MFE team wins 2021 Morgan Stanley Applied Finance Prize

Portrait MFe students
From left to right, top to bottom: Jerry Qinghui Yu, Hao Guo, Anshul Lakhani, Vaibhav Barnwal, and Sanket Ahuja, all MFE 21.

A team of five Master of Financial Engineering (MFE) students won the 2021 Morgan Stanley Applied Finance Project Prize for examining how California’s insurance industry “misprices” fire risk in California.

The winning team, announced March 12, includes Sanket Ahuja, Vaibhav Barnwal, Hao Guo, Anshul Lakhani, and Jerry Qinghui Yu, all MFE 21. They worked with Prof. Nancy Wallace, the Lisle and Roslyn Payne Chair in Real Estate Capital Markets, on the project.

The team examined how California’s insurance industry miscalculates fire risk and the relationship between complex weather patterns and the risk of property damage caused by wildfires in southern California.

They found that the risk to property was significant in regions with mountainous terrain, dry climate, and high vegetation and forecasted that these areas could expect annual property damage worth about $6 billion with tail damages—or damages reported after a claim is filed—of up to $10 billion.

Read more about the students’ findings here.