June 2025 
50/50: Appreciating the Nuance of
Local Markets

The Actuarial department has many functions, but they all revolve around two primary objectives: rates and reserves. We also do a little bit of reporting on key operational metrics.

– Sokol Berisha, Chief Actuary Officer (5 years with the Actuary team)

[We are] responsible for ratemaking, reserving, large account pricing, data science initiatives, and operational reporting and analysis that support both actuarial and underwriting functions.

– Adalene Woodroof, Manager of Actuarial Underwriting Analysis (5 years, 12 total with ProAssurance)

Projects future costs for policies not yet written so that we can prepare rate filings for the rates in the Underwriting manuals and assist in the pricing of large accounts.

– Glenn Stewart, Director of Actuarial Services (21 years in July)

We handle project needs to maintain company solvency and set a policyholder rating that is reasonable and not unfairly discriminatory.

– Bruce Williams, Assistant Vice President of Actuarial Services (21 years)

“Rates are the dollars we charge to take on future liabilities,” Sokol explains. “This function can be done at a state level, meaning in the state of Alabama this is what we will charge a family physician, or it can be done at an account level where you incorporate the experience of that account. Generally, accounts that are larger will be individually priced … Reserves, on the other hand, are when the company writes a policy, we need to put aside money to pay for future losses. As an insurance company, the biggest liability on our balance sheet is the future losses we will have to pay for policies we have sold … At the end of the day, we sell a promise that we will be there when you need us. Having enough money in the bank to fulfill that promise is paramount.” 

In 2022, the Actuarial department established a data science unit to help evaluate risk. “The primary goal of this unit," says Sokol, “is to enhance our ability to differentiate risks at the individual provider level.” Using innovative tools and technology with predictive modeling, the team is able to assist Underwriting in risk selection and in proper pricing. “We are pushing the boundaries of what is possible in the MPL space,” he adds.

The team will prepare data for an external analysis, and that data goes through internal analysis for purposes of projecting future costs of claims for policies that have already been written. With this new information, Glenn explains, “the company can determine the necessary reserves we need to pay our future claim liabilities” (an aggregate adjustment applied to an aggregation of individual claims reserves which are determined by the Claims department).

The team also prepares quarterly and annual financial reporting for certain exhibits.

We asked team members, what are some of your duties?

Sokol: Talking! Most of my time is spent meeting with various leaders in my team to ensure we are making progress on our priorities. Or I am meeting with outside groups to discuss various other initiatives that we are working on collectively!

My job duties at this level are primarily to ensure that my team has the resources required to fulfill and exceed their objectives. I am there to help ensure that our department objectives are aligned with our strategic initiatives and to help each member achieve the goals we set at the beginning of the year.

The biggest item that is fully my responsibility is that each quarter I meet with senior management to make recommendations on the financial performance of ProAssurance. Based on my recommendations, which of course are based on the hard work of my entire team, management will book both current and prior accident years’ reserves. This number is what drives our operating ratios each quarter.

Tonya Bussey (Vice President of Actuarial Services - 24 years): Working with my team to determine the appropriate medical professional liability rate levels to charge for our various programs.

Bruce: Projecting ultimate aggregate claim payouts for liabilities already incurred for which the company is liable and projecting prices needed by customer for liabilities we are incurring as we write new policies. We tailor those prices to the exposure represented by the specific policyholder.

Glenn: I am primarily involved with the reserving and reporting side, as mentioned above. This means making sure we get the data together and we prepare the necessary information for management to make reserving decisions, as well as making sure we complete the reporting we are responsible for on time.

Ted Pyle (Director of Actuarial Services - started with NORCAL in 2002): Primarily large account pricing.

Adalene: I am responsible for calculating and analyzing key monthly metrics, compiling quarterly reports for executive leaders and regional leadership, developing tools to support book-of-business management and profitability analysis, and collaborating cross-functionally to address business needs through tailored ad hoc reporting.

Kenneth Saunders (Senior Actuarial Analyst - 15 years): Preparing reserve schedules (Schedule P, etc.) and loss report controls/maintenance.

Jean-Paul Kapuya (Actuarial Analyst - 20 years): Developing and analyzing rate indications and loss development factors and selecting trend rates. I prepare rate analyses for rate-making decisions. On top of those duties, I also perform class plan and territory analysis for most rate reviews when historical data is available.

Finally, I enjoy representing Actuarial in company functions and work cooperatively with other teams on projects and in meetings. (I currently serve as the chairperson of the Birmingham office wellness committee.)

Sokol: My favorite part of being an actuary is how interconnected we are with various departments within the organization. For example, I work very closely with the Claims team to ensure that we are correctly interpreting the trends we are seeing in the loss data, whether that is claim close ratios or average case reserves that they are setting up in individual states.

We work with Underwriting to ensure we are appropriately charging risks for the potential exposure they represent to the company. This is at the state level but also at each individual account.

We also work with Business Development and Marketing to ensure we release new products that will make us competitive in a particular state.

Working in Actuarial, I really feel like I get to interact with each part of ProAssurance. That is gratifying to me as it helps you understand the whole picture.

Tonya: Numbers, numbers, numbers! I have always enjoyed being able to connect mathematics to the real world; working in insurance was the ideal choice for being able to connect the two.

On the pricing side, we get to analyze claims and exposure data to determine which risks are more likely to have claims, and how big the claims are likely to be. Since we work in the medical professional liability space, we usually only have tens of thousands of records in our sandbox to work with (compared to actuaries working in auto and homeowners who usually have tens of millions of records in their data sets). With a relatively small data set, we frequently need to reach out to our business partners in Underwriting, Business Development, Claims, Risk Management, and elsewhere to help us connect the dots between the trends that we discover in the numbers and the real-world causal factors. The actuary can identify the spike in claims severity. It takes input from our team members in Claims and elsewhere to help us understand the “why” behind the spike.

