The Actuary Magazine October/November 2015

68 Pages·2015·8.25 MB·English

THE
OCT
15
NOV
Surprise
This issue has a
whole new look.
Check it out.
20 FROM ACTUARY TO ...
ANYTHING YOU LIKE
3 6 SAVING
Actuaries can use their analytical minds to
be successful in many areas
THE WORLD 26 IMPROVING TECHNIQUES
The use of predictive analytics in the development
of experience studies
New data sources and modeling
techniques are changing the 44 LIVE LONG AND PROSPER
way actuaries analyze risk
The role of actuaries in longevity risk
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THE
OCT
15
NOV
20 26 36 44
20 FROM ACTUARY TO ...
ANYTHING YOU LIKE
With a little ingenuity, actuaries can use their analytical
minds to be successful in many areas including politics,
recruiting and information technology.
FEATURES
26 IMPROVING TECHNIQUES
Predictive analytics can offer a new approach to experience
studies that refine assumptions, are more granular, and
ultimately create more clarity around the value of new and
existing business.
36 SAVING THE WORLD
Actuaries are utilizing new data sources and modeling
techniques to analyze risk and solve industry-specific
business problems. In many cases, they’re not just focusing
on business results, but also working to improve the lives
of their fellow citizens at the same time.
44 LIVE LONG AND PROSPER
With lower mortality rates, Mr. Spock’s greeting of “live long
and prosper” is beginning to take on a different coloration.
Living long seems to be a given, but where is the prosperity
coming from? With this question, longevity risk starts to take
on a personal dimension.
The Actuary welcomes both solicited and unsolicited submissions. The editors reserve the right to accept, reject or request changes to solicited and unsolicited submissions, as well as edit articles for length, basic syntax,
grammar, spelling and punctuation. The Actuary is copyedited according to Associated Press (AP) style. For more information about submitting an article, please contact Jacque Kirkwood, magazine staff editor, at
[phone], [email protected] or Society of Actuaries, 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. ©2015 Society of Actuaries. All rights reserved. No part of this publication may be reproduced
in any form without the express written permission of the Society of Actuaries.
SOA PRESIDENT CREATIVE SERVICES
Be sure to visit our digital edition Errol Cramer
at SOA.org/actuarymag. FSA, MAAA
[email protected]
SOA STAFF CONTACTS
Patrick Gould The Actuary is published bi-monthly (February, April, June,
Managing Director of August, October, December) by the Society of Actuaries, 475
Marketing & Communications N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226.
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mailing offices. USPS #022-627.
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Director of Member & This publication is provided for informational and educational
Candidate Communications purposes only. The Society of Actuaries makes no endorse-
[email protected] ment, representation or guarantee with regard to any content,
and disclaims any liability in connection with the use or
Karen Perry misuse of any information provided herein. This publication
Publications Manager should not be construed as professional or financial advice.
[email protected] Statements of fact and opinions expressed herein are those
of the individual authors and are not necessarily those of the
Jacque Kirkwood Society of Actuaries.
Magazine Staff Editor
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CONTRIBUTING EDITORS
Rod Bubke, FSA, MAAA Wilbur Lo, FSA
14 62 [email protected] [email protected]
Alan Cooke, FSA, FCIA, MAAA Albert Moore, ASA, MAAA
[email protected] [email protected]
Carl Hansen, FSA, EA, FCA, MAAA Jeffrey Schuman, FSA, MAAA
[email protected] [email protected]
Christine Hofbeck, FSA, MAAA Lloyd Spencer, FSA, CERA, MAAA
[email protected] [email protected]
Karin Swenson-Moore, FSA, MAAA
[email protected]
DEPARTMENTS
6 EDITORIAL A Mysterious Profession
10 LETTER FROM THE PRESIDENT End-of-Term Report
14 AROUND THE GLOBE Meeting of the Minds: A roundup of events in the international community
16 NEW & NOTEWORTHY Take Note: Your source for industry briefings and SOA news
54 TOOLBOX Take the Lead: Useful tools and resources for actuaries
56 INNOVATE Target the Learning Strategy
62 RESEARCH The Actual (and Actuarial) Applications of Predictive Analytics
66 TAKE CHARGE Get information on professional development opportunities
ADVERTISING INFORMATION
Inquiries about advertising M.J. Mrvica Associates, Inc.
