Stage 4 (2023) “Premium City”

This is an actual case study that was presented to the participants of the Financial Modeling World Cup 2023, Stage 4 (June 9-12).

Case description:

The “Premium City” case focuses on actuarial financial modeling and explores the calculations used to assess risk, determine premiums, and evaluate financial scenarios in the context of life insurance. The case is set in a fictional city and involves calculating life insurance premiums based on factors such as life expectancies and distances to key facilities. Participants are tasked with determining the premiums required to provide a life insurance policy with a specified sum assured, considering factors like age, gender, proximity to facilities, and initial expenses.

The case is divided into three parts:

Part 1 – Calculating life expectancies based on age and gender using life tables and multipliers.
Part 2 – Determining distances from residents to schools, hospitals, factories, and parks, and considering the “accident hump” concept that affects premium calculations for younger ages.
Part 3 – Calculating premiums based on residents’ locations, incorporating factors such as age, gender, proximity to facilities, and initial expenses. The objective is to analyze the variations in premiums required to provide the requested sum assured in different scenarios.

The downloadable file consists of the following:
–Task: PDF file with Case Materials; PDF file with Questions; Excel file with Assumptions
–Solution: Excel file with full Solution Model; PDF file with correct Answers in Bold