Protection from the weather: 2023 SOA case study challenge

Abstract

It is no mystery that bouts of extreme weather have the potential to cause life-changing amounts of damage. The people of Storslysia, the fictional country manufactured by the Society of Actuaries, are particularly prone to hazardous weather events. The country’s government relied upon our group of burgeoning actuaries to develop a social insurance program that will minimize the costs arising from climate-related displacement. I, along with two of my peers, designed a program that accomplishes this goal by providing incentives for proactive relocation to safer regions of the country while simultaneously offering relief to those people who are for whatever reason unable to leave their current position. This paper will discuss in detail how I, with the help of my group, utilized the 60 years of hazard records alongside demographic and economic data to ensure that the costs of our program are not only lower than the amount the government would expect to pay otherwise, but also that our program’s costs remain under 10% of Storslysia’s gross domestic product for the next 100 years.