Actuaries Around the World
September 2016

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month we have the pleasure of interviewing Yair Babad, who splits his time between Israel and California, to learn more about the actuarial profession in Israel. Yair is a full Member of the Israeli Actuarial Association, U.S. CPA, and a Full Professor Emeritus of University of Illinois, Chicago (emeritus since September 2008). Born in Israel, he received a BSc in Mathematics and MA in Actuarial Studies from Hebrew University and was a Pension Fund and Life Insurance Actuary for four years. In 1977, he joined Arthur Andersen & Company as Senior Software Development Manager. From 1981-2008, he was MIS Professor, Founder/Head of MIS Research Center, Department Head and Associate Dean at the College of Business of University of Illinois Chicago, continuing since as Emeritus Professor. Currently, he is a Health Actuary for an Israeli HMO, consulting actuary to Israeli corporations and the Israeli Commissioner of Insurance, the Treasurer/Secretary of the International Actuarial Association Health Section and an Associate Editor of International Actuarial Association's ASTIN Bulletin

ACTEX Learning (AL): How many practicing actuaries do you have?
Yair Babad (YB): About 370 of which 150 are full members, and the remainder are students.

(AL): What is the word for actuary in your local language?
(YB): Aktuar / Actuar – deriving from the German word aktuar, since the first actuaries in Israel had trained in Germany.

(AL): When was actuarial science first introduced?
(YB): 1946

(AL): What is your favorite part about being an actuary?
(YB): What I love the most is high-level corporate-wide work. So many actuaries are an expert in one small area – reserving, pricing, etc, and may not be trained in communications, business management and legal affairs. People who can use actuarial knowledge at high echelons of companies can see the risk, assess the risk and can connect it with marketing and other company functions. These types of individuals are hard to find.

(AL): Can you share an interesting anecdote from your career?
(YB): Many different stories come to mind. One time I developed a portfolio management system for an Israeli insurance company. I was working with a 72-hour deadline, and only made it on time to my flight thanks to a special last-minute taxi.

One interesting political issue came up in Israel. Like many developed countries, we wanted to raise the social security retirement age. For men, it was clear that it would go from 65 to 67, but for women, who at the time could retire at age 60, it was a more complex political issue. In the West the ages were generally the same, however, in Israel the issue was, should we raise the age to 62, 64, 65 or 67? There were many arguments back and forth representing different viewpoints, and it wasn’t an easy thing to resolve. However, the actuarial implications of women living longer than men did not enter into the political discussion, but should have, as it greatly affected the financial equation.

(AL): What are some of the main challenges and projects for your association over the next 5-10 years? (YB): We have very interesting and challenging years ahead. Two major issues that are affecting insurance business worldwide and Israel in particular are the issue of savings and pensions and health and long-term care insurance.

Israel is unique – for many years, Israel had union benefits which were defined benefit, and based on the last 3 years’ average salary, and received COLA (Cost Of Living Adjustments). This started in early 1950s. The government didn’t want to set aside too much money, so decided to pay this from the general fund. But now, 60 years later, the liabilities for the government benefits are billions of dollars, and no one knows how to resolve this issue. There is a push to move to Defined Contribution, but this leads to a Generation A and B and intergenerational tension.

A second big issue, in 1969, the National Health Service (NHS) started with 4 HMOs that had been nationalized, but slowly the government has begun reducing payments to the HMOs, which are now very much in debt. At the same time, they have started to offer supplementary options, such as semi-private rooms. There is now a basic NHS, with supplementary and private health insurance, so it is now no longer an equal arrangement for all, which is not how the service was originally envisioned. There is a similar issue with Long Term Care where 60% of individuals are covered by group Long Term Care polices administered by the government, and the costs are no longer sustainable.

(AL): Who are the main employers of actuaries?
(YB): Most are insurance companies. There are approximately 20, five of which are very large. A few actuaries work in social security, the insurance commissioner, consulting firms, HMOs, and some are independent.

(AL): Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?
(YB): There are two universities – Haifa University and Me chon Magid (the Magid Insitute) at Hebrew University which prepare actuarial students in all areas of actuarial science and insurance.

(AL): What is the credentialing procedure like for an actuary in your country?
(YB): Every Israeli full actuary must pass the UK (Institute and Faculty of Actuaries) exams, so there is a joint agreement between the Israeli association and the IFoA where the exams are graded locally. There was also an agreement signed four years ago regarding the CERA, so that credential is available locally as well.

The association in Israel just celebrated its 70th anniversary in June. It started in 1946 with a group of German Jewish actuaries who came to the country before the war. In 1966, they decided that there weren’t enough actuaries, so some faculty were brought in from the University of Michigan and 20-25 actuaries received a Master’s degree from the University of Michigan and were later grandfathered in to the association as full members. In the 1980s and 1990s something similar happened, and then Haifa University began training actuaries. However, during this time period, if an actuary came to the country with a Fellowship from the SOA, CAS or several other national associations, they were also recognized as full members.

(AL): Do employers support the cost and time of exam preparation?
(YB): Generally, yes, but there may not be as formal of a program as is common in North America.

(AL): Are there any noteworthy non-traditional actuarial positions?
(YB): Not really. It’s too small of a market to get into this area yet.

(AL):What is the reputation of actuaries in your country?
(YB):They are considered people above reproach. No one argues with actuaries. If two actuaries are on opposite sides in a court case, the judge tells the actuaries to work out a compromise. They are considered very reliable, ethical and knowledgeable. Actuaries are very well respected.

(AL): Do you have any non-actuarial hobbies?
(YB): I love listening to music, especially older music, photography, reading, problem-solving, hiking, travelling, and writing actuarial papers and research. That is a hobby too, because I like it. Last, but not least, spending time with family and friends, which is the basis of everything

(AL): Is there anything else you would like to add?
(YB): I’m working with the health practice insurance committee of the academy and am discussing telemedicine and how it will change the framework of the insurance business, the healthcare business and its actuarial framework. Twenty to thirty years from now, it will be completely different world. Most actuaries don’t think about this or pay attention to it. We are falling behind the times and are not leading the future, but are following from behind. This is something that needs to change in the actuarial profession.

(AL): If anyone has additional questions, feel free to reach out to Yair at his e-mail: ybabad@ybmconsult.com.

Correction: Please note that a previous version of this interview incorrectly stated that there were 150 members and 50 full members of the Israeli Actuarial Association. It also previously incorrectly stated that Haifa University and Hebrew University focused on specific areas of actuarial practice.

Actuaries Around the World
June 2016

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Hassan Scott Odierno BSc, FSA from Malaysia. Hassan Scott Odierno has been a partner with Actuarial Partners Consulting in Malaysia and involved in Takaful since 1996. His specialties are in life and Takaful consulting. He is the appointed actuary for both Takaful Operators as well as conventional insurers, extending from Malaysia to Mauritius and Kenya to Hong Kong. He has been involved in assisting companies set up Takaful operations from feasibility studies to product and model development and business projections in countries such as Malaysia, Indonesia, Saudi Arabia and Bahrain for both local companies as well as multinationals. He has also been involved in merger & acquisition exercises for insurers in countries such as Malaysia, Taiwan, Thailand, Singapore and Bahrain.