should be directed to: 2 West Taunton Avenue
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phone: [phone]
POSTMASTER: Send address changes to the SOA, c/o Communications Fax: [phone]
Department, 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. Email: [email protected]
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EDITORIAL
A mysterious
profession
BY CHRISTINE HOFBECK
Christine Hofbeck, FSA, MAAA, is vice
president & actuary at Prudential Group
Insurance in Roseland, New Jersey.
[email protected]
Y ou’re like an accountant, has been ranked as one of the top jobs the Black Plague. Thirty years later,
right?” consistently (ranked fourth or better in Edmond Halley, a mathematician and
As actuaries, we’ve each of the last five years). Despite this geophysicist, demonstrated a method
all probably heard the seeming popularity, many people really to calculate a life-annuity premium
above question at least don’t know what an actuary does. using a later version of this mortality
once in our lives, and probably many “Tell me when I’m going to die.” table, along with the idea of compound
times more. No matter how often this No, that’s a doctor … or a psychic. interest. Halley’s work is often credited
question is posed to me, it’s still decid- “Actuaries work for insurance as strongly influencing the development
edly bothersome that actuaries are so companies, right?” Getting warmer. of actuarial science. Both of these men
often confused with Certified Public But let’s not forget about the thou- used their mathematical acumen and
Accountants (CPAs). Yes, we both can sands of actuaries who work for outside-of-the-box thinking to develop
add and our professions start with the consulting firms, the U.S. government groundbreaking and valuable concepts
letters “AC,” but an actuary is defi- (think Social Security Administration) that completely changed the economic
nitely not an accountant. CPAs attest or individual businesses. and financial landscape.
to the accuracy of disclosures of what “You’re like Ben Stiller in Along In 1762, we were officially named
happened in the past, while actuaries Came Polly!” Hmmm. Neurotic, “actuaries” by the founder of Equitable
mitigate financial risk by calculating regimented, awkward, socially back- Life, the first life insurance company
probabilities of what will likely hap- ward introverts. “You’re Ethan Hawke to use mathematical calculations to
pen in the future. Please don’t ask me in Boyhood!” Aimless and deadbeat. derive premiums for multiyear poli-
for tax advice. No, we most definitely are not. cies. Throughout the next 200 years,
So why is the actuarial profession We actuaries actually have a rich innovative advancements in actuarial
such a mystery? history of strong analytical skills, methodology such as commutation
One would think that Forbes’ innovation and business expertise. functions were developed to simplify
reporting of “actuary” as the No. 1 In 1662, John Graunt created our exceedingly complex manual calcu-
job of 2015 might have given us a first pooled risk mortality table lations. Additional life insurance
popularity boost. In fact, “actuary” based on census data he obtained on companies were established, and by
6 The Actuary theactuarymagazine.com
SEND RESUMES TO [email protected]
NORTHEAST USA - LIFE PRICING CALIFORNIA - SENIOR HEALTH ACTUARY
Assistant Vice President Life pricing and product development Senior health actuary with Medicare experience is now sought
actuary needed by Northeast USA client for Position 66169. FSA by a California insurer for Position 66429. Manage staff. FSA or
with several years of product development and pricing experience ASA with 11+ years of healthcare actuarial experience preferred.
preferred. Must have supervisory experience.
SOUTHEAST USA - LONG TERM CARE MODELING
NORTHEAST USA - BROKERAGE ACTUARY
Long term care modeling actuary is needed by a Southeast USA
Northeast USA insurance broker has asked Ezra Penland to find
insurer for Position 66011. FSA or near-FSA with 8+ years of
a health actuary for Position 66300. 5 to 12 years of health
actuarial experience preferred.
actuarial experience preferred. ASA or FSA credentials required.
Client is in a unique, niche growth market.
