Catastrophic events, natural or manmade, present significant costs to property owners, businesses, and government agencies. In many cases, insurance is utilized as a financial tool to protect against the impact of these losses. However, as the frequency and severity of these events continue to increase, insurance providers must implement innovative practices to ensure they are adequately serving their customers while remaining competitive.
Finding such innovative solutions is exactly what AM Best—the world’s first credit rating agency that focuses on the insurance industry—is attempting to achieve with their Student Challenge. Students participating in the challenge are to submit catastrophe risk solutions to finance risk related to natural and manmade catastrophic events (e.g. hurricanes, wildfires, pandemics).
The current class of Wisconsin School of Business Risk Management and Insurance (RMI) MBAs will be participating in this challenge and have created three groups to submit our ideas. After a week of brainstorming, each group chose to focus on areas of interest within the insurance industry. Our ideas include parametric insurance products aimed at providing coverage to farmers who experience crop losses due to severe weather events, providing emergency evacuation funds to low-income households affected by hurricanes and wildfires, and using catastrophic bonds to fund volcano insurance.
To help with refining our ideas, Joan Schmit, RMI Department Chair, scheduled a virtual meeting between the current MBAs and seven RMI MBA alumni. Current students were excited to meet with the alumni whose experience range from insuretech entrepreneurship to enterprise risk management consulting. During the 90-minute discussion, the students shared our product ideas and each of the alumni provided generous and valuable feedback. The conversation was both educational and motivating. Each of our groups left the meeting with a clearer vision of our product ideas as we worked towards the submission deadline at the end of September.
This experience has been just one of many, within our first month of classes that excites me about the work being done and the opportunities made available through the RMI department. I cannot wait to see what lies ahead over the next two years as we all work toward achieving our personal and professional goals.