Bruce: Finding new ways to address the everchanging landscape impacting our projections of the future.

Glenn: One thing I enjoy is the challenge of basically attempting to predict the future for this long-tail line of business. The nature of the MPL line means that the payments you are projecting now will be made over many years into the future. This adds an extra layer of challenge, but I believe it makes it more interesting than perhaps some quicker-paying lines of business. Just the whole concept that, unlike a factory where you just add up the costs of part A, B, and C that make up product D (which is certain because you can look at the receipts), we sell a product where we literally don’t know what it costs yet. Ultimately, we have to wait to find out if we were correct, but we still have to figure out a price to charge today. I just find it fascinating.

Ted: Collaborating with other teams to develop optimal solutions for our largest accounts.

Adalene: I enjoy partnering with teams across the organization to translate data into meaningful insights that support informed decision-making and ensure stakeholders have the information they need.

Kenneth: My wonderful department. I love being part of this team!

Jennifer Hooks (Actuarial Associate - 14 years starting in 2003, 15 total with ProAssurance): I enjoy getting hands-on with data, both to see it mesh into an output that can be shared with others, as well as to dig around in the details of it when necessary. Anything where there is a question to be answered or a problem to be solved can be a fun exercise.

Jean-Paul: My favorite part of the job is my colleagues. The Actuarial team is fortunate to be replete with an amazing group of people! They always go beyond to assist and support one another.

We asked the team, what is one misconception about your job or the Actuarial department that people often make?

Sokol: That actuaries can tell the future. I am joking of course … but not fully.

A big part of an actuary’s job is setting the price for things that will occur in the future or setting reserves so that the company can make future payments. This requires us to make a significant number of assumptions about the future. Often people associate our number as a “given/certainty,” but everyone needs to understand that the number is based on mathematical/actuarial principles, and very likely future events will be different.

As I often tell people, if I could tell the future I would not need a job as I would be an excellent stock trader!

Bruce: That actuaries aren’t social—communicating data needs and results are key skills.

Glenn: The first thing that is not necessarily a misconception, but may still be relevant, is that a lot of people simply just don’t know what an actuary is or does. Though in fairness, before I decided to get into this line of work, neither did I! But more to the spirit of the question of an actual misconception—that actuary numbers are right. That is to say, even though we do our best and we have strong skills in methods and analyses to try to get to good projections, we are sometimes going to be wrong.

We don’t have a crystal ball. We are just doing the best we can to estimate. So for us, the job is to (a) try to get as close as we can but, more importantly, (b) adjust and react as quickly as possible to make course corrections on those initial projections, especially if it’s clear that maybe we weren’t as close as we would have liked!

Kenneth: People often ask for investment advice because they have the misconception that we review investments.

Jennifer: That we make projections by using some kind of magic or just by guessing!

Jean-Paul: That actuarial work is boring! I often get this remark in most of my nonprofessional gatherings. This misconception likely stems from the technical nature of our work, which involves analyzing data and forecasting future events. However, for those of us who find numbers fascinating and believe that they inherently tell a story, actuarial work is intellectually stimulating and challenging. We must constantly stay updated on industry trends, economic conditions, and regulatory changes. We also play a pivotal role in developing financial strategies, making our work highly engaging and impactful.

Finally, we dug a bit deeper into the data science and asked how states and regions can potentially impact data and data projection.

Sokol: As an actuary your primary responsibility is to project what will occur in the future. Part of that process is understanding how data was generated and if there are unique patterns to it. As such, there are operational patterns that arise in data when you look at each state.

For example, in Florida the majority of policies carry $250K limits. So these losses will behave very differently than, let’s say, in Illinois where most limits are $1M and claims take a significant amount of time to resolve due to the slower nature of the court system.

Due to these facts, Actuarial must take geography into account when making projections.

Tonya: State regulations directly impact claim frequency and claim severity. Noneconomic damage caps, joint and several liability rules, venue regulations, statute of limitations, etc.—each has a significant impact on claim severity, which then directly impacts the cost of providing insurance coverage.

A look at results for the state of Ohio easily demonstrates this link (based on information provided by the U.S. Department of Health and Human Services in their National Practitioner Data Bank, for MDs and DOs in Ohio):

• 1991: Ohio Supreme Court struck down noneconomic damage caps. The next year, claim severity increased by 11.0%. The average annual increase in claims severity (1991 to 1995) was 5.5%.
• 1996: Ohio passed a package of tort reforms. The next year, claim severity increased by 0.1%. Average annual increase in claims severity (1996 to 1998) was 1.4%.
• 1999: Ohio again struck down tort reform. In 2000, claim severity increased by 10.8%, and average annual increase in claims severity (1999 to 2002) was 7.2%.
• 2003: Ohio passed a new package of tort reforms. Claim severity increased by 1.4% for the year, with average annual increase in claims severity (2003 to 2006) at 2.8%. From 2003 to 2009, it was 2.2%.

Bruce: Clean consistent data inputs and consistent company processes, especially claims handling, are vital—and more is better when it comes to data!

Glenn: There actually can be multiple ways regions and states impact how data and data projections work. For example, states have different laws and different legal/litigation environments, and sometimes those can even be different within a given state. States and regions can have different economic conditions, demographics, or cost-of-living standards. All of these can play a role in how much claims will ultimately settle for and, in turn, play a role in how much premium may be charged for a policy.