GEORGIA - ASSOCIATE ACTUARY
ASA life actuary with long term care experience and AXIS soft- FLORIDA - ASA or Near-ASA
ware experience needed in Atlanta for Position 66097. Portfolio Health actuary with 3 to 9 years of experience is immediately
analysis, management reporting, modeling and other assign- sought by a Florida insurer for Position 66289. Reserve studies,
ments. product development, pricing, financial modeling and manage-
ment reporting opportunity.
MASSACHUSETTS - RISK MANAGEMENT
FSA financial risk management actuary is sought by a life insurer SOUTHEAST USA - DIRECTOR, ACTUARIAL SERVICES
in Massachusetts for Position 66171. Modeling and enterprise Southeast USA healthcare insurer seeks a Director of Actuarial
risk opportunity. Immediate need. Services for Position 66322. ASA or FSA with 5 to 15 years of
experience preferred. Management experience a plus.
MISSOURI - INDIVIDUAL LIFE PRICING
Missouri client seeks individual life pricing actuary at the FSA NORTHEAST USA - LONG TERM CARE ACTUARY
level for Position 66004. Must have 8 to 15 years of life actuarial Northeast USA health insurer is searching for a long term care
experience. near-ASA or ASA actuary for Position 66437. Must have at least
three years of actuarial experience. Strong actuarial exam support
NEW JERSEY - GROUP LIFE ACTUARY
program.
Group life actuary with COLI / BOLI experience is now needed by
a New Jersey insurer for Position 66348. Pricing, product de-
MARYLAND - ASSOCIATE ACTUARY
velopment, programming and valuation opportunity. ASA or FSA
For Position 66335, a Maryland insurer seeks a health actuary
with C++ and SQL programming skills ideal.
at the ASA or near-FSA level. Must have 5+ years of healthcare
MIDWEST USA - LIFE FSA actuarial experience. Exam support.
Life FSA actuary with financial reporting or actuarial modeling
SOUTHEAST USA - HEALTH CONSULTING ACTUARY
experience is sought for Position 66253. Must have management
Health actuary with Medicare Advantage experience is needed by
experience. Client prefers an FSA with 8 to 18 years of life actu-
a Southeast USA consulting group for Position 66436. ASA or
arial experience.
FSA with at least two years of Medicare Advantage experience
NEBRASKA - FSA/ASA WITH 10+ YRS OF EXP preferred.
Nebraska insurer seeks a life actuary at the ASA or FSA level with
10+ years of experience for Position 65596. High-profile valu-
ation, financial reporting and management reporting opportunity.
Work closely with Appointed Actuary.
EZRA PENLAND
ACTUARIAL RECRUITMENT
Over 40 Years of Industry Experience
[phone]
[email protected]
These Roles and Many Other Actuarial Jobs Can Be Found at EzraPenland.com
EDITORIAL
the end of the 19th century, about modeling capabilities within insur- and capabilities? Perhaps the onus to
100 actuaries were practicing in the ance organizations, I am proud to put the truth out there rests squarely
United States and Canada. In 1889, 38 call myself an actuary, and would not on our own shoulders. There are 20
charter members were deemed fellows choose to be labeled as working in an times as many accountants as actuar-
in the first actuarial organization—the alternative profession. ies; it is up to us to promote our value.
Actuarial Society of America. (Perhaps Then again, I have often been told, I encourage you to take some time
this is the origin of the “40 percent “You don’t seem like an actuary.” to think about exactly what it is that
pass rate” rumor!) Really? A colleague of mine considers you do. Write it down and refine your
We actuaries have developed this comment equal parts compliment thoughts, if that is helpful. Think
extensive mathematical approaches and insult. And what exactly does it about how the description of your
to determine the probability of risk even mean? I have been an actuary for role and your value proposition would
and mitigate the financial impact over two decades. One would think differ depending on your audience.
of certain events. Our skills enable that I am exactly like an actuary. Then, tell your business partners
us to design new insurance prod- Recently, I was working a table at and professional contacts what you
ucts, accurately calculate premiums a local high school career fair when a really do. Tell your children. Tell your
and reserves, skillfully forecast asset student approached to ask me what an neighbors. Tell your spouse! Yes, the
growth and longevity risk, appropri- actuary does. I mistakenly thought he wording will change depending on
ately determine pension liabilities was interested in pursuing the pro- your audience, but hopefully your
and required plan contributions, and fession. Instead he said, “My dad is an message will resonate.
