Wisconsin School of Business

Joan Schmit

Professor - Actuarial Science, Risk Management & Insurance
American Family Insurance Professor of Risk Management and Insurance

Joan T. Schmit is the American Family Insurance Chair in Risk Management and Insurance in the Wisconsin School of Business at the University of Wisconsin-Madison, where she has been on the faculty since 1988. Schmit also serves as an affiliate faculty member in the Nelson Institute for Environmental Studies at the University of Wisconsin, and in the insurance program at the University of St. Gallen in Switzerland. Prior to joining the faculty at UW-Madison, Professor Schmit spent four years on the faculty at the University of South Carolina.

From summer 2008 to summer 2012, Professor Schmit served in the Dean's office, holding the positions of Senior Associate Dean, Vice Dean, and Interim Dean. She also has been department chair of the Actuarial Science, Risk Management and Insurance Department various times over the years.

Professor Schmit has published extensively in insurance and legal journals. Among her areas of expertise include insurance regulation, enterprise risk management, and the interaction of law and economics in an insurance and risk management context. For the 2012-13 academic year, Dr. Schmit will be on sabbatical at St. Gallen University and the University of Bath, studying the development of insurance in emerging markets.

Additionally, Joan serves as an associate editor for the Journal of Risk and Insurance and is active in the International Insurance Society. She also holds the designation of Research Fellow with the China Center for Insurance and Social Security Research at Peking University.

The program in risk management and insurance at the University of Wisconsin-Madison has existed since 1938 and currently is ranked second among all programs in the United States. Our alumni list is long and of very high quality, including insurance company, brokerage, and consulting executives in both life and non-life business. Faculty members equally shine in leadership positions, including four prior presidents of the American Risk and Insurance Association.
 

Selected Accepted Journal Articles


Eling, M., Pradhan, S., & Schmit, J. (2014). The Determinants of Microinsurance Demand.
Article AbstractThe purpose of this article is to structure the extant knowledge on the determinants of microinsurance demand and to discuss unresolved questions that deserve future research. To achieve this outcome, we review the academic literature on microinsurance demand published between 2000 and early 2013. The review identifies 12 key factors affecting microinsurance demand: price, wealth, risk aversion, non-performance risk, trust and peer effects, religion, financial literacy, informal risk sharing, quality of service, risk exposure, age, and gender. We discuss the evidence of how each of these 12 factors influences demand, both within the microinsurance and the traditional insurance markets. A comparison with traditional markets shows an unexpected (negative) effect of risk aversion on microinsurance demand, with trust perhaps being the intervening factor. Other relevant results include the importance of liquidity (and/or access to credit), informal risk sharing, and peer effects on the decision to buy microinsurance. The influence of trust on insurance take-up and the unanticipated results for risk aversion are fertile areas for future research.
The Geneva Papers
Biener, C., Eling, M., & Schmit, J. (2013). Regulation in Microinsurance Markets: Principles, Practice, and Directions for Future Development.
Article AbstractRegulation of any market can either promote or impede its development, thus affecting social welfare. In this paper, we are concerned with the impact of regulation in microinsurance markets. We evaluate existing and potential regulatory mechanisms with regard to its underlying economic rationale, and offer recommendations intended to enhance support and minimize barriers for microinsurance market development. Specifically, we recommend avoiding incentives for regulatory arbitrage; responding to the characteristics of the microinsurance market, including licensing, capital, reinsurance, and distribution systems; enhancing the market through financial literacy initiatives; and providing support in the form of data collection and management training.
World Development

