ISU Alumni Day Presentation
Carol Sorenson, FCAS, MAAA
Workers' Compensation
Pricing
Agenda
Introduce Myself, Zurich, and CAS
What employers are looking for
How to make the most of your time at ISU
What I do
Things I’ve learned on the job
Case Study on Severity Trend
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About Me
Graduated from ISU Actuarial Program in May of 2006
Started at Zurich North America in June of 2006
Earned ACAS Designation, Spring 2009
Earned FCAS Designation, Spring 2010
Currently focus on Pricing Workers’ Compensation Insurance
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About Zurich North America
Subsidiary of Zurich Financial Service Group
Headquartered in Zurich, Switzerland
60,000 employees serving customers in 170 countries
Group has remained profitable throughout the financial crises
ZNA: Commercial Property & Casualty Insurer
Headquartered in Schaumburg, IL
Products like: Property, Worker’s Compensation, General Liability, Auto
Liability, Medical Malpractice, etc.
Customers range from small to large and cross many industries
Actuarial
Approximately 200 actuaries and actuarial students in NA
Actuarial Student Program provides study time and raises for passed exams
Domestic and International Job Rotations
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Casualty Actuarial Society
2011 Exam Structure
Associate
VEE, Exams 1-4, CAS Professionalism Course
Module 1: Risk Management and Insurance Operations
Module 2: Insurance Accounting, Coverage Analysis, Insurance Law, and
Insurance Regulation
Exam 5: Basic Ratemaking and Reserving – 4 hours
Exam 6-US: Regulation and Financial Reporting – 4 hours
Fellowship
Exam 7: Advanced Techniques in Unpaid Claim Estimation, Insurance
Company Valuation, and Enterprise Risk Management – 3 hours
Exam 8: Advanced Ratemaking – 3 hours
Exam 9: Financial Risk and Rate of Return – 3 hours
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What employers are looking for:
The best person for the job.
Technical Skills
High GPA
Actuarial Exam Success
Internship Experience
Problem Solving Skills
Computer Skills: Excel, VBA, SAS
Non-technical Skills
Communication Skills
Leadership Skills
Time Management Skills
Personal Characteristics
Enthusiasm
Confidence
Drive to Succeed
Personality
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Get Involved at ISU!
Gamma Iota Sigma
Actuarial Club
Benefits
Improves Non-technical skills like
communication, leadership, and
time management
Toastmasters
Katie Insurance School
Leadership Program
International Internships
Student Government
Helps differentiate you from our
candidates
Gives you more material and
increases your comfort in
interviews
Volunteering
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My Role at Zurich: Workers’
Compensation Pricing
Trends Analysis
Frequency, Severity, and Loss Ratio Trend
Rate Indication Study
Profitability Studies
State Specific Analysis
Research Industry Data
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Lessons from the Real World
You’re never done learning.
There is often no right answer.
Work is a process of creation and improvement
Peer Review produces a better work product
Work projects often do not have a definite end point
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Case Study: Medical Severity Trend
Unlimited Medical Severity
70,000
On-leveled Average Severity
60,000
50,000
40,000
30,000
20,000
10,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Accident Year
Many actuarial analyses use loss trends to adjust a loss ratio to today’s level
of losses.
Prospective and historical trends can be hard to determine.
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Making a Trend Selection
Year Begin
Year End
Year Begin
Year End
Year Begin
Year End
2000
2008
2002
2007
2000
2009
Selected Trend
2000
9.5%
2001
9.5%
2002
9.5%
2003
9.5%
2004
9.5%
2005
9.5%
2006
9.5%
2007
9.5%
2008
9.5%
2009
9.5%
2010
9.5%
Pricing
2011
9.5%
10/13/2010
Exponential Fit
10.0%
R-Squared
97.6%
10.7%
96.8%
9.1%
95.9%
Last Year Selected
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
Use the graph to
determine appropriate
range to run exponential
regression
Consider economic
conditions and other data
issue
Consider last years
analysis and changes
since last year’s study
Make selection, here our
selection is close to last
year’s trend and does not
overreact to latest AY
severities
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Q&A
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