Three Practical Assignments for the Introductory Risk Management and Insurance Student

ABSTRACTI have developed, used, and refined an auto quote assignment, a life quote assignment, and a retirement analysis assignment that seem to communicate certain concepts well to the typical student enrolled in a risk management and insurance principles course. These assignments consist of worksheets requiring Internet research and a series of questions based on the answers discovered. Additionally, a short class discussion follows each of the three assignments to further ensure that students have achieved the primary learning objectives of each assignment. In their current form, these assignments are practical and require relatively minimal student and instructor time. Each could easily be expanded to accommodate students with advanced understanding and capability.INTRODUCTIONStudents in my classes report higher engagement and better performance when exposed to a multiplicity of learning approaches. Previous insurance literature has detailed specific and innovative assignments and activities intended to reinforce important concepts. For example, Baranoff (2001) describes a classroom game wherein students are assigned the burden of certain risks, which then may be transferred to insurers. Haley (2012) outlines a simulation that uses students' statistical knowledge to price insurance in situations where loss probabilities are unknown. Eckles and Halek (2007) describe a classroom simulation modeling asymmetric information and its relationship to adverse selection in insurance markets.In discussing auto insurance, life insurance, and retirement planning, some concepts are so important that illustrating them by example and requiring students to consider the impact of certain proposed changes make it much less likely that crucial lessons will pass them by. The auto quote assignment and the life quote assignment help students explore certain aspects of each type of insurance coverage. Students are required to use specific Internet sites1 to generate anonymous quotes that are reasonably close to students' actual life circumstances, and are then asked to make specific changes and record the difference in price reported by the quote generator. These exercises help illuminate (1) the factors that drive insurance prices and (2) the factors that drive the primary differences in auto insurance quotes and life insurance quotes. These two assignments are scaffolded, in that the lessons from the auto insurance quote are referenced during the life insurance quote to illustrate similarities and differences.In the retirement analysis assignment, students are asked to first generate a budget, using today's expenses in today's dollars, to estimate a retired person's likely expenses. They are then asked to project these expenses to their own future retirement date, to account for inflation. They get a price quote from a private company's Internet site2 for a life annuity that will make payments sufficient to cover these projected monthly expenses. Then, they are guided through a simulation exercise in Excel that helps determine how much must be saved each year during a working career to generate enough to purchase the calculated annuity at the time of retirement.In all three assignments, after manually generating different quote situations, students are asked a series of questions intended to help them consider some of these important concepts, in case they do not necessarily immediately grasp the intent of the exercise. In addition, a short class discussion follows to ensure that students understand the learning objectives of each assignment. All three of these assignments can easily be expanded to cover additional concepts, or can be narrowed and tailored to specific course objectives.3 The remainder of the article consists of a discussion of each assignment's learning objectives, rationale, completion process, and possibilities for expansion.Auto Quote AssignmentLearning Objectives1. …