Description: Explores the open vs. closed systems debate with regards to actuarial modeling and exposes the over-simplification. Valuable for anyone who uses models.

Description: In this paper we propose a model that can be used to analyze correlated claims data. In the process we introduce a class of multivariate generalized Poisson distributions. Then we present posterior distributions of its parameters. These distributions are difficult to manipulate, so we employ Markov chain Monte Carlo methods to draw random numbers from posteriors and predictive distributions. We present a collection of EXCEL VBA functions and subroutines to perform the simulations.

Description: Empirical evidence of reported losses suggests that insurance firms are interconnected in a nontrivial way, making them prone to systemic risk. Systemic risk can be viewed as the result of a cascading process, as it unravels throughout a network structure. In response, this work presents a simple analytical model that can simulate this process. The model is subsequently tested upon an empirical dataset via the means of numerical simulations. This work makes three main contributions. First, it provides a novel methodology for quantitatively and objectively assessing the systemic role of individual firms within the insurance domain. Second, it exemplifies the inability of traditional, firm-based information in serving as proxies for mapping these systemic effects. Third, it provides a practical example where network-based information (e.g., Criticality IDX, Sensitivity IDX) can outperform firm-based information (e.g., admissible assets, excess c apital) resulting in increased efficiency in the decision-making process. These findings strengthen the need to account for the interconnected nature of the domain while showcasing some of the potential benefits that can be harvested by doing so.

Description: Panelists discuss the methods HMOs employ to measure their providers' quality of care, outcomes, compliance with best practice guidelines, and cost control. From the Record of the Society of Actuaries, Vol. 25, No. 2.