June 2020

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. In addition, the committee is dedicated to providing SOA 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 slennox@soa.org.

The following general insurance research project has been completed and is published on the SOA general insurance research page:

  • Auto Loss Cost Trends 2019 Update—In the latter half of 2013, personal auto insurance carriers noticed an uptick in property damage liability and collision frequency. Subsequent loss cost experience has varied in frequency and severity, and by coverage type, region, demographics, weather patterns, quality of road maintenance, congestion level and other factors. In response, industry partners banded together to analyze these trends. Using publicly available data from the Federal Highway Administration, Bureau of Labor Statistics, the Census Bureau, and other sources, an analysis group is searching for explanatory variables correlated with these losses. These reports update the reports previously published in January and September 2018.

The following SOA research projects relating to general insurance have been completed and are awaiting final copy-editing before being published on the SOA general insurance research page.

  • Quantification of Cyber Risk for Actuaries—This research aims to develop an economics-based risk analysis framework to help actuaries quantify cyber security risk into monetary value. The innovations of the proposed research are:
    • Development of a risk analysis method emphasizing the interdependencies and ripple effects of cyber failure in one system on other dependent systems through the synergy of their respective functionalities.
    • Inclusion of human factor as one vulnerability.
    • Development of a method to calculate monetary value of cybersecurity risk.
    • Validation of developed framework using agent-based modeling and simulation techniques.
    The deliverables of the project will be a report of the developed method. The researchers will also host a webinar to disseminate the research findings to a broad audience, as well as scholarly publications in peer reviewed journals and conferences.
  • 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.
  • Exposure Bases for Use in Pricing Cyber Insurance—This is a CAS project that the SOA will license because of its value in continuing the SOA’s interest in cyber risk and funding additional research in this area. This project will consider the nature of cyber risk exposure, review cyber coverages currently available, and then list candidate exposure measures for the identified coverages; considering suitability.

The General Insurance Research Committee is currently finalizing details for various submissions for research funding. Once the projects commence, the SOA will be seeking individuals to join volunteer project oversight groups (POG) to help guide and oversee each project. Each 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 slennox@soa.org. 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 slennox@soa.org.