Selected Published Journal Articles


Post, T., Grundl, H., Schmit, J., & Zimmer, A. (2014). The Impact of Investment Behavior for Individual Welfare: Evidence from the United States and Germany.
Article AbstractThe industrialized world experiences a demographic shift that is straining public pension systems. Employer-sponsored pension plans change from defined benefit to defined contribution. More emphasis is put on individually managed retirement funds. One concern with this movement is the potential negative effect on individual welfare if households’ investment behavior is suboptimal. Using micro-level U.S. data, we compare the optimal utility computed using a life-cycle model with the actual utility as reflected in empirical asset allocation choices. Average estimated welfare costs estimated are below three percent of households’ endowment (assets and human capital); yet specific population groups experience higher welfare costs.
Economica (81), 15-47.
Eling, M., Schmit, J., & . (2012). Is there Market Discipline in the European Insurance Industry? An Analysis of the German Insurance Market.
Article AbstractEconomists often argue in favor of market discipline as a means to distribute resources effectively and efficiently (Flannery and Sorescu, 1996; Martinez Peria and Schmuckler, 2001). These same arguments likely influence decision makers as they incorporate market discipline as the third pillar of Solvency II, the European insurance regulatory scheme currently being implemented. Success for Solvency II, then, is dependent in part on the strength of influence found in market discipline. Our research indicates that the German insurance market demonstrates the existence of such discipline, although the actual effect appears smaller than previously found in the U.S. insurance market. Solvency II, therefore, seems to be following an appropriate path, although further research is needed to evaluate whether or not enhancements to market discipline within the European market are warranted.
Geneva Papers on Risk and Insurance (37), 180-207. doi: 10.1057/grir.2011.8.
Lei, Y., & Schmit, J. (2010). Influences of Organizational Structure and Diversification on Medical Malpractice Insurer Performance. Journal of Insurance Issues (33), 157-177.
Eling, M., Klein, R., & Schmit, J. (2010). A Comparison of Insurance Regulation in the United States and the European Union. Independent Institute
Lei, Y., & Schmit, J. (2009). Influences on Organizational Form on Medical Malpractice Insurer Operations. Connecticut Insurance Law Journal (15), 53-84.
Kerr, D., Ma, Y., & Schmit, J. (2009). A Cross-National Study of Government Social Insurance as an Alternative to Tort Liability Compensation.
Article AbstractLitigation rates in the United States have long been considered out of proportion with the remainder of the world, leading to a good deal of economic research trying to understand the causes. Much of that literature has focused on lawyer compensation rules and availability of general damage awards. Another possible reason for differences in national litigation rates is the relative generosity of government social programs. Using a sample of 24 countries over a 12-year period, we test the relationship between the size of government social program payments and liability costs as measured by liability insurance premiums, and find a strong negative relationship, controlling for income, accident rates, and a variety of other factors.
Journal of Risk and Insurance (76), 367-384. doi: 10.1111/j.1539-6975.2009.01303.x.
Doerpinghaus, H., Schmit, J., & Yeh, J. (2008). Age and Gender Effects on Auto Liability Insurance Payouts.
Article AbstractWe examine the relationship between claimant demographic characteristics (specifically, gender, age, and marital status) and the relative size of automobile third-party settlements. We present three possible theories to explain differences in payouts associated with gender and age: variations in risk attitudes, variations in negotiating costs, and discrimination. Results of empirical testing are consistent with differences in settlement amounts, particularly with respect to gender. These differences are examined and discussed along with suggestions for future research.
Journal of Risk and Insurance (75), 527-550. doi: 10.1111/j.1539-6975.2008.00273.x.
Browne, M., & Schmit, J. (2008). Litigation Patterns in Automobile Bodily Injury Claims 1977-1997. Journal of Risk and Insurance (75), 83-100. doi: 10.1111/j.1539-6975.2007.00249.x.
Eling, M., Schmeister, H., & Schmit, J. (2007). The Solvency II Process: Overview and Critical Analysis. Risk Management and Insurance Review (10), 69-85. doi: 10.1111/j.1540-6296.2007.00106.x.
Schmit, J. (2006). Factors that may influence tort litigation trends in the European Union. The Geneva Papers: Insurance Issues and Practices (31), 304-313. doi: 10.1057/palgrave.gpp.2510075.
Schmit, J., & Yeh, J. (2003). An Economic Analysis of Auto Compensation Systems: Choice Experiences from New Jersey and Pennsylvania, forthcoming. Journal of Risk and Insurance (70), 601-628. doi: 10.1046/j.0022-4367.2003.00067.x.
Doerpinghaus, H., Schmit, J., & Yeh, J. (2003). Personal Bias in Claims Settlement: An Example from Automobile Insurance,. Journal of Risk and Insurance (70), 185-205. doi: 10.1111/1539-6975.00055.
Schmit, J., & Ma, Y. (2000). Factors Affecting the Relative Incidence of Uninsured Motorists Claims,. Journal of Risk and Insurance (67), 281-294.

