KATIE SCHOOL STUDIES
The Katie School engages in industry studies on key and emerging issues facing the insurance industry. Some of these studies are conducted for specific clients, others are for general exposure. The studies featured here are for general exposure to the insurance industry.
The Katie School conducts two types of studies: Student research Studies, and Research/Consulting Studies. The Student research projects are facilitated by a faculty member, but the project research is conducted mainly through graduate and undergraduate students. The projects typically culminate with a report to the industry client.
The Katie School Research and Consulting Studies are conducted by faculty (often interdisciplinary) and address a particular issue facing the industry. The results of the studies are intended to provide industry with actionable items.
Interested in Katie School supported research? Click here to learn more about the ISU Innovation Consulting Community.
2020 Katie School Studies
This white paper presents current research and a summary of over 2000 insurance industry employees. Our findings indicates that engagement in critical to successfully transforming a remote workforce. And the key to engagement is closing the psychological (as opposed to structural) distance between managers and co-workers. Thanks to Neil Alcorn and Laura Erskine for their work on this. I think that this is a valuable study for all forward-thinking organizations looking to transform their workforce.
2018 Katie School Studies
Study One- Economic Impact of Insurance Industry On State of Illinois
The attached Katie School white paper and pdf of presentation done by Jim Jones at the Illinois Legislative Day in Springfield, IL in 2019 describes the role of the insurance industry in Illinois in contributing to the economy of the state of Illinois. The study and presentation include employment in insurance in Illinois compared to other states, the $ amount written, and claims paid by Illinois insurers, the breakdown of occupations and wages, and the contribution the industry makes in terms of municipal bond investments and charitable contributions.
2016 Katie School Studies
Drought‐Triggered Index Insurance Using Cluster Analysis of Rainfall Affected by Climate Change
Authors: Askar Choudhury, James Jones, Adolph Okine, and Raquiba (Lena) Choudhury
Abstract:
Farming often tops the list of agricultural practices that generate income for a large percentage of the population in developing countries, including Ghana. In Ghana, as in other developing countries, changes in weather patterns have negatively impacted crop yields. Traditional agricultural insurance can be a risk management mechanism to recover from these losses. However, traditional insurance has several drawbacks, including high administrative costs and moral hazard. An alternative would be index‐ based insurance, such as rainfall‐based index insurance. Accordingly, developing an associative model that may include linear or non‐linear relationships to establish a correlation of crop yield with rainfall may provide satisfactory results. In addition, the occurrence of a trigger that signals insurance payment due to drought is an important component in the pricing of drought‐triggered index insurance. In that regard, we have introduced model‐based cluster analysis for determining the drought trigger. Agricultural practices are highly dependent on the specific timing of various climatic conditions for crop growth and crop yield. However, climate change, such as increas‐ ing frequency and severity of droughts or floods, could pose severe threats to agricultural practices. Therefore, the effect of climate change needs to be incorporated into the analysis, along with other factors that affect agricultural production. In our study, we have found evidence that crop yield is significantly affected by climate change and, therefore, has the potential for indicating much variation in crop production.
Economic Impact of Insurance Industry on State of Illinois
This study, conducted in 2016 by the Katie School of Insurance at Illinois State University, examined the role of the insurance industry in Illinois with respect to its impact on the economy, including its role in state employment, loss indemnification, and institutional investment in government and corporate bonds, and its role as a contributor to state tax revenues.
The study looked at losses paid, employment, taxes paid, investments into communities, and charitable giving and highlighted how the Illinois insurance industry compared to other states. Illinois leads the nation in premiums written in both the property/casualty lines and health insurance lines of business. It is one of the top contributors to the state's GDP.
As reported by Insurance Business America, the insurance industry continues to grow in Illinois, providing $1.1 billion in tax revenue annually and nearly 145k jobs, doubling employment figures in surrounding states. Additionally, the insurance industry tops construction and agriculture in contributions to the Illinois GDP.
Data compiled for the study on the economic impact of the insurance industry on Illinois is accessible through the following links:
Ranking of Illinois Insurance Premiums Written to Other States Table
Investments of Illinois Insurers Table
Katie School Student Research
Illinois State University's Research & Tech Team
The Risk Management Implications of UAVs and Drones
This student research project, led by insurance major Daniel Liedke and overseen by Katie School Director Jim Jones, included students from multiple disciplines including computer science, political science, risk management and insurance, and agriculture.
"The whole purpose of this project is to get students to start to understand how to gather information, how to analyze information, how to contemplate the business uses of different technologies, evaluate the risks of different things going on—things that will be game changers in the future." - Katie School Director Jim Jones
Read more about this research project here.
Pet Insurance Research Team
Pet Insurance & Stakeholder Decision-Making Processes: Awareness, Goals, and Perceived Value
Marketing students Kayla Jenkins, Elyse Link, and Jarvis Sokolowich explored the potential for pet insurance products in the insurance industry. Under the direction of both the Katie School of Insurance and the Illinois State College of Business Marketing department, these students conducted focus groups with both potential consumers and insurance agents about their awareness and perceptions of the value of pet insurance. Both groups were concerned with the return on investment, and the students discovered that there is little awareness of the availability of pet insurance products for consumers and of the need for pet insurance products by insurance agents.
The research revealed that the market for pet insurance in the United States is less than 2% of its capacity while European markets were as high as 45% exposing a major gap for the American personal lines insurance market. Matching European levels estimates to a thriving pet insurance industry of around $15 billion. The implications of the research project demonstrate that the insurance industry needs to not only respond to the need of pet insurance products but also construct a messaging platform to communicate that product to its agents and potential customers to take advantage of this untapped market.
Read the full report and findings of the study here. Thanks goes to FIGO Pet Insurance!
The Pet Insurance Research team recently presented their findings to the local CPCU chapter as well as the 2016 Katie School/CPCU Symposium.
The Pet Insurance Research Team discussed their research on WJBC Radio in Bloomington, IL. Listen to the full interview here!
2015 Katie School Studies
The Role of Large Deductibles for PEOs in the Failures of Small Workers' Compensation Insurers
James Jones, Executive Director of the Katie School of Insurance
Abstract:
This study examines the way in which large deductible plans in some instances were abused by some employers at the expense of injured workers. It also considers owner abuse of these plans. Additionally, the failure of insurers, auditors, and actuaries to understand the credit risk of large deductible plans, which are inadequately collateralized, contributes to these problems. Studies conducted by regulators, legislators and other experts are reviewed for this study. Recommendations are based on these prior studies, recent investigations of insolvencies, and an analysis of their causes.
An examination of the underwriting guidelines (detailed in this study) by well-known insurers illustrate that large deductible policies, involving professional employer organizations, can be underwritten responsibly and have sustainable profitably. However, the insurers featured in this study significantly deviated from responsible underwriting and claims administration standards, oftentimes for the benefit of owners, or managers, at the expense of workers and employers. The case studies included at the end of this paper of actual insurers, and the circumstances surrounding their failures, highlight the important causes of these insolvencies.
Every attempt was made to make this study factual and objective. However, the recommendations made in this paper may generate concerns among numerous professionals, regulators, associations, and companies because the causes of these failures have numerous antecedents. You may contact the author James Jones if you have any questions.
Previous Katie School Student Studies
The Katie School of Insurance helps to facilitate student research projects each semester to help students develop skills in research, critical thinking, data analysis, business presentation, and business writing.
School Student Research Team: Brett Burba; Sarah Crowley; William Drobny; Nick Janky;Rachel Mann; and Nick Silva
Associated Faculty Collaborators: Steve Taylor; James R. Jones, CPCU, AIS, ARM, AIC; and Lindsey Pfleger; Katie Insurance School, Illinois State University
Abstract:
This study looks into the behaviors and perception concerning the use of social media by independent insurance agents in the Midwest, more specifically Illinois. By conducting this research, we hoped to understand the benefits of using social media in relation to the perceptions and behaviors currently exercised . We want to find out whether the time and money that could be assigned to growing and supporting the use of social media on the agency side of business would be for the greater good or whether efforts should be focused elsewhere . As has been apparent in the news media lately, there are good and bad ways to use social media in support of day-to-day business . The goal of this study is to get a grasp on the insurance agents' current use of social media in support of the agency and how the benefits of doing this are perceived.
