Insurance and Risk Management Department

By majoring in Insurance and Risk Management, an MBA student may fuse general management education with a specialized expertise. This major enables the student to gain a thorough understanding of both risk management and insurance theory and practice. Students are exposed to the legal, actuarial, financial, and economic principles underlying corporate and public sector risk management, with specific applications to individual, business, and social problems. In addition, the functional areas of insurance company management, e.g., investment policy, financing, marketing, pricing, and underwriting, are explored in depth. Risk management and insurance theory, functions, and strategies are all investigated against a background of accelerating change in the legal, regulatory, and economic environment.

Career opportunities for MBA graduates with a major in Insurance and Risk Management include positions in many types of consulting, risk management, employee benefits management, insurance company management, and personal financial planning. Risk management involves financial and statistical analysis of risk and insurance-related problems that confront businesses and public sector managers. Positions are available in risk management departments of large corporations, risk management consulting firms, insurance brokerage firms, and special risk divisions of insurance companies that deal with large corporate risks as well as government and nonprofit organizations around the world. The increasing importance of employee benefits in overall compensation management requires individuals with education in group insurance, pension plans, and deferred-compensation arrangements. Positions are available in corporate benefit departments, employee benefit consulting firms, and bank trust departments as well as social insurance agencies in the public sector. Insurance company management positions are available in general management, marketing, financial management, and research and planning; jobs in the regulatory sector are also available to our graduates. The growth in the number of firms providing personal financial planning has increased the demand for persons with education in the use of life insurance and related mechanisms in capital accumulation and estate conservation.

Additional opportunities for an MBA combining finance and insurance include positions in insurance company investment, pension fund management, and social insurance program design and oversight. Management consulting firms also seek candidates with expertise in insurance for positions involving insurance industry analysis, including insurance company formations and acquisitions. This demand can be expected to accelerate in view of the ongoing erosion of traditional regulatory barriers between commercial banking, insurance, and the securities industry.

The Insurance and Risk Management Department also participates in a cross-functional major in Environmental and Risk Management.

The Department also offers a concentration in actuarial science. The Wharton actuarial science curriculum prepares students for professional certification as an actuary. The curriculum includes general business courses important for developing a strong, general understanding of the business environment, as well as quantitative courses in economics, accounting, computer science, and finance. The location of the actuarial science program within an internationally renowned business school provides students with an exceptional opportunity to blend studies in economic theory, financial strategies, general business principles, insurance company management, corporate risk management, and public policy. Students enrolling are expected to have undergraduate training in calculus and at least one course in statistics and probability theory. Students are encouraged, but not required, to take actuarial examinations organized by the Society of Actuaries or the Casualty Actuarial Society during their studies. The Department will reimburse students' exam fees.

Some of the career opportunities for an MBA student majoring in actuarial science include actuarial or managerial positions with insurance companies, management consulting firms, pension consulting organizations, and accounting firms. Actuarial opportunities also exist in government, labor unions, and large industrial corporations.

Course Requirements - Insurance and Risk Management Major

Four courses selected from the following are required (4 cu). At least three courses must be INSR courses.

INSR 805 - Risk Management
INSR 822 - Employee Benefit Plan and Design
INSR 823 - Business Insurance and Estate Planning
Both INSR 811 Risk & Crisis Management and INSR 812 Markets for Pure Risk (mini courses)
or INSR 827 - Risk Management and Treatment
INSR 829 - Fundamentals of Actuarial Science I
INSR 833 - Actuarial Statistics
INSR 835 - Financial Strategies and Analysis: Insurance
FNCE 717 - Financial Derivatives
FNCE 719 - International Markets
FNCE 720 - Investment Management
OPIM 761 - Risk Analyis and Environmental Management

One Advanced Study Project (INSR 890) in Insurance and Risk Management is required (1 cu).

Any deviations from this program has to be approved by the MBA Advisor.

Professional Examinations and Actuarial Courses at Wharton

The Society of Actuaries (SoA) changed its examinations system in 2007.  To become an Associate of the SoA, a candidate must
 

1. Satisfy Validation by Educational Experience (VEE) requirements for three subjects: Economics (Microeconomics and Macroeconomics), Corporate Finance, and Applied Statistics (Regression and Time Series).  The easiest way for a Penn student to satisfy the VEE requirements is to pass approved courses with a grade of at least B-.  Approved courses include STAT 102, STAT 431, INSR 260, STAT 112, STAT 434, STAT 711, ESE 302, ECON 001, ECON 002, ECON 101, ECON 102, ECON 220, ECON 221, FNCE 100, and FNCE 203.
    

2. Complete exams P, FM, MLC, MFE, and C, collectively known as the preliminary education component.
    

   Exam P is a 3-hour exam testing knowledge of the fundamental probability tools for quantitatively assessing risk, with emphasis on application of these tools to problems encountered in actuarial science.  STAT 101-102 and STAT 430-431 are excellent course sequences to prepare for this exam.

   Exam FM consists of two and a half hours of multiple-choice questions, testing the understanding of the fundamental concepts of financial mathematics, including half an hour on financial derivatives.  The first part of INSR 251 covers the financial mathematics part of the exam.  FNCE 206, among others, provides the required introduction to financial derivatives.

   Exam MLC is a three-hour exam testing the knowledge of the theoretical basis of actuarial models and the application of those models to insurance and other financial risks.  The material for this exam is covered in INSR 251 (part 2), INSR 252, and INSR 253 (two sections)

   Exam MFE is a two-hour exam on financial derivatives, studied in FNCE 206

   Exam C is a four-hour multiple-choice exam testing actuarial modeling and important actuarial methods that are useful in modeling.  INSR 253 (one section) and INSR 260 cover a large part of this material.

3. Pass two of the following exams: course 5, course 6, course 7, one of the course 8 examinations, professional development component.
    

4. Complete the Associateship Professionalism Course. 

The Casualty Actuarial Society (CAS) has a different examinations system.  Exam 1, 2, 3F, and 4 of the CAS are exams P, FM, MFE, and C of the SoA and are organized jointly.  Exam MLC and CAS exam 3L are different; the CAS accepts SoA exam MLC.  The SoA does not accept CAS exam 3L

Course Requirements - Actuarial Science Major

The major in actuarial science consists of three required courses, one additional course, and an Advanced Study Project.

Three required courses (3 cu):

INSR 829 - Fundamentals of Actuarial Science I
INSR 830 - Fundamentals of Actuarial Science II
INSR 831 - Applied Statistical Methods for Actuaries

One additional course from the following (1 cu):

INSR 822 - Employee Benefit Plan Design and Financing
INSR 825 - Managing Pure Risks: Operations and Markets
INSR 833 - Actuarial Statistics (Recommended)
INSR 835 - Financial Strategies and Analysis: Insurance

One Advanced Study Project (INSR 890) in Actuarial Science is required (1 cu).

Deviations from the above requirements must be approved by the Department Chairman.