He is a co-author of the World Bank book Takaful and Mutual Insurance, co-author of the book Essential Guide to Takaful and a contributing author to the book Health Insurance in Asia and frequently writes articles and gives presentations on Takaful. He is also the external advisor to two universities in Malaysia to their risk management and actuarial science programs.

Hassan is a Fellow of the Society of Actuaries, and has a Bachelor of Science degree with high distinction in Mathematics from Worcester Polytechnic Institute in the USA.

ACTEX Learning (AL): How many practicing actuaries do you have?

Hassan Scott Odierno (HSO): We have six qualified actuaries with the firm. I am the only FSA, we have one FCAS and four British qualified actuaries. In the Actuarial Society of Malaysia as of December 2015:

Membership Breakdown by Class
Fellow - 148
Associate - 43
Ordinary - 572
Student - 35
Total - 798

Membership Breakdown by Professional Body
Society of Actuaries - 433
Institute and Faculty of Actuaries - 220
Institute of Actuaries of Australia - 51
Casualty Actuarial Society - 54
Others - 40
Total - 798

Some of the Fellow members are currently working outside Malaysia but this gives an idea of the size of the industry.

(AP): What is the word for actuary in your local language?

(HSO): Aktuari

(AP): When was actuarial science first introduced?

(HSO): The first several batches of actuaries to qualify in Malaysia was in the mid 1980's, when our office head Zainal Kassim qualified. Before that an actuary with a reinsurer would do the yearly valuation work for the various insurance companies.

(AP): What is your favorite part about being an actuary?

(HSO): The lifelong learning definitely. Being an actuary in the developing world we get to see a wide range of situations and problems to solve. The current challenge is the implementation of risk based capital (RBC) in many of our markets, particularly how Takaful (Islamic) insurance should implement RBC as the risk profile can be quite different between Takaful and traditional insurance. The exciting part is to take RBC from being a compliance exercise to being used in product pricing, risk management and capital management. Another good thing about being an actuary is to see the positive energy of the actuarial students. I have been fortunate to speak on actuarial science to actuarial science majors in several universities in Malaysia as well as in Kenya and Tanzania and to spend time with actuarial science fresh graduates in countries such as Sri Lanka and Brunei. Unlike the more developed world these students and graduates are entering a market where they need to prove their worth as an actuary as actuaries are not as of yet fully understood or even well known within insurance companies.

(AP): Can you share an interesting anecdote from your travels as an actuary?

(HSO): I have had the pleasure of so many interesting projects and interactions through our consulting work, such as spending a few weeks in Tanzania helping them develop Takaful insurance regulations, speaking in Lome (Togo) and meeting so many excited and passionate young actuaries around Africa and speaking on the benefits of microtakaful, a subject I am passionate about, at major microinsurance conferences in Africa.

(AP): (AP): What are some of the main challenges and projects for actuaries over the next 5-10 years?

(HSO): In many developing markets in order to develop stability the premium rates for motor insurance is set by regulation (tariff). As the market grows and the insurance companies develop its expertise and data the rates would be allowed to vary based on market forces (detarif). The detarif process for motor insurance in Malaysia will be a main challenge for actuaries here in the short to medium future, as well as developing new markets for Takaful and especially microtakaful to increase insurance penetration.

(AP): Who are the main employers of actuaries?

(HSO): The main employers of actuaries continue to be insurance companies.

(AP): Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

(HSO): In Malaysia the actuaries have traditionally been US or UK educated with some Australian and Canadian graduates. Local universities do offer actuarial science though, and have been turning out a large number of actuarial graduates lately.

(AP): What is the credentialing procedure like for an actuary in your country?

(HSO): To be accepted as an appointed actuary in Malaysia the actuary needs to be qualified from one of the major bodies such as SOA and IFoA.

(AP): Do employers support the cost and time of exam preparation?

(HSO): Traditional employers of actuaries do, but actuarial graduates working in non-traditional employers such as banks and in risk management departments would not generally be supported very well.

(AP): Are there any noteworthy non-traditional actuarial positions?

(HSO): Actuarial graduates tend to fare well in risk management departments and banks here as the actuarial degree is well respected.

(AP): What is the reputation of actuaries in your country?

(HSO): Actuaries are well regarded here, though certainly not as well-known as in the US and UK.

(AP): Your company works with many other countries outside of Malaysia, what are the similarities and differences you have seen in the profession during your travels?

(HSO): We find a whole spectrum of development in the countries we work in. For instance in Kenya for a long time there were only a small number of qualified actuaries but now each year there are new qualified actuaries. In countries such as Sri Lanka the need for actuaries far exceeds the supply currently whereas in Mauritius actuaries are not as of yet valued to the extent of some other countries. One unifying characteristic is that RBC is coming worldwide and this will require a much larger number of actuaries than currently exists and a larger job scope as well. Whereas traditionally actuaries performed net premium valuations with assumptions set via regulations and pricing using a load up of reinsurance rates, now the actuary needs to perform detailed experience studies (which is not easy with the lack of data in many jurisdictions) and complex calculations for reserves on a gross premium valuation basis and solvency margins. Pricing is now much more complex as well, as we need to ensure the effect of a product on the capital position of the insurer is well understood.

(AP): Is there anything else you would like to add?

(HSO): Our firm has strong ties with ACTEX. We have contributed to a chapter in the book, Actuaries in Microinsurance and we are developing an e-course in Takaful in collaboration with ACTEX, and we are also working together to distribute exam preparation videos.

Actuaries Around the World
May 2016

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Dr. Bakhodir Shamsuddinov Rakhimovich from Tashkent, Uzbekistan. Dr. Rakhimovich holds a Ph.D. in Mathematics from Lomonosov Moscow State University, and participated in an actuarial diploma course from 1994 through 1996. He is the head of the department of mathematics at the Tashkent Branch of the Plekhanov Russian University of Economics, and is the Chairman of the Uzbekistan Actuarial Society.

ACTEX Learning (AL): How many practicing actuaries do you have?

Dr. Bakhodir Shamsuddinov Rakhimovich (BSR): Approximately 10.

AP: What is the word for actuary in your local language?

BSR: Aktuariy (Actuariy).

AP: When was actuarial science first introduced?

BSR: In the year 2000.

AP: What is your favorite part about being an actuary?

BSR: I am professional mathematician, specializing in probability theory and mathematical statistics. I was always interested in the practical application of my mathematical skills. I found this possibility in the insurance and the pension system. The actuarial courses organized by Institute of Actuaries of Great Britain and Lomonosov Moscow State University gave me the possibility to carry out my plans. I would like to express my thanks to the organizers and tutors of those courses, especially Chris Daykin and Professor Evgeniy Chepurin.

AP: Can you share an interesting anecdote from your career?

BSR: In my article about actuarial mathematics and its application in practice, the phrase "actuarial mathematics" was corrected by the proof-reader to be "actual mathematics".

AP: What are some of the highlights of the history of the actuarial profession?

BSR: There has been a growth process of actuarial activity, the actuarial profession and actuarial education in Uzbekistan. The key moment was the creation of the initial legislative basis of actuarial activity in Uzbekistan. The main legal acts regulating actuarial activity in Uzbekistan were:

The law "On insurance activity" (Provisions № 5, № 9.4 and № 9.5, 2009);
"Regulations on the procedure for rendering of actuarial services" (Order of The Ministry of Finance of The Republic of Uzbekistan from April 7, 2009 of No. 42)
"Regulations on certification of Qualified Actuary" (Order of The Ministry of Finance of The Republic of Uzbekistan from 09.06.2007 of № 82).

