Actuarial Professionalism: Considerations Regarding Price Optimization

This presentation, based upon a presentation made to the Casualty Actuaries of Greater New York, discusses professionalism issues for actuaries concerning the use of price optimization in setting insurance rates. The presentation provides background on the topic of price optimization, including varying definitions of the term as given by state regulators and other interested parties. It discusses the issue in light of proposed changes to the Casualty Actuarial Society’s Statement of Ratemaking Principles and compares the changes to similar changes the organization made in rewriting the Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves.