About the Project

This project is formally entitled Actuarial Ratemaking for the Wisconsin Local Government Property Insurance Fund, a grant that the Actuarial Science, Risk Management and Insurance Department within the University of Wisconsin has with the Office of the Insurance Commissioner (OCI). The initial one-year grant began in June of 2013 and was subsequently renewed in 2014 for another year.

The main purpose of the grant is to provide the Local Government Property Insurance Fund (LGPIF) with a mechanism (an "engine") that can be used to set rates for fund policyholders. The mechanism should be transparent and promote equity among policyholders by determining rates that reflect the appropriate level and amount of uncertainty of each risk. Secondary purposes of the grant include research and education.

Research: In addition to traditional, tried and true, methods for rating, we seek to develop cutting-edge predictive modeling tools for rating. Not only do these tools take advantage of additional sources of information for developing fair and equitable prices, they also provide a signal to fund counter-parties, including reinsurers, that the LGPIF is managing the interests of Wisconsin policyholders with the utmost care.

Education: The grant funds are primarily being used to fund students. Under this grant, business school students at the University of Wisconsin-Madison have an opportunity to get first-hand experience with government insurance, a unique educational opportunity. In addition to help developing the rate engine, our funded students are exploring additional aspects of the fund that will be helpful for education of all insurance students in our classes and potentially to OCI fund management. Currently, we are documenting the marketplace for local government property and liability insurance as well as reinsurance options available to the LGPIF.