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

BSR: The main challenges and projects for our association over the next 5-10 years are:

To become an associate member of IAA;
To organize short-term actuarial courses for university teachers and specialists within insurance companies;
To cooperate with national universities in the creation of actuarial science majors and minors.
To develop recommendations for the State Insurance Supervisory Board (SISB) on changes to the insurance policy and regulatory framework, taking into account international practice and the standards of IAIS, IFRS and IAA; and
To promote the role of actuaries in the insurance market and social security system.

AP: What developments on the horizon could affect future opportunities in your country?

BSR: The Uzbekistan economy is growing dynamically. Over the last 15 years, GDP has been growing at an annual rate exceeding 8%. As of January 1, 2016, the population of Uzbekistan was approximately 31 million people. There is a huge potential for the development of the national insurance market, including life insurance.

The insurance market of Uzbekistan has been expanding rapidly since 2000, but is still at an early stage of development. The insurance penetration in 2014 is equal to 0.4% of GDP. New products emerge and old ones evolve. This concerns not only the insurance market, but also social security system programs, state pension plan designs and savings products. In particular, we need to analyze current and future population trends in order to understand the potential needs of evolving populations and create programs and products that serve to protect people when they are most vulnerable: the elderly, the sick and disabled and those suffering the loss of a family member or unemployment.

AP: Who are the main employers of actuaries?

BSR: Insurance companies.

AP: What qualifications do you find most important for upcoming actuaries?

BSR: Professionalism.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

BSR: Some universities of Uzbekistan offer actuarial science minors.

AP: What is the credentialing procedure like for an actuary in your country?

BSR: In line with the article 6-1 of the Law "On insurance activity", insurance companies are obliged to hire an actuarial organization at least once a year for rendering actuarial services. Actuarial services include calculation of the mathematical possibility of occurrence of the insured event and determining frequency and severity of damage, etc. In line with this regulation, the actuary can offer services in two forms – actuarial research and actuarial support.

AP: Do employers support the cost and time of exam preparation?

BSR: Yes, they do.

AP: What is the reputation of actuaries in your country?

BSR: I think it is still early to speak about reputation of actuaries. The actuarial profession is still very young.

Actuaries Around the World
April 2016

This month we have the pleasure of interviewing Victor Hugo Molinas, the only practicing actuary in Paraguay. Victor holds a Bachelor's degree in Actuarial Science from the University of Buenos Aires, and is currently the Chief Actuary at the Instituto de Previsión Social, a governmental organization overseeing social security and health care. His sister is studying to become an actuary as well, and hopefully, she will soon double the number of actuaries in Paraguay!

ACTEX Learning AL: How many practicing actuaries do you have?

Victor Hugo Molinas (VHM): Just one - me. There are some local people who do work that is related to actuarial science, but have not studied this formally. Some businesses bring in consultants from outside the country.

AP: What is the word for actuary in your local language?

VHM: Actuario

AP: When was actuarial science first introduced?

VHM: I can't answer exactly, but some of the pension funds have actuarial reports from the 1950s. These works were usually carried out by multilateral organizations.

AP: What is your favorite part about being an actuary?

VHM: The work we carry out has a real impact on people, whether it be new product development or the technical support for a new law.

AP: How did you decide to study actuarial science?

VHM: I realized that there was a big need here for expertise in mathematics and econometrics. My father was involved with the national insurance commission, and in my research, I found out about actuarial science and the fact that there weren't any actuaries here. This led me to decide to go "next door" to Argentina to study.

AP: Can you share an interesting anecdote from your career?

VHM: In my company, we begin a "young professionals" program, and heavily recruited employees with a technical background to work in my department in order to support our actuarial work. This was of great help in improving our organization's reports.

On a lighter note, once a company asked me to analyze the pricing of a group life policy within 24 hours. I asked for the data regarding the lives involved, and they brought me a pile of folders full of papers, and said that all the information was in there. I had to explain to them that I couldn't work with data in that way, and definitely not in 24 hours!

AP: What developments on the horizon could affect future opportunities in your country?

VHM: Many international companies with a branch in Paraguay are going to seek to implement Solvency II, and this will require a great deal of work to implement.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

VHM: There needs to be a regulation requiring the presence of someone with actuarial knowledge within insurance companies, for reserves and pricing. There should be the requirement of a certain level of statistical analysis.

AP: Who are the main employers of actuaries?

VHM: Pension funds with defined benefits schemes and life insurance companies.

AP: What qualifications do you find most important for upcoming actuaries?

VHM: An actuary should be able not only to determine ratemaking, actuarial liability or make reports for financial statements, but also develop new products and find solutions for current issues.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

VHM: Schools do not have actuarial majors or minors, it is a topic in Statistics in the School of Economics. I studied Actuarial Science in Argentina.

AP: What is the credentialing procedure like for an actuary in your country?

VHM: There is not credentialing procedure for an Actuary in the country.

AP: What is the reputation of actuaries in your country?

VHM: The reputation of the actuaries is that we are professionals that focus on the mathematical aspects of the problem and not on how our work actually affects individuals.

AP: Is there anything else you would like to share?

VHM: If anyone is interested in learning more about the Paraguayan market, feel free to contact me at victor.molinas@mgc.com.py.

April 2016

Interview with Bill Bluhm, a Retired Actuary turned Winemaker

Bill Bluhm retired in 2013 as a Principal and Consulting Actuary with Milliman in Minnesota after a successful, nearly four decades long career as an actuary. Now he owns and operates Dancing Dragonfly Winery, a thriving vineyard and winemaking operation in northwest Wisconsin. We spoke to Bill recently about his remarkable second calling and how a Health actuary became a winemaker.

ACTEX Learning AL: How long was your career as an actuary and what area did you focus on during your career?

Bill Bluhm (BB): I started as an actuarial student in January, 1976, in Manhattan. I changed jobs in late 1977, to become a health regulator working at the New York State Insurance Department, in Albany. That was when I became a specialist in health insurance, which is where I stayed until I retired, in early 2013. Thirty-seven years in the profession.

AP: Where did you get the idea to start winemaking?

BB: I kind of stumbled into it. I was retiring from my consulting firm, where I had built a number of businesses that I was exiting. I felt that I still had some entrepreneurial energy in me, plus a lot of business know-how that would otherwise go to waste. (Plus, my wife was having some health challenges at the time, and I had a whole lot of nervous energy.) I've always enjoyed wine, and love the challenge of a new industry.

AP: Did you have any experience in this industry before starting to plant your first vines?

BB: Not one bit.

AP: We read that you started with planting few vines in a friend's backyard. How did that small venture develop into a full blown vineyard and business?

BB: I had a friend who had six vines planted in his backyard, who suggested we jointly find a plot of land to plant more. In my usual way, I kept talking myself into scaling upward, in order to make the investment more balanced. One acre of land wasn't available, but 60 acres were. And if you are growing grapes, wouldn't it be natural to make the wine? And if you're building a winery, you need a tasting room. If you have a tasting room, people will want to come to the winery for events like weddings, so you'll need an event center. Etc.

