After working on a nagging insurance industry problem on and off for three decades, an actuary, who is also a software engineer, recently devised the solution—a new model of the occurrence form for liability insurance policies covering latent exposures.
Executive Summary
The combination of an actuary with unique skills, a firm with a unique business model and developments in technology and in the case law around liability trigger theories have all come together to pave the way for a solution to a problem that seemed impossible for decades. Praedicat's VP of Modeling, Melissa Boudreau, has created a model of the occurrence form to give insurers and reinsurers a view into where latent liability losses might be allocated to policy years and towers of insurance. While her innovation gives clarity into an issue arising out of the past, her personal journey to solving may be a model career for future actuaries, Praedicat's CEO believes.“We needed to design and code this pretty much from the ground up,” said Melissa Boudreau, chief actuary and vice president of modeling for Praedicat, a Los Angeles-based InsurTech analytics company. “So I did that. I called it my night job because that’s when I did most of the work,” she said matter-of-factly.
But the task was by no means a simple one, especially given the rigors of her day job, which include managing a modeling team and meeting with clients and internal teams of product managers and client-facing sales professionals to understand—and respond to—market priorities. In her words, the meetings take place “to understand what the urgent problems are and how we can truly revolutionize how insurance works given the tools we have.”
Boudreau referred to the revolutionary nature of Praedicat’s offerings and its business model several times during an interview that took place just a day after she completed a three-week European trip to meet with clients there. Offerings include a text-mining software platform (CoMeta) and a cloud-based liability catastrophe portfolio modeling platform (Oortfolio), which were created before she joined the firm. The latest one—the model of the occurrence policy form probabilistically allocating liability losses among defendants and policy years—is revolutionary for the industry but not entirely groundbreaking for Boudreau personally. In fact, it’s something she tackled during the early days of her actuarial career in the late 1980s, although she didn’t quite get all the pieces to work as well as they do today.
