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

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

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

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

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impact of research conducted outside the CAS has little impact on actuarial science Forum is not a professional journal Not peer reviewed Inclusive editorial policy

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 discussion groups that offer a place to shape ideas and present documents for informal peer review COTOR-VALCON is a good prototype

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

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

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

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)