AP: What new skills have you had to learn as a vineyard proprietor?

BB: This is an amazingly vertically integrated business. I am a farmer (growing grapes), a manufacturer (making wine), a retailer (in our tasting room), a wholesaler (to liquor stores, restaurants, and other retailers), and in the hospitality business (for our festivals and other events, and for weddings.) All my prior business experience was cerebral-- managing health insurance and its support products, like software products. Not a bit of experience with growing, making, or selling actual things.

AP: Do any of your actuarial or consulting skills come into play in this second career / business?

BB: To some extent. We have a strong need for predictive models, for example. To look at it from an extreme point of view, the planning cycle starts when you put a vine in the ground. It is five years until it starts yielding grapes. Then it's another 1-2 years before those grapes can be released as wine. We must essentially predict our sales seven years in the future-- in a business where we started three years ago and have no real data.

Data analysis is another area where these skills come in handy. Impacting business processes is no different from any other company; there is just different emphasis on some aspects. We constantly analyze our sales data, to understand what sells and what doesn't, and what's profitable and what's not.

AP: Do you have any new varieties of wines you are working on?

BB: We have made roughly twenty wine blends over our first three years. Many of them have won awards, but yet I believe we can constantly improve on what we've done. At the same time, we only have one winemaker (who develops a tic when I say "I just thought of a new idea for a wine"), who has limited time. So we'll have to make some decisions as time goes on.

AP: How do you stay connected to the actuarial community?

BB: I have quite a few friends I still stay in contact with, and I've maintained my membership in the Academy and the Conference of Consulting Actuaries, both of whom have retiree-friendly categories of membership for this purpose. I make a trip to one of their annual meetings every year or so, and catch up with many old friends.

AP: Do you travel to other areas of the country or world to visit vineyards and wineries?

BB: I learned an important lesson from another retired actuary, Bill Halvorson. When Bill retired, he had an investment advisory business, and I remember him telling us about traveling to other countries to visit their stock exchanges. I do not claim to know even a little bit of Bill's rationale, but I remember thinking "what a brilliant way to make your trips deductible." I like to think that I have learned from my predecessor, and am able to do so. Generally, when on a trip, we do try to visit wineries wherever we go.

Interestingly, there is widespread hospitality toward others in the wine industry, and when we visit other places, they usually go out of their way to provide us special treatment in their tasting rooms or in a tour of their facilities.

AP: What do you enjoy most about being a part of the wine industry?

BB: Probably the most fun part is when people ask me "what do you do?" I used to say, "I'm a consulting actuary," and they would usually get a confused or blank look on their face as they tried to figure out what to say next. Now I say, "I own a winery," and they immediately smile broadly and want to know all about it.

I urge my colleagues to consider a similar path. It's fun. But don't forget the old adage: "Know how to make a small fortune in the winemaking business? Start with a LARGE fortune."

AP: Thank you Bill!

Bill Bluhm is the Founding Editor of ACTEX's Group Insurance textbook. The 7th edition of Group Insurance will be published in the first half of 2016.

Actuaries Around the World
March 2016

This month we have the pleasure of interviewing Sandeep Chavda, co-founder of the Actuarial Society of Tanzania. Sandeep holds a Bachelor's of Science in Statistics from University of Cape Town, and is currently an actuarial specialist with Metropolitan Tanzania Life Assurance where he works in the areas of pricing, reinsurance and product development.

ACTEX Learning AL: How many practicing actuaries do you have?

Sandeep Chavda (SC): Currently there are no practicing actuaries in Tanzania with an actuarial designation. I have completed a Diploma in Actuarial Techniques (CT1-CT9 from the IFoA), and I would estimate that there are approximately 20 individuals taking IFoA exams, as I am.

AP: When was actuarial science first introduced?

SC: This was introduced by the University of Dar-es-Salaam in 2010.

AP: What is your favorite part about being an actuary?

SC: Being part of a rare pool of individuals who have this qualification in Tanzania.

AP: Can you share an interesting anecdote from your career?

SC: I co-founded of the Actuarial Society of Tanzania whilst in my 3rd year at university to further the profession in my country. This association is currently dormant, but we hope to get it up and running again soon.

AP: What are some of the highlights of the history of the actuarial profession?

SC: There has been a growth in interest by high school students now joining the program at the local university, as well as a slow but steady recognition and uptake of actuarial graduates and value placed on the skills that actuarial professionals bring in running insurance companies and pension funds.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

SC: Finding leadership for the Actuarial Society of Tanzania which is currently dormant. We have a lack of exemption credits for the courses at local university, requiring students to do costly IFoA exams, sometimes without financial support from employers. There is a lack of senior actuarial personnel to provide guidance and support as well as transfer of practical technical skills. There is a lack of organized mentorship support for university actuarial students.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

SC: There is expected regulation requiring an actuarial function in local general (property and casualty) insurance companies. The general economic growth of the country is attracting more insurance companies. We see an introduction of sophisticated products on the capital markets requiring modeling skills

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

SC: With the expected regulation requiring actuarial input in General/Short term insurance companies, it is likely to increase job prospects and diversification for those currently in life insurance companies and pension funds. Up-skilling is required in terms of technical capacity in the areas of reserving, modeling and pricing techniques for banking/capital market products like derivatives.

AP: Who are the main employers of actuaries?

SC: Life insurance companies, health insurance companies and pension funds.

AP: What qualifications do you find most important for upcoming actuaries?

SC: At this stage, the newly introduced CAA qualification from the IFoA and its Associate qualification would be a good platform whilst building up the required technical skills and work experience to climb to the Fellowship qualification of the IFoA.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

SC: For those who can afford it, actuarial science is pursued overseas. Most high school students opt to join the local university (University of Dar-es-Salaam).

AP: What is the credentialing procedure like for an actuary in your country?

SC: Not in place. The law recognizes Associate and Fellowship qualification from reputed organizations such as the IFoA and SOA.

AP: Do employers support the cost and time of exam preparation?

SC: Few employers support this. Those who do are foreign-owned companies who have an actuarial support policy from the originating country and hence apply this for locals as well. One example of this are South African-based insurance companies with a presence in Tanzania.

AP: What is the reputation of actuaries in your country?

SC: The profession is gaining reputation as students pass more exams and add value to their organizations. This is, however, not moving at a desirable pace and could be remedied by seminars and workshops for potential employers, showcasing the technical skills and added value actuaries can have on their companies.

AP: Is there anything else you would like to share?

SC: Tanzanian actuaries need support from large actuarial associations in terms of mentorship and exam support, technical skills training in practical aspects of actuarial work for those who are working and studying at the same time and workshops/seminars for employers.

Sandeep can be contacted via the following email address: svchavda@gmail.com.

Actuaries Around the World
February 2016

This month we have the pleasure of interviewing David Mureriwa, FIA, FASSA, from Zimbabwe. David is the Chief Actuary at African Actuarial Consultants. He is a Statutory Actuary to a number of Pension Funds in Zimbabwe and Africa. He is also Consulting Actuary to a number of Life Offices in Zimbabwe. David also gives financial and actuarial advice to General Insurance Companies and Medical Aid Funds. David has over 20 years working experience in the Actuarial Consulting Business within the Southern African Development Community region. He has worked in Corporate Life, Pensions, Health, General Insurance and Investments in Zimbabwe, Namibia and South Africa.

