Lecturer, College of Business, Finance
Finance 350: Risk and Insurance
Al Gustafson has been teaching in the College of Business as PTF for over 50 years but is always willing to try new strategies in the classroom, especially if they seem likely to improve student learning and understanding. Even before he joined an FLC focused on "the learning-centered classroom," Gustafson was committed to using "the most effective teaching tools, not just lecture." In his Risk and Insurance class, he is aware that students have little prior knowledge of reinsurance and only a limited knowledge of insurance. To help students become aware of the complexities of insurance and reinsurance, he has used current events to generate student interest and participation.
This reinsurance assignment was a successful and informative task with students learning from information they discovered and discussed.
To make his class more learning-centered, he designed a research assignment around a current event: the sinking of the Costa Concordia, a cruise liner that ran aground off the coast of Italy on January 13, 2012, killing 32 people and injuring many others. Most students would have heard breaking news reports about the Costa Concordia early in the semester, as news sources compared the loss of the ultra-modern cruise liner to that of the "unsinkable" Titanic in 1912.
For this assignment, however, students focused on the tragedy of the Costa Concordia to explore the billions of dollars of losses caused by the shipwreck and the role of reinsurance in losses of this size. Students had to develop contacts among staff and faculty (librarians and instructors) to locate information from media and library sources and then read and summarize those sources. After submitting their individual research papers, students explored in class discussion the various types of losses: death and bodily injury to passengers and crew; the loss of a cruise liner worth perhaps a billion dollars; reimbursement to passengers for the loss of personal belongings; refunding of cruise fares and the cost of transportation home; possible lasting damage to the reputation of the cruise line, and years of legal costs to defend and settle claims.
By conducting research outside class and discussing their findings in class, students began to have an understanding of the need for reinsurance defined as the insurance bought by insurance companies from other insurance companies to avoid catastrophic losses. Reinsurance spreads financial loss to limit the total loss a single insurer would experience in a disaster. Students saw through the example of the Costa Concordia the very large dollar amounts of values and losses and the complicated sharing of losses by many insurance companies in a catastrophe. Consequently, they developed an understanding of the economic importance of reinsurance in international commerce.