Solving problems at the intersection of climate change and insurance: U of T actuarial science students rise to the challenge

March 31, 2021 by Vicki Zhang

Last Saturday, U of T actuarial science undergraduate students competed in the final round of the first-ever U of T case competition sponsored by the Casualty Actuarial Society (CAS).

Prior to the event, students were given insurance data, including premiums and losses, from a property and casualty insurance company, as well as historic hurricane data going back to the 1850s. Based on this data, the student teams had to evaluate the insurance coverage in dozens of locations around the globe and make suggestions in light of recent climate change trends.

After two weeks of analyzing the case data, each contending team provided a short video presenting their preliminary results and recommendations. Six teams were selected to move on to the final round on March 27, 2021. The finalists shared a range of crucial insights.

Some key findings included:

  • Based on historical hurricane data from the 1850s to 2016, climate change has caused a significant uptick in both the frequency and severity of hurricanes around the world.
  • Tropical regions have the highest and most concentrated hurricane risks, with significant financial implications to insurers.
  • Insurance loss ratios (loss paid/premium received) are uneven across regions, suggesting exposure and premium adjustments.

Graph from slide deck on hurricane data
From Team Incognito's slide deck: data visualization on the number of storms by year (1851-2011)

In addition, students got to practice their problem-solving skills by proposing a range of suggestions to insurers: from diversifying insured locations to decrease risk exposure in certain high-risk areas to premium adjustments.

The competition was judged by a panel of accomplished industry professionals: Fellow of CAS Li Li Lin from Chubb Insurance, Associate of CAS Ronald Tsang and Fellow of CASS Jimisha Gohil from AllState.

Congratulations to all of our winners and finalists:

First place winner: “Team Incognito” Danny Su, Jane Hue Yang, Elning Utami
Second place winner: “Team Premium” - John Choi, Cyndi Choi, Seung Wan Woo
Third place winner: Natalia Smuth, Sartaj Khurana
Finalist: Kevin Kai Pong, Wei Qiao
Finalist: “Team Eva” – Kexin Wang, Elaine Huang & Lai Jiang
Finalist: “Team Ace” - Guemin Kim, Zhuoyang Song

The event ended with breakout rooms hosted by several major insurers that facilitated conversations between students and employers – an additional opportunity for students to network with potential future employers and develop their careers.

Students also benefited from the strong peer mentorship this competition had to offer. Several third- and fourth-year actuarial science students volunteered their time to provide workshops and one-on-one consultations to students participating in this case competition.

Many thanks to our student leaders and peer mentors Jessica Zhang, Rachel Fermo, Rachel Yang, Nicholas Teghararian, Prinsa Gandhi, Howard Chen, Jiaqi Zhao, Harsh Rughani, and others, for championing the case competition and providing mentorship.

Additional thanks to CAS, our industry judges and Assistant Manager Employer Relations & Career Megan Whitehead for their invaluable support.

The actuarial science program at the Department of Statistical Sciences is looking forward to future collaboration and hosting this event again next year.