Risk Management and Insurance for the use of Unmanned Aerial Vehicles
School Student Research Team: Daniel Liedke; Frank Busch; Devin Taseff; JP Smith; Adam Ringwood; Joseph Spero; Tasha Brown; Andrea Davidson
Associated Faculty Collaborators: James R. Jones, CPCU, AIS, ARM, AIC
Abstract:
The Katie School Unmanned Aerial Vehicle (UAV) Research Project is an Illinois State University, College of Business, Katie School of Insurance multidisciplinary student initiative aimed at studying and researching UAV applications in business, and developing risk management, security, and safety protocols for their use. The team consists of students in Insurance, Agriculture, Information Technology, and Political Science, who, through their combined efforts, are working to produce a research report detailing their study results and conclusions. Additionally, the team will consistently update interested parties through periodical articles and blog postings. Ultimately, the multiple articles and subsequent published report will seek to educate and inform those concerned with the safe implementation and commercial use of Unmanned Aerial Vehicles in the domestic United States.
Click here to view the students presenting their research project to industry professionals.
Previous Katie School Research and Consulting Studies
The Katie School also provides value to the industry by conducting research and consulting on industry issues. Some of the Katie School funded research included corporate governance best practices, the affect of insurance product diversification on company profitability, dealing with information overload by insurance agents, the affect of technology and automation on workers compensation claims practices.
The Beneficial Role of Insurance Industry in State of Illinois
Katie School of Insurance and Financial Services at Illinois State University
James Jones, Executive Director of the Katie School of Insurance
Aligning Workers Compensation Technology with Business Results
James Jones, Executive Director of the Katie School of Insurance
Michael Williams, Ph.D., Professor of Marketing at Illinois State University
Summary:
The objective was to determine the current and potential effect of technology on improving workers comp claim results.
Managing Climate Change Risk: Insurers Can Lead the Way
Deborah L. Seifert, Associate Professor at Illinois State University
Deborah L. Lindberg, Professor at Illinois State University
Abstract:
Rapid climate change has been occurring for the past few decades (IPCC 2012). These climate changes are predicted to continue and possibly accelerate for many decades to come (IPCC 2012). One of the industries most affected by climate change is the insurance industry; for instance, changing weather patterns could lead to increases in damages from events such as hurricanes, tornadoes, and floods (Mufson 2007). Fortunately, however, the insurance industry is uniquely positioned to lead the way with regard to climate change mitigation and risk management. Insurers can promote a more sustainable future through better risk-based modeling and product pricing; through innovative green products; through partnering with businesses for better environmental governance; through alliances with policy-makers and regulators to ensure voluntary market adjustments for risk; and by championing the enforcement of building code efforts (Lloyd’s 2006; Liedtke, Schanz, and Stahel 2009). Finally, while insurers can potentially have a major influence over the management of climate change risk in society, they must first model sustainability in orderto be credible advisors to customers and other constituents.
Socially Responsible Funds and Market Crises
Abhishek Varma, Assistant Professor at Illinois State University
John Nofsinger, Professor at Washington State University
Abstract:
Compared to conventional mutual funds, socially responsible mutual funds outperform during periods of market crisis. This dampening of downside risk comes at the cost of underperforming during non-crisis periods. Investors with Prospect Theory utility functions would value the skewness of these returns. This asymmetric return pattern is driven by the mutual funds that focus on environmental, social, or governance (ESG) attributes and is especially pronounced in ESG funds that use positive screening techniques. Furthermore, the observed patterns are attributed to the socially responsible attributes and not the differences in fund management or the characteristics of the companies in fund portfolios.