Selected Submitted Journal Articles


Gatzert, N., Schmit, J., & Kolb, A. (2014). Assessing the Risks of Insuring Reputation Risk.
Article Abstractbackground of a fast growing extension of social media, its consideration by banking and insurance regulators, and its high relevance for organizational value. Insurers have only recently responded to this development by offering new reputation risk insurance solutions. The aim of this paper is to offer the first detailed academic analysis of these new policies, including examination of the risks insurers face in offering such coverage. We also offer the first conceptualization of reputation risk in an insurance and risk management context with focus on exposures, perils, and hazards. Our analysis indicates that loss identification and measurement seem to generate the greatest challenges to insurers currently providing reputation risk coverage. Thus, lack of experience as well as the complexity of the chain of reputation risk events related to reputation insurance coverage present insurers with significant challenges in making this a viable line of business.
Journal of Risk and Insurance
Kamiya, S., Schmit, J., & Rosenberg, M. (2012). Determinants of Insurers' Reputational Risk. Journal of Risk and Insurance
Schmit, J., & Ren, Y. (2012). A New Measure of Insurer Franchise Value. Risk Management and Insurance Review

Presentations


Southern Risk and Insurance Association Annual Meeting ( 2013 ) Modernizing Insurance Solvency Regulationin the United States & European Union:A Comparative Assessment

European Group of Risk and Insurance Economists Annual Meeting ( 2013 ) The Legal Constraint of Misrepresentation in Insurance Market

American Risk and Insurance Association Annual Meeting ( 2013 ) The Legal Constraint of Misrepresentation in Insurance Market

University of St. Gallen Banking and Finance Seminar ( 2013 ) Determinants of Insurer Reputational Risk

University of Swansea School of Business and Economics Research Seminar ( 2013 ) Determinants of Reputational Risk

American Risk and Insurance Association Annual Meeting ( 2012 ) Regulation in Microinsurance Markets: Principals, Practice, and Directions for Future Research

American Risk and Insurance Association Annual Meeting ( 2011 ) Advantageous or Adverse Selection in Emerging Health Insurance Markets: Evidence from a Micro Health Insurance Program in Pakistan

Asia Pacific Risk and Insurance Association Annual Meeting ( 2009 ) The “The “The Performance of Risk Retention Groups: Does Organizational Form Matter?

Program Seminar ( 2006 ) Litigation Patterns in Auto BI Claims 1977-97

American Risk and Insurance Association ( 2004 ) On the Escalating Medical Malpractice Insurance Premium Rates

European Group of Risk and Insurance Economists ( 2004 ) Insurance Claims and Legal Filings: Trends from 1977-1997

International Insurance Society, Inc. ( 2002 ) Insurance Claims and Legal Filings: Trends from 1977-1997

American Risk and Insurance Association ( 2000 ) Insurance Claims and Legal Filings: Trends from 1977-1997


Undergraduate Courses


Liability Risk Management
Course DescriptionComprehensive analysis of economic services, benefits, rates and rating theory, loss adjustment problems, legal theory factors, risk management concepts, loss prevention and transfer techniques and government regulation of public liability insurance. Topics include: medical malpractice, no-fault auto insurance, professional liability, workers' compensation, products liability and pollution liability.
(RSK 615), Spring 2001.

Property Risk Management
Course DescriptionComprehensive analysis of economic services, benefits, rates and rating theory, loss adjustment problems, legal theory factors, risk management concepts, loss prevention and transfer techniques and government regulation of public liability insurance. Topics include: medical malpractice, no-fault auto insurance, professional liability, workers' compensation, products liability and pollution liability.
(RSK 610), Fall 2001.

Property Risk Management
Course DescriptionComprehensive analysis of economic services, benefits, rates and rating theory, loss adjustment problems, legal theory factors, risk management concepts, loss prevention and transfer techniques and government regulation of public liability insurance. Topics include: medical malpractice, no-fault auto insurance, professional liability, workers' compensation, products liability and pollution liability.
(RSK 610), Fall 2003.

Property Risk Management
Course DescriptionComprehensive analysis of economic services, benefits, rates and rating theory, loss adjustment problems, legal theory factors, risk management concepts, loss prevention and transfer techniques and government regulation of public liability insurance. Topics include: medical malpractice, no-fault auto insurance, professional liability, workers' compensation, products liability and pollution liability.
(RSK 610), Fall 2004.

Principles of Risk Management
Course DescriptionPrecedes advanced work in insurance; the nature of risk, principal techniques of risk management and the bases for decision making in management of business and personal risks.
(RSK 300), Fall 2001.

Principles of Risk Management
Course DescriptionPrecedes advanced work in insurance; the nature of risk, principal techniques of risk management and the bases for decision making in management of business and personal risks.
(RSK 300), Fall 2002.

Principles of Risk Management
Course DescriptionPrecedes advanced work in insurance; the nature of risk, principal techniques of risk management and the bases for decision making in management of business and personal risks.
(RSK 300), Spring 2003.