solve many other financially uncertain actuary, but when I ask him what he And one day people will approach
business problems. In fact, with ded- does, he tells me it’s too complicated our most innovative, creative and
ication and determination, our skills to explain. Can you please tell me?” successful mathematicians, statisti-
make many opportunities possible. Given our depth of skill and span cians, data scientists and financial
We should all be consistently pushing of expertise, why do we have so much business leaders and say, “You’re like
the boundaries of actuarial science trouble articulating our value, work an actuary, right?”
to improve and enhance not just our
work, but ourselves.
We must endeavor to share our value,
promote our work and celebrate our
capabilities. If we want to ensure future
growth of our profession, guarantee
our seat at the table in the most valu-
able business decisions, and have our
expertise requested and heard, we will
all need to concentrate on thoughtfully
and appropriately communicating who
we are and what we do.
There is a clear opportunity for
us today. Key buzzwords right now
are “data scientist,” “big data” and
“analytics.” Actuaries fit well into
each of those buckets—but can we
convince everyone else of that? The
Society of Actuaries (SOA) is currently
exploring the role of actuaries in
predictive modeling; at one time this
There are 20 times as many accountants as
was tentatively labeled an “alternative
profession.” I would challenge that, as actuaries; it is up to us to promote our value.
a professional who builds predictive
8 The Actuary theactuarymagazine.com
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© ©
from the PRESIDENT
End-of-term report
BY ERROL CRAMER
Errol Cramer, FSA,
MAAA, is president
of the Society of
’m frequently asked whether one year is sufficient Key themes emerging from these Actuaries.
I
time to make a meaningful impact as president of the meetings were:
Society of Actuaries (SOA). Approaching the end of The SOA should find ways to [email protected]
my term, I’m pleasantly surprised how much I’ve been work collegially with the other
able to influence the course of events within a year. U.S. actuarial organizations (as perceived conflicts and
Of course, the one year was not in isolation—I served two difficult relationships, regardless of cause, could harm the
prior terms on the SOA Board of Directors and a year as profession).
president-elect, and had the counsel and assistance of the Concern was expressed regarding the future of the
Leadership Team, Board and staff—which provided me the profession and how actuaries might be valued in
deep understanding to formulate an agenda. the marketplace.
My priorities were: 1) strengthen member communica- More news about the SOA and transparency in
tions, 2) fortify partner relationships, and 3) execute on key communications.
strategic and operational initiatives. The SOA should do more to promote the value of the
profession to employers.
STRENGTHENING MEMBER COMMUNICATIONS
Going in, I heard from members who were unclear about The Listening Tour received enthusiastic support and we
the SOA’s priorities and unsure about its direction. I felt plan to keep hosting these events in 2016 and beyond. The
we could do better in communicating with members and themes we’ve heard are being carefully weighed and reflected
winning their trust, and efforts were undertaken this past in a variety of ways in our ongoing work. On a positive note,
year to better inform members and listen to their voices. members were supportive of the SOA’s current strategic and
The SOA Listening Tour (http://bit.ly/1PTVewL) was key operational initiatives once these were clearly discussed.
introduced as a pilot program to inform members of the The Plain Talk letters from the President (http://bit.
SOA’s key strategic and operational activities, to provide ly/1MUWIZ3) launched as a forum to speak forthrightly on
contextual background, and to give them an opportunity topical issues regarding the SOA, and covered topics about
to express their views. I was assisted by several current and international strategy, competition among actuarial organi-
former board members, each delivering a consistent message zations and proposed bylaw amendments. Direct and to the
in their respective localities in the United States, Canada point, these were well received and engendered both appre-
and Asia, to a variety of groups, big and small. We were ciative comments and constructive counterpoints, resulting
careful to facilitate dialogue and let members talk. in healthy dialogue.
10 The Actuary theactuarymagazine.com