Ratemaking Research Working Party

1. Ratemaking Research Working Party Stewart Gleason, Ph.D., ACAS, ASA, MAAA CAS Research Initiatives Coordinator Senior Vice President Guy Carpenter & Company, Inc.

2. Agenda • Working Parties • What is a working party? • Who forms them and why? • What’s wrong with the way things are now? • Can working parties really replace the call paper programs? • What are the current working parties? • What papers have been produced to date? • Are they working? • Research Paper Template • Research Taxonomy

3. What is a “working party”? • Essentially a task force focused on research of a specific topic or solution of a specific problem • Group effort with a single work product • Modeled on GIRO platform where it has been used successfully

4. Who forms them and why? • Currently, motivated and created by research committees • Recommend that at least two committee members participate in the working party, one as co-chair • Committees can identify problems of current importance and bring resources to bear • Can be in addition to or instead of call paper programs • CASCOR considering working party only this year • Team approach gives critical mass necessary to tackle larger problems in a more thorough and systematic fashion than individual researchers can • Group effort forces discussion during the production of the research • Enforcement of editorial and referencing standards • Encourages a thorough literature search as a necessary step in the process so that current state of the science is documented • By utilizing a broad knowledge base, it encourages inclusion of research produced outside the CAS

5. What’s wrong with the way things are now? • No keepers of the state of the science • If the CAS wants to be the “pre-eminent resource in…conducting research in casualty actuarial science,” a more proactive, systematic approach is required • Call Paper Programs • Not generating discussion: solitary practitioners produce and present but there is no context, follow-up or formal discussion • Inconsistent review and prize standards • Inconsistent appearance and structure of papers contributes to members’ filtration and overload problems • Not leading to systematic progress of the science • CAS Publications • Impact and notoriety of PCAS outside the CAS is minimal • Conversely, impact of research conducted outside the CAS has little impact on actuarial science • Forum is not a professional journal • Not peer reviewed • Inclusive editorial policy

6. Can working parties really replace the call paper programs? • The short answer is NO • The working party platform is not intended to stifle independent research efforts • Participation in a working party requires a margin of selflessness as credit will be diluted • Call paper programs occasionally produce stellar papers on self contained topics that are too small or too specific in scope to warrant a working party • The long answer is WELL, MAYBE, IF…. • Working parties are successful in delivering work products of good quality and which are comprehensive in scope • There is an alternative forum that encourages individual initiatives • Email discussion groups that offer a place to shape ideas and present documents for informal peer review • COTOR-VALCON is a good prototype

7. What are the current working parties? • Current working parties are • Correlations and Dependencies Among All Risk Sources • Executive Level Decision Making Using Dynamic Financial Analysis • Elicitation and Elucidation of Risk Preferences • Quantifying Variability in Reserves Estimates • Implication of Fair Value on Asset Allocation (no members) • Have they produced any papers? • Not yet! • How are they working? • Will hear today from members of current working parties on the practical matters of implementation • How they are structured • How they are parceling out work • How work is reported back to the group • How work is edited for inclusion in the group work product • Too early to tell if they are really being successful

8. Research Paper Template • Standardized format for research papers has been developed and is available on the CAS website • Will give a consistent appearance and structure to CAS research publications • Working parties, call paper programs and other Forum submissions will be required to use it from this point forward • Available for download on the CAS website • Review period open until March 19th

9. Research Taxonomy • Hierarchical classification system for research work conducted within the CAS • Approved by the research committee chairs for implementation in September, 2003 • Web based search tools will be developed to facilitate literature searches over next 6-8 weeks • Migration of the Online Database of Actuarial Abstracts will begin after that (about 4,000 citations) • Volunteer workforce • Two rounds of review, with author as first reviewer whenever possible • Up to six categories per paper • Work is being overseen by Erin Clougherty, Information Specialist for the CAS • Available for download on the CAS website • Review period open until March 19th

10. What does a “Research Initiatives Coordinator” do anyway? • Carries the working party message to the research committees and encourages the formation of new working parties • Facilitates transfer of experience and solutions between research committees and working parties • Acts as a “Help Desk” to assist in wading through all of this new research stuff • Goes to every committee meeting and CAS seminar that Don Mango can’t (which is all of them)