Research & Industry Advancements Flashcards

The CAS Working Party on Generative AI in Actuarial Science is most concerned with which limitation of large language models for actuarial tasks?

Answer: Hallucination and lack of auditability in numerical outputs

Hallucination—generating plausible but incorrect outputs—and poor auditability are key concerns when applying LLMs to actuarial calculations requiring precision.

In insurance research, 'loss development factor (LDF) selection' using machine learning differs from the volume-weighted average approach primarily because ML methods:

Answer: Can incorporate external covariates and detect structural breaks in development patterns

ML-based LDF selection can leverage external predictors (e.g., legal environment, inflation) and identify non-stationarity that simple averages miss.

Which research technique is used to assess the marginal contribution of individual predictors in a black-box insurance pricing model?

Answer: SHAP (SHapley Additive exPlanations) values

SHAP values decompose a model's prediction into contributions from each feature, providing interpretability for complex models.

The CAS research area of 'resilience modeling' for catastrophe risk focuses primarily on:

Answer: Quantifying post-disaster recovery trajectories and their impact on insured losses

Resilience modeling examines how quickly communities and economies recover after catastrophes, which directly affects loss development and business interruption claims.

A key finding in CAS research on social inflation is that it is primarily driven by:

Answer: Changes in jury verdicts, litigation funding, and plaintiff attorney tactics increasing loss severity

Social inflation refers to rising claim costs driven by legal system changes—nuclear verdicts, third-party litigation funding, and aggressive plaintiff strategies.

When CAS researchers use a train/validation/test split in a predictive model for claim frequency, the test set's primary purpose is to:

Answer: Provide a final unbiased estimate of model performance on unseen data

The test set is held out until final model selection is complete, providing an unbiased estimate of how the model will perform in production.

Which CAS research paper category addresses the application of stochastic simulation methods to estimate the full distribution of unpaid claim liabilities?

Answer: Stochastic reserving and bootstrapping papers

Stochastic reserving research uses bootstrapping and simulation to produce probability distributions of IBNR, not just point estimates.