In my February 2012 Actuarial Review “From the President” column, I announced that the CAS would post a CAS Roundtable blog to solicit your views on the CAS’s geographic reach.
I invite you to read the original column (or this summary post) and provide your feedback below.
One of the major questions being addressed by the CAS Board in its strategic planning is that of geographic reach. Our CAS Centennial Goal has no geographic boundaries:
The CAS will be recognized globally as a leading resource in educating casualty actuaries and conducting research in casualty actuarial science. CAS members will advance their expertise in pricing, reserving, and capital modeling, and leverage their skills in risk analysis to become recognized as experts in the evaluation of enterprise risks, particularly for the property and casualty insurance industry.
I was a member of the Board when the Centennial Goal was adopted and believe that this global vision for the CAS is not only appropriate but necessary if we are to serve our members effectively. I see the international arena as an opportunity, a platform from which we can continue to teach and learn, share ideas, advocate for an expanded actuarial role, and grow our membership. To be relevant, I believe that the CAS must continue to expand its geographic horizons and should step forward to play a more visible leadership role in the global actuarial arena. This role benefits all of our members by protecting their interests and expanding their opportunities.
The CAS is recognized throughout the world as a leader in advancing casualty actuarial science. Employers respect and value the CAS credential. The CAS can be proud of its many contributions to practical, non-life research and its application and we continue to be a leader in advancing new processes for evaluating risk. But the CAS has some fundamental decisions to make regarding our international position. I vote for a strong, visible, and active presence on the international stage.
CAS leadership is interested in hearing your perspectives on international issues. Please complete the online poll and/or leave a comment on this blog.
The goal to become the global leading resource in educating casualty actuaries and conducting research in casualty actuarial might be viewed internationally as imperialistic. In this regard, the CAS might be viewed similar to how much of the CAS is viewing the SOA’s goal of offering general insurance training and designation. Also, the AAA should be viewed as the proper unified actuarial voice/advocate that the SOA seeks but the SOA is refusing to acknowledge the AAA is the proper organization and that it is doing a good job. Is the CAS similarly infringing on the international actuarial community?
In its international vision, the CAS recognizes the value of nation-specific actuarial organizations, and is routinely teaming with those organizations to provide meaningful casualty content. The nation-specific exams offered for Canada and Taipei are examples of the CAS’s recognition that the most effective way to respond to international opportunities is to team with local actuarial organizations to build programs best suited for their geographies. Our work with GIRO in advancing casualty actuarial research is another example. We don’t have to “take over the world” to be a meaningful contributor to advancing casualty actuarial knowledge on a global basis.
At this point in time, I am not as concerned with expanding our horizons beyond the USA as I am with maintaining the horizons that we currently enjoy within the USA.
International boundaries should certainly not dissuade actuaries in different countries from collaborating, learning and sharing. I love Pat’s vision of the international arena as a platform from which we can learn, share, and advocate for an expanded actuarial role. But I disagree with the statement that we cease to be relevant if we fail to expand geographically. I do not think it necessary for the CAS to be the only provider of non-life actuaries in other countries. Globalization is beneficial, but not necessary. In fact, some of the benefit of sharing across international boundaries derives from the very fact that actuaries in different countries are exposed to different educational systems. Expanding the CAS into other countries would eliminate some of the diversity that currently exists and, thus, might actually harm our profession in the long run.
I suggest that we focus on remaining relevant within the USA. Let’s assume that the SOA begins producing non-life actuaries. Let’s further assume that their education is inferior to ours. Initially, we won’t have a problem because everyone in the insurance industry today knows what the CAS means and what the SOA means. US employers currently recognize the CAS as the (nearly) sole provider of casualty actuaries. But eventually, non-life students graduating from the SOA will find jobs in the casualty field. Many of them will be bright and energetic; they will do a fine job, even if their exam-based education is inferior to a comparable student graduating from the CAS. I fear that, twenty years from now, employers will cease to distinguish between the CAS and the SOA. The hiring managers at that time will have grown up with both societies producing casualty actuaries, and they will neither appreciate nor care where the interview candidate received their education. Moreover, college students of the future won’t understand the historical difference between the societies, and will not want to pigeon-hole themselves into the CAS. They will opt for the SOA where they can declare their specialty after taking a few exams and getting some on-the-job experience. I fear that, twenty years from now, both the flow into the SOA from colleges and the flow out of the SOA to employers who are oblivious to the historical distinction of our societies will threaten us tremendously.
To remain relevant, I urge the CAS to ensure that we maintain/expand our horizons within the USA.
What would you suggest are the most important considerations for the CAS, in light of increased competition?
In my opinion, our most important consideration is survival. I wish that I could say “If the CAS trains newly arising actuaries, and maintains a forum for continually pushing the boundaries of casualty actuarial science for existing members, and does these things far better than the competition (emphasis on “far”), then that should guarantee our continued success.” But, that would be naive. I fear that, despite our attempts, we won’t be able to accomplish these goals FAR better than the competition does. If a competing organization (think SOA) or a burgeoning field (think credit quants or risk management) is determined to educate their members in non-life insurance concepts, they will likely do so competently. They’re smart folks. Whatever we can do, they can do. We don’t have a monopoly on intelligent, hard-working people. Thus, for the reasons that I outlined in my original comment, I fear that allowing the 2 main actuarial bodies to coexist will eventually lead to the demise of the CAS. I certainly do not WANT this to happen. It’s just that I can’t think of any way to prevent it. Which is depressing.
