The Casualty Actuarial Society (CAS) Ratemaking, Product and Modeling Seminar 2024, hosted at the Sheraton New Orleans Hotel from March 17 to 20, provided a valuable platform for insurance actuaries and consultants to engage in dynamic discussions and gain new insights.
Addactis was privileged to be part of this event, contributing to both sessions and round table discussions and engaging in fruitful exchanges of ideas and experiences on territorial ratemaking, expected profit curves, portfolio management optimization, and much more.
Explore the article to delve deeper into Addactis’ participation at the CAS RPM Seminar 2024, where Juan Ignacio de Oyarbide, our actuary and Business Developement Representattive, provided invaluable insights and perspectives.
Addactis’ Insights from the CAS RPM Seminar 2024
SESSION
Credibility-Weighted Territorial Rating
Session description:
Creating and implementing new rating territories is a multifaceted process that demands collaboration among pricing actuaries, underwriters, and decision-makers. In the actuarial literature, various advanced methodologies exist to develop tailored geographical segmentations. However, translating the insurer’s strategy into the math and explaining the reasoning behind smoothing or clustering decisions are challenging tasks.
Credibility theory, with its simple interpretation, offers a bridge between parameters and concepts such as risk mutualization. Remarkably, there are clear connections between credibility parameters and the degree of smoothing, which, in turn, controls territorial cross-subsidies.
Some practical tools are valuable to ensure sound geographical pricing decisions: Disclosing credibility parameters, lift, Gini, or consistency measures are some tools that can be helpful both within and outside the organization.
In this session, Juan Ignacio de Oyarbide, Pricing Actuary and Business Development Representative at Addactis, explained how these could be implemented in order to achieve more fair and transparent rating strategies.
Session Highlights:
Creating and implementing new rating territories involves collaboration among pricing actuaries, underwriters, and decision-makers. Credibility theory simplifies complex concepts like risk mutualization, aiding in translating insurer strategy into practical math.
Practical tools like disclosing credibility parameters and consistency measures ensure sound geographical pricing decisions.
During this engaging session led by Juan Ignacio de Oyarbide and Dan Post, FCAS, MAAA, participants had the opportunity to discuss profit allocation techniques and delve into the intricacies of territorial ratemaking across various states.
Attendees actively shared their experiences, underscoring the vital importance of territorial ratemaking and its tangible effects in practice.
Get your complimentary copy of the presentation from this session
Are you struggling to translate your insurance company’s goals into effective territorial ratemaking decisions? Do you need practical tools to explain and justify your rating decisions?
Our comprehensive resource explores the intricacies of advanced methodologies as well as the links between risk mutualization and ratemaking. This will empower you to develop fairer and more transparent rating strategies.
ROUND TABLE
Expected Profit Curves:
Portfolio Management and Optimization with Fairness Constraints
Roundtable Description:
Juan Ignacio de Oyarbide led a roundtable on the feasibility of incorporating expected profit and expected conversion/retention in rating strategy design. The discussion explored the possibilities of promoting profit optimization practices with formal quantification and measurement of fair discrimination and mutualization.
Roundtable highlights:
The debate brought together diverse perspectives and backgrounds, highlighting ongoing developments in rating management and profit allocation under fairness constraints.
Key takeaways include:
- Ratemaking practices currently adopted in Europe could be implemented in the US landscape considering certain aspects.
- Regulation on adverse price-walking techniques will continue to evolve worldwide.
- The actuary will play a pivotal role not only in quantifying fairness but also in incorporating such measures in building a rating plan.
- Profit optimization is often wrongly associated with adverse rating practices; however, the concept extends beyond the use of elasticity curves and requires a holistic approach.
We look forward to contributing to the insurance industry by enhancing value through fair and transparent risk pooling schemes.
Our Speaker:
Juan Ignacio de Oyarbide
Actuary - Business Development Representative
Juan Ignacio de Oyarbide is a certified actuary affiliated with the Portuguese Institute of Actuaries (IAP), holding an Actuarial Science MSc with specialization in Bayesian modeling. Currently, he leads the ratemaking software practice at Addactis Worldwide. Over the past 5 years, he has played a pivotal role in various software implementations, addressing diverse aspects such as data transformation, risk and behavioral modeling, profit optimization, and rating strategy deployment. Presently, he is actively promoting a comprehensive profitability management mindset within insurance companies. He has recently participated in global conferences and contributed to recognized actuarial magazines.
Reflections on the CAS RPM Seminar 2024
In conclusion, our participation in the CAS RPM Seminar 2024 was a valuable opportunity to exchange knowledge, network with industry peers, and gain fresh perspectives.
We extend our gratitude to CAS for orchestrating this enriching event. We also express our appreciation to Dan Post for his collaboration, sharing his expertise and insights. Last but certainly not least, we extend our thanks to Klayton Southwood from WTW for his skilled moderation.
Addactis remains committed to contributing to the advancement of the insurance sector and looks forward to future collaborations and engagements within the community.