December 2018

General Insurance Research Update

By Scott Lennox

The General Insurance Research Committee continues to meet monthly to identify relevant research topics and potential partnering organizations with the goal of furthering the SOA’s activities in general insurance. As well, the committee is dedicated to providing members with results that will help them in their day-to-day activities. The committee welcomes ideas for consideration and is seeking additional members. If you are interested in either submitting ideas or becoming a member, please contact Scott Lennox, SOA staff fellow at

The SOA has the following two general insurance research projects that have been completed and are published on the SOA general insurance research page ( /Research/Research-Projects/General-Insurance/default.aspx):

  • Incorporation of Flood and Other Catastrophe Model Results—This research report on the incorporation of flood and other catastrophe model results into pricing and underwriting is prepared by the authors for the Canadian Institute of Actuaries, the Society of Actuaries, and the Casualty Actuarial Society. This research follows upon the recent emergence of water damage claims and climate-related perils as the largest claims costs facing property insurers in Canada. With the upwards trend in water damage claims, Canadian insurance companies have responded with the development and introduction to the market of property protection flood endorsement policies.
  • Market Framework and Outlook for Automated Vehicle Systems—The surface transportation industry is in the early stages of a series of profound changes, stimulated by the development of increasingly sophisticated driving safety and automation technologies. Considerable uncertainty exists regarding the speed with which these changes will take place and the nature of their impact on safety, the overall demand for travel, vehicle sales, and vehicle ownership. This report does not attempt to forecast the pace of these changes, instead advancing a list of “trigger points” that might serve as leading indicators of change.

The SOA has the following research project relating to general insurance currently in progress:

  • Predictive Analytics an Application to Agriculture—The overall aim of the proposed research is to develop new predictive models in the context of agricultural insurance. To accomplish the overall objective, this research will include developing an innovative time-series extrapolating model that can provide long-term crop yield forecasting. A main contribution of this research is that the new proposed forecasting model can decompose the effects of weather and technology on crop yield. Therefore, the forecasting model will help to explain how much of the observed yield trend is due to advances in technology, and how much of the trend may be due to weather conditions.

The SOA General Insurance Research Committee is currently seeking individuals to join a volunteer project oversight group (POG) to help guide and oversee the following project:

  • Projecting Dependent Loss Ratio Under Shifting Parameters—This research will focus on stable and accurate loss ratio projections for reserving and ratemaking. Ultimately, the goal of any company is to minimize the discrepancy between projected and realized loss ratios. This research proposes a least squares approach to minimize this discrepancy.

The POG seeks four to seven volunteers who may be FSAs, ASAs, or non-members with backgrounds in the topic. Volunteers are expected to participate in periodic, hour-long conference calls (a total of five to 10 calls expected over the course of a project) to review material and provide guidance. Research projects provide a way for volunteers to network, build upon their experience in the field, and help support the SOA’s research efforts. If you have questions about the research projects listed above, contact Scott Lennox, SOA staff fellow at If you would like to volunteer, please review the current open volunteer positions on the Volunteer Opportunities Database. (

Scott Lennox, FSA, FCIA, FCAS, is a staff fellow for the Society of Actuaries. He can be contacted at