Thus, I am forced to the following conclusion, which is also depressing. Merge all the actuarial bodies within the US under a single actuarial organization. Borrowing terminology from the medical profession, call the parent organization the American Academy of Actuaries. (I’m merely using this name, not implying that it would be the organization of the same name that currently exists.) Within this academy, create colleges for each discipline. The college of life actuaries, the college of health actuaries, the college of pension actuaries, the college of casualty actuaries, the college of risk management actuaries, etc. All prospective actuaries entering the Academy would need some common educational background at the front end, akin to the current common exams, and a common professionalism seminar at the back end to be officially admitted as a Fellow of the Academy (FAAA). But in between the common exams and Fellowship, each college would need its own specialized exams. Furthermore, each college would orchestrate its own continuing education opportunities for members of that college. And, most importantly, each college would be responsible for expanding the body of knowledge within its discipline.
There is actually some benefit to the public from this form of organization. When I need a doctor, I want there to be a single body that licenses and governs doctors. I don’t want to have to choose between two people, both of whom claim to be experts, with each claiming to be superior to the other because of which medical association’s name is stamped on their diploma. I’m not an expert in the medical field, so I can’t discern who is better. Not to mention that I shouldn’t even have to try. One of the benefits of a professional society is that the rest of us non-experts can presume expertise on the part of its members. I am better served if all doctors in a particular specialty have had the same education and are held to the same standard. It should be similar for consumers of actuarial services. Not being experts in actuarial matters, they should not have to fret about which body licensed a particular casualty actuary. They are better served if all actuaries in a particular specialty have had the same education and are held to the same standard.
When I think about it objectively, I have to admit that merging all 3 main actuarial bodies (CAS, SOA, AAA) makes some sense. In a perfect world, life, health, pension and casualty would all be equal specialties under a single actuarial umbrella. Each specialty would require its own training, its own continuing education, its own research and development.
To summarize my thought process:
1. My goal is to provide the US public and employers with worry-free access to talented actuaries in each discipline (life, health, pension, casualty, etc.).
2. Allowing competition between the CAS and the SOA spells doom for the CAS. (Argh! I can’t overemphasize how much this depresses me. I honestly think we are already providing the US with worry-free access to talented casualty actuaries. But in a toe-to-toe competition between two well-matched opponents, the better team does not always win.)
3. Having multiple, competing organizations is suboptimal from the public’s perspective.
4. Thus, start from scratch with a single body to govern all actuaries. Within this body, establish a separate college for each discipline. Allow each college autonomy over its own specialized training. Make each college responsible for expanding the body of knowledge within its discipline.
I reach this conclusion reluctantly. I think that the CAS does a superb job of preparing its members for the ever-expanding challenges of casualty actuarial science. When I have something good, I hate to mess with it. Thus, I hate to propose a change to the CAS’s organizational structure for fear of breaking it. I would love for someone to talk me out of it. Show me a better solution. Please.
p.s. I realize that this entire discussion has veered far from this blog’s focus on geographic reach and global expansion. I’ve never blogged before, so am not familiar with blog etiquette. Should we cut/paste this entire thread into some other blog spot?
I agree with John Captain and Greg Beaulieu. I’ve worked five wonderful years overseas, but I believe that the bloom is off that rose and that the emphasis on international leadership and ERM will backfire, even has begun to backfire, on the CAS. Mr. Captain rightly uses the ‘i’ word, imperialism. Just as the USA is ruining itself by being #1 in the geopolitical world (as if it had some holy mission), the arrogance of the CAS will ruin and bankrupt itself in the actuarial world. The CAS is not ueber alles.
The sole preserve of the CAS is the signing of the NAIC opinion: that must be maintained. We must not whine and demand the CAS to be our job protector and creator, as we hear so much in election rhetoric. It’s a fact of life that many actuarial functions can now be outsourced or performed by lesser paid technicians. Don’t we all love competition until we start to be beaten! But with that said, the CAS should warn the SOA that it’s easier for us to learn life/pension than it is for them for learn property/casualty. Turnabout is fair play.
I’d like to comment also on the Miller/Teufel exchange in the recent Actuarial Review. Although Mr. Miller undervalues the “science” in casualty-actuarial science, our syllabus and scientific literature have been commandeered by the “aliens among us,” viz., the MBAs, economists, financial analysts/engineers, ERM-ers, and miscellaneous folks whose fancy titles contain the word ‘capital’. Remember the days (the roaring 90s) when actuaries were encouraged to take CPCU exams? We have almost forgotten our underwriting homeland. Rather than enterprise risk management, we should be studying and developing the classical risk theory of Borsch, Beard, and Pentikainen. Symptomatic of our decline is the increasing number of chief actuaries who report to CFOs and CROs (an acronym begging to be lampooned), rather than to CEOs. I warned of all this out in my 2003 Spring Forum paper, “The Valuation of Stochastic Cash Flows,” whose conclusion I recommend to all pensive CAS members.