News & Events Archive
Seminar on "The Rise of Peer-to-Peer Insurance and its Mathematical Modeling" by Dr. Runhuan Feng
Peer-to peer (P2P) insurance is a decentralized network in which participants pool their resources together to compensate those who suffer losses. It is a revival of a centuries-old practice in many ancient societies where members care for each other’s financial needs in the event of misfortune. With the aid of internet technology, P2P insurance is becoming a transparent, high-tech and low-cost alternative to traditional insurance and is viewed by many as a huge disruptor to the traditional insurance industry in the same way Uber is to the taxi industry.
P2P insurance took an unexpected twist in the Chinese market. A new business model called “mutual aid” is largely driven by many non-insurance tech firms, including the e-commerce giant, Alibaba. In less than three years, the mutual aid industry amassed close to 260 million participants, which is closely 20% of the Chinese population, or equivalently, 80% of the US population. Such an unprecedented development is causing huge anxiety for insurers and regulators in China and being closely watched by their peers around the world.
Despite the fast-changing landscape in this field, there has no previous academic literature for the theoretical underpinning of P2P insurance. Our research team presents the first such effort to build the mathematical framework under which the design, engineering and management of mutual aid and P2P insurance can be studied.
This presentation is based on joint work with Samal Abdikerimova and Chongda Liu.
University/Corporate Partnership launches to advance Cybersecurity Risk Analysis.
Arx Nimbus, the leading provider of financially-literate Cybersecurity risk quantitative analysis via its 'Thrivaca' platform, has entered into a collaboration agreement with the University of Illinois I-Risk Lab to explore and define methodologies for actuarial science applications in measuring cybersecurity risk.
With this key partnership, Arx Nimbus will refine and position Thrivaca as the risk analytics platform for assessing enterprise cybersecurity risk in financial terms. The insurance industry has long struggled to understand the actual value of cybersecurity risk and properly underwrite cybersecurity policies.
The Agreement provides the core framework for the organizations to work together on teaching, research, technology transfer, exchange of faculty and students, and staff development, as well as joint educational and research activities, participation of personnel for research and discussions, access to advanced graduate and professional students for collaborative or independent research, and exchange of materials, models/methodologies, publications, and other information related to cyber security and actuarial science.
Runhuan Feng, director of the Actuarial Science Program in the Department of Mathematics, said: "The Illinois Risk Lab is built on the premise that innovative practical research stems from the understanding of emerging needs for new technology in the industry. Cyber risk is a new territory of academic research. We are glad that our research interests and expertise coalesce with Arx Nimbus on this critical topic."
R. David Moon, CEO of Arx Nimbus, said: “We are very enthusiastic about this new level of partnership with the world-class Actuarial Sciences team at The University of Illinois. Together we examine and develop the most effective and sophisticated of quantitative techniques, and apply them to the largest risk facing most organizations today. By advancing together the state of understanding of cybersecurity risk, we bring much more effective knowledge to bear for the better protection of individuals, enterprise and society from these growing threats."
Feng, Linders and Chong receive MAPFRE grant for their research on Cyber Risk.
Cyber Risk is a rising concern for organizations in both the public and private sectors. The World Economic Forum's Global Risks Report 2018 names cyberattacks and cyber warfare as a top cause of disruption in the next five years. After years of development, the cyber insurance market is still in its infancy. Cyber insurance products are less than satisfactory and often criticized for high premiums, low capacity and obscure policy language.
Illinois Risk Lab aims to develop technology to address issues impeding development in cyber insurance and seeks to provide potential solutions in several aspects including:
Better data and modeling for cyber risk assessment;
Developing mechanism to incentivize stakeholders to participate in the market;
Utilizing capital markets to share risks and spur the growth in insurance market;
Raising awareness of cyber insurance as risk management tools.
This research project won the Ignacio H. de Larramendi research grant from the MAPFRE Foundation in Spain. The Larramendi grant is awarded each year to research projects around the world in areas related to insurance and social protection.
Daniël Linders receives research grant from the TIAA Research Institute
Daniël Linders received, together with dr. Servaas van Bilsen from the University of Amsterdam, a research grant from the TIAA Research Institute. The title of the project is optimal variable annuity design.
Runhuan Feng and Daniël Linders publish study manual for the SOA exam Statistics for Risk Modelling
Together with Prof. Ambrose Lo from the University of Iowa, Runhuan and Daniël publised a study manual to aid students pass the new SOA exam Statistics for Risk Management (SRM). The manual covers all the learning objectives of the SRM exam in a easy-to-digest way. The manual contains many original practice problems. The interpretations and insights that are presented will foster a genuine understanding of the syllabus material and discourage slavish memorization. The manual concludes with an original sample exam.
Runhuan Feng publishes book on Computational Risk Management and Equity-Linked Insurance
Features of the book:
A comprehensive and self-contained introduction to quantitative risk management of equity-linked insurance
A collection of mathematical formulations of risk management problems presenting opportunities and challenges
A handbook summarizing state-of-art computational techniques
Bridges a gap between latest development in finance and actuarial literature and the practice of risk for risk management professionals
A comprehensive review of both Monte Carlo simulation methods and non-simulation numerical methods.
First Actuarial Science Reunion in Chicago
Alumni of the Actuarial Science Program in the Department of Mathematics at the University of Illinois gathered for a reunion on May 17, 2018, at the Deloitte office building in downtown Chicago to show their Illinois spirit and reconnect. Attendees learned about the new IRisk Lab and a new alumni-sponsored scholarship fund that will support students as they experience the innovative actuarial education at Illinois. The organizing committee members were Jonathan Ankney, Mehb Khoja, Shawn Maloney, Corrie Proksa, and Sara Teppema. The Illinois Actuarial Science Program is one of the largest in the country, and is a Center of Actuarial Excellence. Nearly 6 percent of all U.S. actuarial graduates received their degree from the University of Illinois according to 2015 data.
Undergraduate Research Symposium (URS)
During the Spring 2018, the project "Optimal Reinsurance under Distortion Risk Measures" was presented at the Undergraduate Research Symposium (URS) in 2018.
This project was supervised by Assistant Professor Alfred Chong.
Alfred Chong appointed professor in Actuarial Science
Dr. Alfred Chong will be a new assistant professor. His position will be a joint position in Actuarial Science and Statistics. Currently, Alfred Chong is a J.L. Doob Research Assistant Professor in UIUC.
Runhuan Feng develops model to address pension crisis
This past year, Professor Runhuan Feng, Director of the Actuarial Science Program in the Department of Mathematics at Illinois, worked with the State Universities Annuitants Association (SUAA) on a legislative proposal for bonding the state’s unfunded pension liabilities. The bond plan would result in a $103 billion reduction in the state’s pension costs by 2045, according to Feng.