David is the current President of the Actuarial Society of Zimbabwe. He is the Chairman of Actuarial Society of Zimbabwe's Education Committee. He is also Advisor of the Institute and Faculty of Actuaries in Zimbabwe. David is also the current Head of International Mentorship Program of the Association of South African Black Actuarial Professionals. He is part time Lecturer at National University of Science and Technology.

David holds a First Class Honours Degree in Mathematics from the University of Zimbabwe. He is a Fellow of both the Institute and Faculty of Actuaries in the United Kingdom and the Actuarial Society of South Africa.

ACTEX Learning AL: How many practicing actuaries are there in Zimbabwe?

David Mureriwa (DM):There are currently ten resident, practicing actuaries in the Zimbabwean market.

AP: When was actuarial science first introduced?

DM: The National University of Science And Technology (Zimbabwe) started offering the Actuarial Science Degree in the year 1998.

AP: What is your favorite part about being an actuary?

DM: I enjoy the challenges associated with the job. Being an actuary requires one to put in a lot of long hours and it requires considerable updating of professional skills. The actuarial profession also brings a lot of privileges with it. It is a valued career that is quite rewarding. Actuaries are one of the best paid professionals in the country.

AP: Can you share an interesting anecdote from your career?

DM: I joined the actuarial profession by accident in 1994 whilst I was studying towards a Mathematics Degree at the University of Zimbabwe. Insurance companies were forced to have an actuarial department, so they came to the University seeking help, and since I was the best student in my year, I was offered a job on the spot. I then found myself writing actuarial exams from 1995 on, and I found the profession rewarding though I still regret not fulfilling my childhood dream of being a Mathematics professor.

AP: What are some of the highlights of the history of the actuarial profession?

DM: Two major highlights were the merger of the Institute and Faculty of Actuaries and the emergence of actuaries in wider fields.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

DM: There are a lot of challenges in our actuarial market. There are currently very few actuaries working in the country. The markets are also neither stable nor deep, which makes it hard to set actuarial assumptions. This has therefore led to variable actuarial methods and assumptions in use. There are also issues in regaining public confidence after low pension values were granted to pensioners after the recent hyperinflationary period. Board ownership of actuarial output is also not sufficiently emphasized. There is also a lack of commitment by members of the Actuarial Society of Zimbabwe as only a few take up volunteering roles when they arise.

In addition, the regulation system in Zimbabwe is weak. The Pension and Provident Act as well as the Insurance Act are quite outdated. This is worsened by low compliance with the Insurance and Pensions Commission circulars. The valuation of Defined Contribution Funds is also not mandatory. There is no strict regulation of all the actuarial work carried out which means some of the actuarial work is carried out by unqualified actuaries. Another challenge is the presence of very serious data challenges in the market. This is as a result of the lag in technology in the country which leads to poor information capturing and storage systems.

AP: What developments on the horizon could affect future opportunities in your country?

DM: There are progressive steps towards making use of risk based approaches i.e. Solvency II/SAM. The Insurance and Pensions Commission in Zimbabwe also is looking forward and there are current amendments in progress to the Insurance Bill and the Pensions and Provident Fund Act. There was a recent launch of the National Code on Corporate governance which provides a framework for corporate conduct for both the public and private sector. There is talk of harmonizing actuarial methods which will ensure that there is consistency and uniformity in the various work carried out by actuaries.

The Actuarial Society of Zimbabwe (ASZ) has also made significant strides since its re-launch in 2010. There have been great improvements in the actuarial profession in Zimbabwe since its rebirth with ASZ registering all actuaries doing work in Zimbabwe and lobbying for better legislation in the industry. The ASZ works closely with the Insurance and Pensions Commission (IPEC) in trying to improve the functionality of the market.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

DM: There is a serious lack of appreciation of actuarial input and work, however I see this changing for the positive through the influence of the Actuarial Society of Zimbabwe. It is working towards the betterment and increased exposure of the actuarial profession in Zimbabwe by carrying out annual conventions, hosting talks on actuarial issues, and offering career guidance exercises. I foresee regulatory changes which will greatly influence the future of the Actuarial profession in Zimbabwe. I also foresee more actuaries taking up greater roles in non-traditional actuarial fields considering the direction that the country's economy is headed and the world economy at large. However this might lead to a greater need for qualified actuaries in the country.

AP: Who are the main employers of actuaries?

DM: Life offices and Consultancy firms

AP: What qualifications do you find most important for upcoming actuaries?

DM: With the emergence of greater actuarial roles in non-traditional actuarial areas, I believe having a qualification in other fields e.g. Enterprise Risk Management, General Insurance, Banking is very important.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

DM: Currently, one local university offers the Actuarial Science degree and most students study on their own through the Institute and Faculty of Actuaries.

AP: What is the credentialing procedure like for an actuary in your country?

DM: There is currently no Zimbabwean Actuarial Fellowship which means most members make use of the Institute and Faculty of Actuaries (IFOA) or the Actuarial Society of South Africa (ASSA).

AP: Do employers support the cost and time of exam preparation?

DM: Most employers offer full or partial support.

AP: Are there any noteworthy non-traditional actuarial positions?

DM: Chief Risk Officer (Life Company),
Chief Executive Officer (Life company),
Bank Risk Management positions,

AP: What is the reputation of actuaries in your country?

DM: The current reputation of actuaries in Zimbabwe is poor following the conversion exercise carried out after the hyperinflationary period which led to pensioners receiving very low pension values. The public attributes this to the methods and assumptions made use of by actuaries in carrying out the conversion exercise from the Zimbabwean dollar to the United States dollar.

AP: Is there anything else you would like to share?

DM: The Actuarial Society of Zimbabwe is diligently working towards the growth and exposure of the actuarial career in Zimbabwe and is succeeding profoundly to date. However the society should now work towards coming up with Zimbabwe actuarial practice modules and mortality tables fit for the Zimbabwean market. There is also room for more actuaries in Zimbabwe provided the policymakers create an environment that attracts Zimbabwean actuaries from overseas.

The standards of local universities should also improve to ensure that students get exam exemptions. Companies that employ actuaries in Zimbabwe should also invest in IT infrastructure to enable the usage of progressive methods like Sungard, iWorks and Prophet.

The Insurance and Pension Acts in Zimbabwe must also be modernized and the Insurance and Pension Commission (IPEC), National Social Security Authority (NSSA) and the government must have functional actuarial departments. The local insurance commission should make it compulsory for each insurer to have an actuary who must be a board member. This, I believe, will improve the operation of insurance firms in Zimbabwe.

Actuaries Around the World
January 2016

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month we have the pleasure of interviewing Gayane Arsenyan from Armenia. Gayane is a Supervisor Actuary at the Central Bank of Armenia, and a lecturer in actuarial science and insurance at the Russian-Armenian (Slavonic) University in Yerevan. She is Vice-Chair of the Actuaries Without Borders Committee, and is a founding member and board member of the Actuarial Society of Armenia. In addition, she serves on the Advice and Assistance Committee of the International Actuarial Association for Eurasia and the Middle East.

ACTEX Learning AL: How many practicing actuaries do you have?

