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 provides 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 Anthony Cappelletti, SOA staff fellow, at acappelletti@soa.org.

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

• Catastrophic Cyber Risk: An Expert Panel Discussion Series—This topic highlights various panel discussions on catastrophic cyber risk. There is a need to understand and provide greater context of this topic, which has implications for insurance companies, reinsurers, regulators, consumers, and society. The panelists brought an array of experiences and backgrounds, creating a strong and diverse conversation on catastrophic cyber risk. The objectives of this panel discussion were to:
  • Provide insights from experts on catastrophic cyber risks, available tools and methods to address these risks and challenges; and
  • develop an outline for future red teaming exercises and improve the understanding of defining catastrophic cyber risk, how catastrophic risks are handled, and catastrophic cyber risk scenarios.
• Cyber Risks in the Smart Home Ecosystem: Identification, Modeling, and Pricing—This project enhances the current understanding of cyber risks in the smart home ecosystem from the insurance industry's perspective. In particular, the quantitative framework and pricing strategies developed in this project can be immediately adopted/adapted by actuaries to price the cyber risks for smart homes, a fast-growing insurance market. The framework consists of four components: (i) identifying vulnerability-incurred cyber risks; (ii) classifying cyber risks into business lines; (iii) modeling cyber risks; and (iv) determining insurance premiums and coverages. This project lays a sound practical groundwork for launching cyber insurance for the smart home ecosystem, which will provoke further in-depth investigation along this research line.
• Perceptions of Younger Generations on Risk and Insurance—This study explores the evolution of and trends in how consumers from younger generations understand, investigate, and purchase private insurance plans, including how they regard the risks they face and the insurance products that can help them manage/mitigate these risks. It also covers their purchase method preferences for various types of insurance, their views on coverage levels, their use of social media and InsurTech/FinTech and how this affects their planning, and their views on and use of insurance agents and other financial professionals for education, advice, and products.
• CyLit: An NLP-Powered Repository and Search Tool for Cyber Risk Literature, dated April 2023—CyLit is a repository of cyber risk articles, with a Natural Language processing (NLP)-powered search tool that can easily be used by researchers to find relevant materials. CyLit was built to help the actuarial research community provide a context-aware tool for finding cyber literature, a central repository of cyber risk resources, and integration of literature on the trends in cyber risk.

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 Anthony Cappelletti, SOA staff fellow, at acappelletti@soa.org. If you would like to volunteer, please review the current open volunteer positions on the Volunteer Opportunities Database.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.

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