Principles of Risk Management
Course DescriptionPrecedes advanced work in insurance; the nature of risk, principal techniques of risk management and the bases for decision making in management of business and personal risks.
(RSK 300), Spring 2001.



Graduate Courses


Risk, Perceptions and Decisions (RMI 999), Spring 2009.

Seminar in ASRMI
Course DescriptionDoctoral seminar in actuarial science, risk management and insurance with emphasis on developing an appreciation of existing literature and appropriate skills to conduct own scholarly work in the field.
(RMI 920 Section 1), Fall 2007.

Smr-Risk Managemnt&Insuranc
Course DescriptionContinuation of RMI 870.
(RMI 875 Section 1), Spring 2008.

Risk Management Information Systems
Course DescriptionExamination of data collection and analysis methods for risk management decisions. Analysis of qualitative and quantitative data to support transfer, retention, and loss control decisions, including loss trending, and evaluation of regulatory controls.
(RSK 820), Spring 2002.

Risk Management Information Systems
Course DescriptionExamination of data collection and analysis methods for risk management decisions. Analysis of qualitative and quantitative data to support transfer, retention, and loss control decisions, including loss trending, and evaluation of regulatory controls.
(RSK 820), Spring 2004.

Risk Management Information Systems
Course DescriptionExamination of data collection and analysis methods for risk management decisions. Analysis of qualitative and quantitative data to support transfer, retention, and loss control decisions, including loss trending, and evaluation of regulatory controls.
(RSK 820), Spring 2004.

Advanced Topics in Risk Management
Course DescriptionExamination of data collection and analysis methods for risk management decisions. Analysis of qualitative and quantitative data to support transfer, retention, and loss control decisions, including loss trending, and evaluation of regulatory controls.
(RSK 820), Spring 2005.

Advanced Topics in Risk Management
Course DescriptionExamination of data collection and analysis methods for risk management decisions. Analysis of qualitative and quantitative data to support transfer, retention, and loss control decisions, including loss trending, and evaluation of regulatory controls.
(RMI 820 Section 1), Spring 2007.

Current Topics in RMI (RMI/RMI 765 Section 1), Fall 2008.

Contemporary Topics (RMI 765 Section 1), Spring 2010.

Contemporary Topics (RMI 765 Section 1), Spring 2009.

Contemporary Topics (RMI 765 Section 1), Fall 2009.

Risk, Perceptions, and Decisions (BUS 765 Section 01), Spring 2012.

Risk, Perceptions, and Decisions (RMI 765 Section 31), Spring 2013.

Managing Legal Environment
Course DescriptionLegal implications for business managers of selected areas of the law including negligence, contract, intellectual property, officer/director liability, financing the business enterprise, and employment and trade regulation; introduction to the legal process, including alternative dispute resolution systems.
(BUS 701 Section 1), Spring 2009.

Managing Legal Environment
Course DescriptionLegal implications for business managers of selected areas of the law including negligence, contract, intellectual property, officer/director liability, financing the business enterprise, and employment and trade regulation; introduction to the legal process, including alternative dispute resolution systems.
(BUS 701 Section 1), Spring 2010.

Managing the Legal Environment
Course DescriptionLegal implications for business managers of selected areas of the law including negligence, contract, intellectual property, officer/director liability, financing the business enterprise, and employment and trade regulation; introduction to the legal proc
(BUS 701 Section 1), Spring 2012.

Managing Legal Environment
Course DescriptionLegal implications for business managers of selected areas of the law including negligence, contract, intellectual property, officer/director liability, financing the business enterprise, and employment and trade regulation; introduction to the legal process, including alternative dispute resolution systems.
(BUS 701 Section 1), Spring 2008.

Principles of Risk Management
Course DescriptionBackground for advanced work in insurance. Nature of risk, principal techniques of risk management, and the bases for decision making in management of business and personal risks.
(RSK 700), Fall 2004.

Principles of Risk Management
Course DescriptionBackground for advanced work in insurance. Nature of risk, principal techniques of risk management, and the bases for decision making in management of business and personal risks.
(RMI 700), Fall 2006.



Professional Organizations


International Insurance Society

ARIA

ARIA


Editorial and Reviewing Activities


Journal of Risk and Insurance - Since January 2000
Associate Editor


Photograph of Joan Schmit

Joan Schmit

 
Professor | Actuarial Science, Risk Management & Insurance
American Family Insurance Professor of Risk Management and Insurance
(608) 262-4240
5194 Grainger Hall