Gayane Arsenyan (GA): Approximately 35.

AP: What is the word for actuary in your local language?

GA:

(actuar)

AP: When was actuarial science first introduced?

GA: In 2001

AP: What is your favorite part about being an actuary?

GA: To get involved in monitoring/supervising and quantifying all risks facing an insurance market, and to help devise strategies for dealing with and avoiding these risks.

AP: Can you share an interesting anecdote from your career?

GA: The most interesting thing in my career is that almost all my colleagues believe that they could do my work better, but when I ask (just for fun) any technical question they answer me "Ohhh, that's too difficult for us to understand. You are an actuary, you must know better!"

AP: What are some of the highlights of the history of the actuarial profession in your country?

GA: The first time the term "Actuary" was used in insurance regulation in 2007. Moreover, starting from summer of 2008, there was a restriction, according to which all insurance companies need to have at least one actuary on their staff, whom the Central Bank of Armenia (CBA) must approve.

In 2008, the Financial Sector Deepening Project (FSDP), one of the USAID's projects, in Association with Central Bank of Armenia (CBA) and UK Institute of Actuaries implemented Actuarial Education, which included 2 stages of courses: Basic Education (8 modules) and Advanced Education (12 modules). Almost all the modules were taught by UK actuaries (except 3 modules, which were taught by local experts). The lecturers were chosen by the UK Institute and Faculty of Actuaries based on their particular areas of actuarial expertise and their availability. Most of the students who graduated from these courses currently work in Armenian financial sector. Some of them are Responsible Actuaries, some work in governmental institutes, and the rest are involved in bank risk management processes.

AP: What developments on the horizon could affect future opportunities in your country?

GA: Currently, the Armenian Society of Actuaries (ASA), in association with the Central Bank of Armenia and Actuaries Without Boarders (AWB) is carrying out a long-term exam tuition project. The first (pilot) phase was carried out successfully in September 2014 (Financial Mathematics) and a second phase was carried out in June/July 2015 (Probability). To create a local educational platform, the ASA has provided Training of Trainers for those actuaries who have adequate knowledge for academic work.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

GA: The Central Bank of Armenia (CBA) understands the significant role of actuaries in the Armenian Financial market and sees the opportunities of Actuarial Professional development in our market. I can see increasing demand for actuaries in our job market. The increase is due to several factors:

1. Additional laws requiring implementation processes (e.g. Annual report of Responsible Actuaries, Solvency II pilot testing, etc).

2. Employers are gradually learning to utilize actuarial skills and knowledges, which is creating an added value for the profession.

Over the next five to ten years, I think actuaries will be involved in Public Pension Schemes, in Public Health Insurance (which currently doesn't exist in our market) and most importantly, in the establishment of a local educational platform.

AP: Who are the main employers of actuaries?

GA: Insurance companies

AP: What qualifications do you find most important for upcoming actuaries?

GA: International qualifications (from the SOA or IFoA) and from a long-term perspective is a local qualification, which will fit to all the IAA qualification requirements. Currently ASA is working with Yerevan State University's (YSU) Actuarial Mathematics chair on partial adoption of the IAA educational syllabus in a newly opened Master's Program.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

GA: Since 2001, we have an Actuarial Mathematics chair in YSU, which is becoming more and more popular due to the rising demand of actuaries in the local job market. Currently the American State University and the Russian-Armenian (Slavonic) University are planning to open new chairs of Actuarial Science which could be considered as a positive trend in terms of the profession's development.

AP: What is the credentialing procedure like for an actuary in your country?

GA: The credentialing procedure is defined only for Responsible Actuary/Head of Actuarial Division. The standards for qualification and professional adequacy of the Responsible Actuary, as well as the procedure for testing the professional adequacy and qualification thereof are established by the Central Bank criteria. The professional adequacy and qualification of the Responsible Actuary of a company is examined at the Central Bank, because this requirement is provided for under Central Bank regulations.

AP: Do employers support the cost and time of exam preparation?

GA: Employers do not pay exam fees, but can pay for materials (if not too expensive). Due to the small number of actuaries, obtaining time for exam preparation can sometimes be a problem and actuaries mostly take part of their annual leave to prepare for exams.

AP: Are there any noteworthy non-traditional actuarial positions?

GA: We don't have non-traditional actuarial positions.

AP: What is the reputation of actuaries in your country?

GA: Recently (over the last two years), the role of Responsible Actuaries is gradually increasing within the Armenian financial market. Currently they are considered to be key employees for insurance companies.

AP: You are vice-chair of the Actuaries Without Borders (AWB) Council. Tell us a little bit about this organization, and your work with them.

GA: AWB is a section of the International Actuarial Association (IAA), whose mission it is to promote global public good, focusing on countries that lack the actuarial resources needed to create productive, sustainable, and stable markets for insurance and other risk mitigation. Specifically, we are willing and able to develop the actuarial profession in supporting strategic objective 4 of the IAA: the development, organization and promotion of the actuarial profession in areas of the world in which it is not present or is not fully developed.

As vice-chair, I assist the committee Chairperson in the management of the committee's work, assume the interim chairmanship of the committee in the absence of the Chairperson; promote AWB activities to actuarial associations world-wide, to NGOs, to potential sources of funding, and to AWB members. I work to grow the membership of AWB and with other IAA sections, IAA committees and subcommittees, the IAA leadership and secretariat to develop AWB projects and to promote IAA objectives.

AP: Is there anything else you would like to add?

GA: The main problem we have in our country in terms of professional development is motivation of students to pay for international exams and exam papers. Due to low income, no income and absence of any available scholarship programs or reimbursement policy of actuarial exams/exam papers we have a very low level of students who are ready to pay. We would be happy to cooperate with our International colleagues in order to provide the best options for local students who are seeking to obtain their fellowship within the SOA or IFoA.

Is Enterprise Risk Management Worth It?
by Max Rudolph, January 2016

Some say that risk practitioners have been managing risk forever, and enterprise risk management (ERM) is nothing new. Others contend that a new crisis every few years is crucial to avoiding cuts in funding during stable periods. These "happy times" are actually when risk exposures grow, only to be noticed when times are bad. As Warren Buffett has said, it is only when the tide goes out that we know who has been swimming naked. Ponzi schemes like the one run by Bernie Madoff are great case studies for this unfortunate reality.

As the researcher behind the annual Emerging Risk Survey, sponsored by the Joint Risk Management Section (Canadian Institute of Actuaries, Casualty Actuarial Society, Society of Actuaries), I try to include interesting questions about current topics. In the 2014 survey I asked, Does ERM improve returns relative to risk? Respondents were given the choices Yes/No/Not Sure, and provided the opportunity to comment. There is a wide range of knowledge from those who respond, and comments generally come from those with lots of experience. The results are fascinating, especially when mapped to the specific response.

More than half of respondents (57 percent) answered "yes," while 26% were Not Sure and 16% said No. In an evolving practice area this can be very helpful to see what others feel is working and what is not.

ERM is Working

Comments have been segmented based on how they answered the lead-in question. Some responses from those saying "Yes" used words like "awareness," "transparency," "discussions," "balance," "decreasing volatility" and "better decisions." Some specific comments were:

Reduce likelihood of major losses
Better able to chop off the tails of returns primarily through risk avoidance in product design
Helps identify and mitigate some tail risk that might have otherwise been passively accepted
ERM creates the framework, tools and metrics to evaluate return against risk.
One business area is not working against another business unit on the same risk
We have caught issues earlier because of ERM.
Better understanding of marginal impacts of business decisions.

