FCAS, FSA, FCIA, MAAA
Independent Contractor and Consulting Actuary

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Steven G. Lehmann

Steve Lehmann is a Consulting Actuary with Abacus Actuarial Consulting, LLC, with over 40 years of actuarial experience. His practice includes loss reserving, ratemaking, development of pricing strategies including coordination of underwriting and rating programs, financial examinations, loss reserve opinions, rate filings, residual market studies and rate of return analysis. His skill set includes testifying before numerous regulatory and legislative bodies and before an arbitration panel on a variety of insurance matters including ratemaking, risk classification, agents’ contingent commissions and fair rates of return. He has a strong background in pricing and reserving of insurance products.

Mr. Lehmann, a co-founder of Pinnacle Actuarial Resources, Inc., retired from the firm in 2011, serving as the firm’s President from 2003 – 2008. His association with Pinnacle continues, working as an Independent Contractor from the firm’s Bloomington, Illinois office.

Mr. Lehmann is a Fellow of the Casualty Actuarial Society (FCAS), a Fellow of the Society of Actuaries (FSA), a Member of the American Academy of Actuaries (MAAA) and a Fellow of the Canadian Institute of Actuaries (FCIA). He is a past President of the Casualty Actuarial Society (CAS) and the American Academy of Actuaries (AAA) and has served as Chair of the Boards of both organizations. He has also served as Vice President and Chair of the Casualty Practice Council of the AAA and Chair of the Actuarial Standards Board Ratemaking Subcommittee. He is certified by ARIAS (AIDA Reinsurance and Insurance Arbitration Society) as one of some 400+ certified reinsurance arbitrators in the U.S.

Publications and Media

December 2012 Apex Discussion Series
Florida House Bill 119
Authored by Roosevelt C. Mosley Jr. and Steven G. Lehmann.

Impact Analysis of Florida HB 119
Actuarial Analysis Conducted by Pinnacle Actuarial Resources, Inc.
Authored by LeRoy Boison and Steven G. Lehmann.

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Case Studies

Catastrophic Risks

Catastrophic Risks

Pinnacle was retained by an insurance company specializing in catastrophic risk to identify and test alternative sources of risk financing capacity including traditional reinsurance and catastrophe bonds. In order to complete the project, Pinnacle designed a dynamic financial model to determine the cost/benefit of alternate risk financing strategies.

Territory / Summit Analysis

Territory / Summit Analysis

The insurer had not reviewed or adjusted their territorial boundaries in several years; and their current territories were not based upon an analysis of their underlying loss experience.

Pinnacle began with an evaluation of available insurer and external industry data at the ZIP code level as well as their current and future policy processing capabilities. After all of the experience data was adjusted to a common base level, we used our Summit® software product to smooth the data to develop an initial adjusted pure premium by ZIP code to reflect both experience in a ZIP code and in neighboring ZIP codes. The number of additional neighboring ZIP codes used was dependent upon attaining a sufficient exposure level.

The smoothed data was then clustered using Summit® on both a contiguous and non-contiguous basis. The insurer needed to decide whether to maintain relatively contiguous definitions or use more granular and theoretically accurate non-contiguous definitions. Using statistical measures, we identified and graphed optimal definition sets. Non-contiguous definitions were selected by the client. To minimize the number of territories with a limited geographic area or only a few ZIP codes, some manual combination of “outlying” ZIP codes with territories (clusters) with similar adjusted pure premiums was performed.

Finally, we assisted the insurer in developing the necessary filing support material to gain approval. The new program is generating new business in areas of historical profitability but previously less than average competiveness. 

Underwriting & Tiering Analysis

Underwriting & Tiering Analysis

A single state auto insurance writer hired Pinnacle to address its current rating and tiering program. We removed unnecessary underwriting restrictions and more adequately priced risk classes, which allowed the insurer to experience significant, profitable growth.

When we began, the company’s existing tiering design was only based on a few factors, including ones that significantly overlapped with the rating plan. When combined with the underwriting rules, the design was punitive and limited writable business. Through predictive modeling, we helped design a new tiering structure and applied an underwriting scoring approach to eliminate rating plan overlap and remove the overly punitive parts of the plan.
 

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