Munich Re America
    David Bellusci, Senior Vice President and Chief Actuary, Workers Compensation Insurance Rating Bureau of California

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Paper Sessions

P-1: 2008 Variance Prize Paper: “Management Strategies and Dynamic Financial Analysis”

By Martin Eling, Thomas Parnitzke and Hato Schmeiser
Monday, May 24, 3:30 p.m.-5:00 p.m., Hanover (Lobby Level)

Dynamic financial analysis (DFA) has become an important tool in analyzing the financial condition of insurance companies. Constant development and documentation of DFA tools has occurred during recent years. However, several questions concerning the implementation of DFA systems have not yet been answered in the DFA literature. One such important issue is the consideration of management strategies in the DFA context. The aim of this paper is to study the effects of different management strategies on a nonlife insurer's risk and return profile. Therefore, we develop several management strategies and test them numerically within a DFA simulation study.

    Carl Ashenbrenner, CAS Program Planning Committee
    Martin Eling, Professor, Institute of Insurance Science, University of Ulm
    Hato Schmeiser, Professor, Institute of Insurance Economics, University of St. Gallen

P-2: “A Pricing Model for Underinsured Motorist Coverage” and “How to Destabilize the Financial System: A Beginner's Guide”

Tuesday, May 25, 1:00 p.m.-2:30 p.m., Windsor Complex (Lobby Level)

“A Pricing Model for Underinsured Motorist Coverage” By Matthew Buchalter

Underinsured Motorist (UIM) coverage, also known as Family Protection Coverage, is a component of most Canadian personal automobile policies, with similar coverage existing in many American states. Traditional ratemaking methods are not appropriate for UIM due to poor credibility of available data as well as the unique characteristics of the IUM coverage. A substitute pricing model is presented that takes advantage of the association between UIM coverage and increased-limits liability coverage. The Ontario auto industry is analyzed to determine the level of adequacy of UIM rates in light of current industry trends.

“How to Destabilize the Financial System: A Beginner's Guide” by Shauna Ferris

What creates instability in our financial system?

In the past, prudential regulation has often focused on monitoring individual financial institutions. But in the aftermath of the global financial meltdown, there is a greater recognition that regulators must adopt a “macro-prudential” approach: taking a step back to look at the financial system as a whole, measuring the aggregation of risks across the entire system, and allowing for linkages and interactions between individual financial institutions. All around the world, the banking system is in disarray. During 2009, 140 American banks failed—and it seems likely that there will be many more in the near future. The FDIC has estimated that at the end of the third quarter of 2009, there were 552 “problem institutions” at risk of failure, with total assets of $346 billion. Of course, this is not just an American problem—banks have failed in many countries all around the world.

This paper asks, “What should we have learned from the previous banking crisis?”

    Benoit Carrier, CAS Program Planning Committee
    Matthew Buchalter, RBC General Insurance Company
    Shauna Ferris, Senior Lecturer in Actuarial Studies, Macquarie University

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