Case Study Workshop

What is a Case Study? Practice Closing Thoughts

What is a Case Study? “A Case Study Interview is a miniature simulation of a typical client engagement, centered on a business problem that a client has likely contended with.”

What kinds of questions? Guesstimate / Market-sizing How many people in Michigan own life insurance? Solution Finding Given [problem], how should the company respond? Data Insights Given [chart, other data], what’s going on? Issue Framework What factors would influence the solution to [problem]?

What skills are tested? Skills Tested Business Thinking Think like a business leader Skills Tested Technical Analysis Business Thinking Communication Summarize and present your thoughts clearly Think like an actuary

What’s the format? Individual Group Fill the space Teamwork Leadership Delegation Fill the space

What’s the format? One big question, Methodology is more important than results Smaller questions, a bit more results focused

Case Studies: Practice Ready To Practice?

Case Studies: Practice Pineless Auto Insurance is one of the nation’s oldest insurers, but it is going through some tough times. It has an aging customer base, and has struggled to reach out to younger consumers. They have an idea for a new insurance product that involves placing a tracker on a customer’s vehicle to measure their driving behavior. Good driving will result in cheaper auto insurance, and vice versa. The Chief Actuary is all in for this idea, but the CEO wants your opinion as a consultant. Positives (thinking as an actuary): Good data (driving behavior, accident locations) Good underwriting/risk selection (Person pays money so that in the event of loss (car accident) the insurance company will cover the loss amount. Underwriting insures people paying the premium accurately reflecting how risky they are: how they drive, where they drive,what car they drive etc.. You do not want to price everyone the same as competitors can do good risk selection offering lower rates); Individualizing the premium rates Negatives (thinking as a business person): Creepy (map out the route companies taking) Can be pretty expensive when insuring the data is secure Start up cost (malfunctioning, stolen, hacked by the insured) Alternatives (no right answer): Look into self-driving cars Partner with manufacturing Change marketing strategy What are some of the positives of this idea? What are some of the negatives? What alternatives might you recommend to this client?

Case Studies: Practice Overall Type A Type B Type C 92 77 45 100 85 82 50 90 78 53 80 2016 2017 2018 Population Mix Three types of policy holders. Overall is the entire portfolio. Type A increasing, Type B is more or less same, type C is going down Type B is way lower that types A and C Most of our members are type C policy holders. Overall is decreasing. Flynn Mutual gives you the following table. There are 3 types of policyholders (A,B,C), and each entry on the table represents the average claim per customer of that type. What’s going on in this table?

Case Studies: Practice Overall Type A Type B Type C 92 77 45 100 85 82 50 110 78 53 120 2016 2017 2018 In the last problem, most of our members were type C. It is not the case now, something is happening from year to year. What was happening is that the percentage of our members in each bucket is changing. Percentage of our members of type B is getting bigger. Overall is average, so percentage must have been changing. Some of the data was wrong in the last table. The values in red are the updated values. How can you explain the trend(s) you see?

Case Studies: Practice Nabil’s Nerd Crew is a growing tech start-up based out of San Francisco, California. NNC is looking to expand by building a new office in Houston, Texas. This new office would potentially double the size of NNC’s workforce. You are a health actuarial consultant brought in to give your expertise on NNC’s potential expansion. What are some unique factors that a company like NNC should consider when it comes to their health insurance? Should a company like NNC be fully-insured with their health insurance, or self-insured? What are some strategies that a company like NNC can take to lower their health insurance costs? Helping to structure company’s benefits What type of company is it? It is a growing tech start-up. People are typically young and wealthier. Tech industry is competitive not just for employees but for employers as well. Employees expectations are high in terms of their benefits. However, what are the types are workers? Are they tech working? Is it the same type of business? Health Insurance cost will be very different between the cities. Health insurance can be very different because they are increasing the number of lives. Fully-insured is when insurance company pays claim amount. Self-insured is when the company itself pays claims. In second case, insurance company provides some of the administrative work, use hospital network (discounted rates). Advertise healthy lifestyle, drug testing, fitness watches, in house medical services

Case Studies: Practice Life insurance companies have faced some serious challenges over the past 30 years. What are some of these issues, and how have they impacted the industry? Low Interest rates Interest rates of the companies have been very very low in this company. Life insurance company take you premium and invest it bonds, stock market, private equity. So, low interest rates really limit how much life insurance can get on their investments. Competitions People are buying less life insurance. There are a lot of attractive alternatives: brokerage accounts, IRAs, index funds. More regulations Additional taxes were added. Companies offer services

Industry Knowledge Helps Takeaways Easy or Hard? Industry Knowledge Helps Practice Makes Perfect Case Studies Vary by Company