ERM is Not Working

Getting your hands around the nuances is worthwhile when dealing with an experienced group of risk managers. Here are some comments from those saying ERM has not improved returns relative to risk. Except for those fighting with a bureaucratic risk culture they don't sound much different than those saying "yes."

Helps to understand the risks being taken. It would stabilize returns, so reduce volatility and not necessarily the absolute level.
The purpose of ERM is to avoid the impact of the risks at a minor cost. There is a positive return relative to what would happen otherwise.
Most activities have so far been regulatory measures.
It is more a matter of focusing on the risk-return trade-off than it is about ERM.
ERM is largely involved with quantifying risks; however, senior management doesn't understand and doesn't use any information.
Creation of a top-heavy bureaucracy with too many unaccountable reviewers.

The comments from those answering "Not Sure" are even more interesting. Unlike most survey questions, here these responses may be the most thoughtful.

Like buying insurance, poor deal in good times.
Utimately it becomes part of how you do business and it is hard to identify the specific impact.
You can't measure what didn't happen.

I certainly have my opinion of how a risk team should operate to be effective, but many others have good ideas too. There is no convergence of best practices at this point, although risk culture clearly is a primary driver. Learning and "borrowing" from other teams is encouraged. Sometimes interactions with ERM practices and failures in other industries can show you what to do as well as what not to do.

Culture drives expectations of a risk team. Some management teams look at risk in all forms as bad, and try to set up controls to eliminate any possibility of a risk. Others focus on risk in only certain sections of a distribution, either trying to optimize the common results around the mean or looking strictly in the tail. Each of these interpretations is important, but a focus on one ignores the other and is suboptimal.

Risk teams can leverage regulatory efforts like Own Risk and Solvency Assessment (ORSA) in the insurance industry to develop and improve internal ERM efforts. Firms can leverage techniques by seeing best practice tools that others are using, as regulators provide feedback. A regulatory requirement can provide funding that improves your decision making ability at the same time. Rightly or wrongly, budget is easier to allocate when there is a compliance aspect to it.

As companies buy in to the benefits of enterprise risk management, both from the top down and the bottom up, risk culture will drive value. ERM pays for itself when management becomes aware of its risk exposures and balances risk and return as it makes tactical and strategic decisions.

Opinions reflect the author and not Actex or the sponsors of the research cited.

Max Rudolph, FSA CFA CERA MAAA is the founder of Rudolph Financial Consulting, LLC. He focuses on ERM and ALM topics as they are integrated with company strategy. He can be reached at max.rudolph@rudolph-financial.com.

Actuaries Around the World
December 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Lisa Wade, Lisa is a Principal and Consulting Actuary with the firm Eckler Ltd and is based in its Barbados office. Since joining the Eckler team her primary experience has been focused on employee benefits work. She advises public and private sector clients throughout the Caribbean. She is a Fellow of the Institute and Faculty of Actuaries as well as the Society of Actuaries. She holds a BSc in Business, Economic and Social Statistics from the University of the West Indies, Mona Campus and a MSc in Actuarial Science from Heriot-Watt University, Scotland.

Lisa has been a member of the Council of the Caribbean Actuarial Association for the last ten years.

ACTEX Learning AL: How many practicing actuaries are there in the Caribbean region?

Lisa Wade (LW): Including students, there are approximately 260 members. We have 83 resident fully qualified actuaries, and 30 more who practice and work in the Caribbean area on a temporary basis.

AP: Where are your members from?

LW: We have members in the following countries: Trinidad & Tobago, Jamaica, Barbados, Suriname, Bahamas, Bermuda, St. Vincent, Belize, Cayman Islands, Haiti, Canada, the U.S., South Africa, the UK, Argentina and Germany

AP: What is the process like for students seeking to become actuaries in your region?

LW: There are a number of routes students can take. Some people take IFoA exams, but the majority of students here are taking SOA exams. We have a Bachelor's of Science program in Actuarial Science available at two campuses in the University of West Indies, and some students choose to go abroad and then return to the Caribbean area to practice. The CAA offers support to actuarial students in the Caribbean region, including reimbursement of examination fees to students for their first two SOA exams, given certain conditions, such as a good GPA. In addition, the SOA offers their Associateship Professionalism Course (APC) in conjunction with our annual meeting every other year in December, so if any students are seeking to complete this requirement in December, and can convince your employer to reimburse you, come to the Caribbean for it!

AP: What are the main areas of practice in your region and what trends are you seeing?

LW: Most actuaries work in traditional areas, such as life insurance, pensions and employee benefits. We have seen an increased focus on microinsurance in the region, as well as a move from defined benefit pension plans to defined contribution plans, in line with international trends. There has also been an increased level of regulation as the region's regulators are not just relying on good market conduct, but codifying requirements.

In the area of property and casualty insurance, there are increasing requests from regulators to have P&C actuaries involved. In Jamaica, there is now a requirement to have an appointed actuary for P&C insurance, whereas in other countries, this is not yet a requirement, although it is a good practice.

Due to the small size of the market, we have seen consolidation within the insurance sector over the last ten years, and we believe that this will continue in the future, partly due to new capital requirements.

AP: What is your favorite part of being an actuary?

LW: What I really enjoy is being able to help people make complex decisions. We, as actuaries, have a unique skill set, but often do not have such good communication skills. Communicating with clients and solving their problems is definitely the most rewarding part of actuarial practice.

AP: Do you have any interesting anecdotes from your career?

LW: Well, as a consultant, so much of what I do is governed by confidentiality agreements! However, I can say that I have had only positive, fulfilling and rewarding experiences. There are not that many actuaries in the Caribbean, but there is a great level of collegiality in the CAA, which has tripled in size since when I joined. We all know and are supportive of one another. Our association requires a lot of volunteer work, but through this, we have reached a level of recognition in the region with regulators regarding the importance of an actuary in a regulatory regime as a risk professional. Actuaries are important allies in analyzing what is a sensible capital regime for our region, taking into account systemic risk and other issues. After some spectacular failures in the region, we have seen a tightening of standards.

AP: What role does the CAA play in the region?

LW: The CAA has been doing a lot of work together with regulators in the region to implement changes. We help analyze proposed regulations from an actuaries' perspective. We also put out Actuarial Standards of Practice (ASOPs) for the Caribbean region. One of our goals is to have consistently high standards of practice in the Caribbean region and to converge with International Standards of Actuarial Practice (ISAPs). We are also seeking to have regulators mandate that practicing actuaries in the region be members of the CAA so that they are bound to follow the CAA's standards of practice.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

LW: In my company I see concern regarding actuaries' continuing education. We understand that future competition will encompass talent, knowledge, practice and service; we are working on improving in these areas. In the near future (5 years), we foresee a movement to participate in companies´ governance, providing models of different phenomena to the corresponding policy committees.

AP: What kinds of regional collaboration do you see in terms of regulators?

