May 2007 

RMI DEPARTMENT RECEIVES VARIOUS RESEARCH GRANTS

Eric Ulm, assistant professor of risk management and insurance, was awarded $15,000 by the Society of Actuaries.  

The Geneva Association awarded a $10,000 grant to RMI doctoral student Jeung Bo Shim to support his doctoral dissertation research. He will also receive funding to attend the 2007 Annual Meeting of the International Insurance Society to present his findings this summer in Berlin. 

Regulation of the U.S. Insurance Industry

RMI faculty members Robert Klein and Martin Grace were awarded a $200,000 grant by the Risk Foundation that will allow the RMI Department to partner with the Brookings Institute and the American Enterprise Institute to conduct a year long study on the future of regulation of the U.S. insurance industry: 

Project Abstract
On behalf of Georgia State University, the Brookings Institute and the American Enterprise Institute, we propose a project on “The Future of the US Insurance Regulatory System” that would address hotly debated issues and proposals regarding changes to the structural framework for insurance regulation and the reform of regulatory policies. Although there has been a fair amount written on these topics, the current literature has failed to pierce through the cacophony of conflicting opinions and address a number of questions posed by policymakers. The project we propose would fill the analytical and information gap by commissioning a series of high-quality, in-depth papers that would be subject to rigorous peer review. The authors of these papers will not only include well-known insurance economists, but we also plan to approach economists of with significant reputations in regulatory economics and in political science.  The papers will be presented and discussed at a high-level conference in Washington, D.C. and would be widely disseminated through a book, via the web and through other distribution devices. Background papers dealing with more detailed, technical aspects of the current system and proposed changes would also be developed and disseminated to assist analysts advising policymakers on proposed legislation.

Value Creation in Enterprise Risk Management

Richard Phillips (RMI Department Chair) and Martin Grace were awarded a $100,000 grant by the Risk Foundation to identify the aspects of enterprise risk management that lead to the greatest creation of shareholder value using the insurance industry as our testing laboratory: 

Project Abstract
As the Risk Foundation correctly notes in its request for proposals, there is a great interest regarding the possibility of using enterprise risk management as a value creation tool for insurers.   However, while many insurance company executives publicly suggest their organizations are actively implementing ERM programs, privately many of these same executives are unsure what constitutes best practice in ERM and whether ERM initiatives they have undertaken will provide the greatest benefits given the costs involved.  For example, a considerable debate exists about who should be principally responsible for the ERM process.  Some firms employ risk committees which report to the Board of Directors while others appoint CRO’s who report directly to the CFO or CEO.  The outcome of this research project will not only allow us to answer questions like this, but also provide estimates of the value increases insurers could expect by adopting best practice.