Drivers of Insurance Demand in Emerging Markets
Dr. B. Elango, Professor at Illinois State University
James Jones, Executive Director of the Katie School of Insurance
Abstract:
This study focuses on factors driving insurance demand measured as insurance density and growth rate of premiums in emerging markets during the years 1998-2008. Findings indicate that demographic factors explain a greater variance relative to economic and institutional variables for insurance density, while economic factors explain the greatest amount of variance in terms of insurance growth rates. We find that growth rate of the country, GNI per capita, interest rate, merchandise trade, and business freedom influence insurance density. The influence of growth rate of the country was in opposing directions in the case of non-life and life density.
Age-Gender Interaction on the Endeavor of Career Development
Askar Choudhury, Professor at Illinois State University
James Jones, Executive Director of the Katie School of Insurance
Abstract:
This study investigates the impact of age-gender interaction on the process of attaining human capital for the purpose of career development. The significance and magnitude of age-gender interaction on the completion time a measure for success is observed. After controlling for education levels gender is instrumental in affecting the process of career development initiatives for higher age groups. Data collected for this study consists of observations of Chartered Property and Casualty Underwriter designees who completed the certification program. Results indicate that the predictive power of gender on the process of career development initiatives to be contingent upon the age category. It is also imperative to observe that younger individuals completed the program much sooner than the others and there is no statistical difference in performance due to gender in those age groups. These findings are consistent with the assumption that an efficient career development process should be very much interrelated with the age-gender interaction. The results of this study indicate that the gender influence on the career progression is very much dependent on the life phase.
Outsourcing, Vendor Relationships, and the Insurance Industry
Steven Taylor, Ph.D., Professor at Illinois State University
James Jones, Executive Director of the Katie School of Insurance
Executive Summary:
The following white paper presents the results of a qualitative study of insurance industry executives’ perceptions of outsourcing and 3rd party vendor relationships. The results are based upon in-depth telephone interviews of 24 insurance executives across small to large insurance firms
Establishing An Index Insurance Trigger for Crop Loss in Northern Ghana
James Jones, Executive Director of the Katie School of Insurance, Illinois State University
Askar Choudhury, Ph.D., Professor of Management, Illinois State University
Domingo Joaquin, Ph.D., Associate Professor of Finance, Illinois State University
Aslihan Spaulding, Ph.D., Associate Professor of Agribusiness, Illinois State University
Krzysztof Ostaszewkski, Ph.D., Actuarial Program Director and Professor of Mathematics, Illinois State University
Horace Melton, Ph.D., Assistant Professor of Marketing, Illinois State University
Marjorie Danso-Manu
Richard Bill
Mukthar Mahdi
Asliddin Odilov
Genevieve Amamoo
Abstract:
As a consequence of climate change, agriculture in many parts of the world has become a riskier business activity. Given the dependence on agriculture in developing countries, this increased risk has a potentially dramatic effect on the lives of people throughout the developing world especially as it relates to their financial inclusion and sustainable access to capital. This study analyzes the relationships between rainfall per crop gestation period (planting – harvesting) and crop yields and study the likelihood of crop yield losses. We make recommendations on how this information could be used to develop a trigger for index insurance to help mitigate the financial risks to farmers and lenders who make loans to farmers in Ghana. The focus of this paper is on rainfall and crop yield and explores the potential for a drought loss insurance index trigger. This study concludes by describing limitations and challenges that must be overcome in order to develop such risk management tools and by describing the potential for crop loss index insurance based on area crop yield in northern Ghana.
College Students Reluctant To Use Facebook and Twitter Beyond Social Boundarie
Steven A. Taylor, Ph.D., Illinois State University
Jamie R. Mulligan, Ph.D., Illinois State University
Chiharu Ishida, Ph.D., Illinois State University
Abstract:
Brown (2012) asserts that faculty perceptions of Web 2.0 for teaching will influence its adoption. For example, social media’s influence on educational delivery is growing (Hrastinski and Dennon 2012). Zulu et al. (2011) note that business educators are only beginning to understand social networking related to education. We report an exploratory inquiry that confirms the growing evidence that many undergraduate business students do not support the use of Facebook as part of their formal academic relationships. However, an argument is presented that while existing tools for social networking such as Facebook may offer limited pedagogical utility, social networking as a concept none-the-less offers significant potential.
