2023 Webinar - Ratemaking
using Auction Theory - September 28
A high-level introduction to auction theory and its applications to insurance ratemaking. Examples in the webinar will focus on individual large risks and range rating, but the theory has very wide applicability across types and lines of insurance. Key messages include: The process of buying insurance coverage may be described as an auction; An actuary who is responsible for ratemaking should us conservatism to control for their own fallibility; The appropriate amount of conservatism in ratemaking can be modeled out using the tools of auction theory.
- Describe different types of auctions and understand their distinguishing features.
- Recognize factors that could give rise to a "winner's curse" in insurance sales.
- Control the risk of a winner's curse by optimizing a bidding function.
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