Actuarial science students win CAS competition

March 10, 2022 by Eran Vijayakumar

The second annual Casualty Actuarial Society (CAS) Case Competition at U of T was a success! This past January and February students in the Actuarial Science Major and Specialist Programs competed in teams to solve a case study that gave them the opportunity to put their problem-solving skills to the test and have their solutions judged by industry professionals. 

1st place team: Jordan Milando, Zuva Gwata, Fergie Galeromeloe, Rongguan Gu. 

2nd place team: Shivanga de Silva, Pascal Lee Slew, Tianqi Sun. 

3rd place team: Jingwen Zhang, Amy (Sifei) Li, Christine Yun, Huyi Xiong. 

The case study required the teams to take on the role of actuaries at an insurance company and calculate necessary claim reserves for a large company’s property and casualty insurance policy. Teams were given a dataset of historical claims to inform their solution. The key challenge was to calculate claim reserves by choosing an appropriate estimation method to use and evaluate its effect on the insurance policy. 

Students had to decide whether to include catastrophic event data in their estimation of claim reserves, which would increase or decrease premiums and claim payouts accordingly. 

“Low premium rates can be advantageous for the insurance company as it gives the insurance the financial agency to make business investments. Lower premium rates allow insurance companies to be more competitive, broaden their customer base, and lower claim reserves. It also results in fewer liabilities in the insurance company’s financial statements,” says Gwata. 

The first-place winning team decided to include the catastrophic event data in their calculations, judging that catastrophic events are becoming more common and the need for necessary claim reserves which they balanced against the reality that including catastrophic event data can have a large impact on the estimation of reserves. 

“Through our data analysis, we found that the frequency severity method gave use more consistent estimates for reserves whether the catastrophe data was included or not, meaning that this method accounts for the fact that catastrophes like these don’t happen all the time,” says Milando. 

The case also provided an opportunity to see how events from recent history like the financial crisis of 2008 affect actuarial calculations. “One of the really interesting things our group found was the impact of the subprime mortgage crisis that was reflected in the data set and how it influenced our results,” says Gu. 

The competition provided a learning opportunity for actuarial science students to apply their skills to a real-world challenge. “The issues investigated in this case competition and the application of actuarial reserving techniques gave me insights into some of the work that actuarial professionals are involved in. I strengthened my technical and analytical skills and my ability to work and communicate in a team of diverse individuals to achieve a common goal,” says Gwata. 

On how to succeed in presenting results, Milando, whose team won first place, says: ”The analysis you do on the project is great but pointless if you can’t get your goal across. You can’t just put up all your calculations that took you three weeks to do and expect people to follow along in ten minutes.” 

If you’re an actuarial science student and interested in competing in next year’s CAS case competition, Xiong says “I highly recommend students give this competition a try and generate ideas from real-life experience to solve the question”. 

“Don’t be afraid. No matter what your result is, I believe everyone can benefit from this competition, and I am sure that the process will be fun,” says Li.