LW: There is a Caribbean Association of Pension Supervisors and a Caribbean Association of Insurance Regulators as well as the Insurance Association of the Caribbean. They meet regularly in order to learn from one another. There are many initiatives to harmonize legislation in the region, but nothing is finalized. There are precedents for cooperation with the Organization of Eastern Caribbean States, who have a monetary union, and are looking to have a single set of regulations for insurance and pensions.

AP: Can you give us some history of actuarial practice in the Caribbean region?

LW: The first actuary to begin practice in the region was Daisy May McFarlane-Coke, who began a firm in Jamaica in 1972, which later merged with Eckler Limited. She was the first black woman to become an FIA and she was a co-founder of the CAA in 1991. Mervyn deSouza founded an actuarial practice in Trinidad and later became a senator. Jean Franz Alcindor began working as an actuary in his native Haiti in 1976 following studies in Switzerland and industry experience in Uganda and the U.S.

AP: Is there anything else you would like to share?

LW: The Caribbean is a great place to work!

SOA Launches Predictive Analytics Initiative
by Ian Duncan, December 2015

Although Predictive Analytics has not been a mainstream focus of actuaries, there are many of us who have been practicing in this area for a number of years, and a number of universities teach relevant courses in regression, GLM, time-series and other relevant subjects. Recent actions by the SOA leadership and Board promise to move Predictive Analytics (PA) front and center for actuaries of the future.

Identify education/training needs for PA actuaries.

An SOA survey has raised concern that actuaries are inadequately trained in the type of statistics and models that are required for PA. There are many roles in a PA project, however, from data management, through modeling to implementation (where business knowledge and skills are important), so the interested actuary has opportunities that do not necessarily involve advanced statistics and modeling. A workgroup is, however, currently considering (see below) what knowledge and techniques will be required for actuaries in the future.

The SOA has offered PA continuing education for some time, including the Advanced Business Analytics Seminar. A second seminar specifically aimed at Health Actuaries will be offered beginning in 2016, using the ACTEX textbook, "Healthcare Risk Adjustment and Predictive Modeling." A second edition of this text is planned for 2016.
A marketing communications campaign to promote actuaries in these roles, target potential employers and inform members of these opportunities is planned.
Providing educational opportunities for members in predictive modeling:
- University courses/preliminary exams/Fellowship track.
  
  Many universities teach students the fundamentals of modeling (Time Series, Regression and Generalized Linear Modeling, for example). It is often difficult to fit practical applications of this material into the undergraduate syllabus, given the SOA's and universities' course requirements. Once they graduate and enter actuarial student programs, students frequently do not have opportunities to apply their knowledge of PA, either. Thus the strategy has to be two-pronged: encourage more hands-on modeling at the university level, and encourage more rotations and jobs at actuarial firms that apply these models.
  
  One of the key recommendations of the committee was that Predictive Analytics should be added to the ASA syllabus. A syllabus re-design committee is currently considering this issue, which is not without challenges: PA is not a subject that can be adequately tested in a multiple-choice environment. Simultaneously with the SOA's decision to enhance the syllabus, other actuarial bodies have similar initiatives (e.g. the CAS with its new exam S and the International Actuarial Association's recommendation to include data and predictive modeling on the syllabus for the "qualified actuary" (essentially the SOA's ASA).
  
  Fellowship exam committees will be encouraged to add practical applications of PA to exam tracks. Actuaries at the fellowship level will not be required to perform the type of modeling that will be expected from Associates, but they will be expected to know how the models are applied in practice.
- The SOA has significantly increased its research budget in recent years and this will be directed at projects in PA, particularly in Life.
- Publicizing actuarial capabilities: the SOA has considerable collateral and research in this area. It isn't well-known, especially by non-actuaries. One of the campaign objectives is to raise awareness of work done by actuaries in predictive analytics.

As you can see, there are lots of developments coming. I am sure ACTEX will continue to be a leader in providing materials for actuaries in this area.

Ian Duncan, FSA, MAAA
Professor of Actuarial Science
University of California, Santa Barbara

Adapted from an article in the Predictive Analytics and Forecasting Section newsletter of the SOA.

Actuarial Association of
Sri Lanka

Actuaries Around the World
November 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Milanthi Sarukkali, Ph.D., FSA, from Sri Lanka. Milanthi is an independent consultant working within the insurance industry in Sri Lanka. She is the former Chief Actuary and Chief Risk Officer at Allianz Insurance in Sri Lanka. In her consulting practice, Milanthi is helping local insurance companies establish sound ERM practices and develop actuarial functions in-house in preparation for upcoming regulatory changes. She supports traditional functional areas such as valuation, pricing and product development and finance, She also works with Linear2, a company that provides data analytics solutions, as a specialist in insurance. In addition, Milanthi is a lecturer in the Masters program in Actuarial Science offered by the University of Colombo. Milanthi obtained her fellowship in 2012, and also holds a Ph.D. in Mathematics from the University of Connecticut. She has been a volunteer with the SOA examinations committee since 2013 and is also an editor of the International Section newsletter. Milanthi is also a committee member of the Actuarial Association of Sri Lanka.

ACTEX Learning AL: How many practicing actuaries do you have?

Milanthi Sarukkali (MS): The Actuarial Association of Sri Lanka (AASL) has 14 fellow members, 18 associate members and 49 ordinary members as of year-end 2014. However, most of the fellows are not practicing in Sri Lanka. Three fellows, 10 associates and 49 ordinary members practice in our country. Other members of AASL are mostly consultants attached to foreign consulting firms who work with local companies. Given the lack of fully qualified actuaries practicing in Sri Lanka, most companies have to engage foreign consultants for product development, regulatory filings and other basic requirements.

AP: What is the word for actuary in your local language?

MS: Even though the national languages of Sri Lanka Are Sinhala and Tamil, the business language of Sri Lanka is English (businesses use English as the primary language). The word "actuary" generally comes up only in formal documents, which are in English. We use English words in place of Sinhala or Tamil words in informal speech such as in conversations, so the English word "actuary" is used.

AP: When was actuarial science first introduced?

MS: Actuarial science was introduced in 1962-1963, with the nationalization of life insurance.

AP: What is your favorite part about being an actuary?

MS: I enjoy the technical nature of the work I do. Each project is different, and constantly challenges me to come up with creative solutions. But what I enjoy the most is that I get to be involved in work that has a direct impact on society. My work is primarily concentrated around life and health insurance. Insurance is a social protection mechanism that mitigates the effect of external events. Especially in developing countries like Sri Lanka, it provides financial protection for unforeseen financial losses that can sometimes indirectly impact several generations of a family. Insurance provides financial stability in such circumstances, and supports people in the lower rungs of the socio-economic ladder to attempt to reach the next level.

AP: What are some of the highlights of the history of the actuarial profession?

MS: The Actuarial Association of Sri Lanka (AASL) was formed in 2008. We have organized 2 major seminars in the past, one covering ERM in 2010 and one with the theme "shaping the future of Sri Lankan insurance industry" in 2014. These two were very successful with active participation from the profession and insurance industry. In addition to these, we have organized several knowledge sharing events for the benefit of the members of AASL. As study support to the members, we annually arrange classes covering at least 2 subjects, with the help of Actuaries Without Borders (AWB). Foreign volunteers, by request of AWB, come to Sri Lanka and conduct seminars.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

MS: The main challenge is to obtain full membership of the International Actuarial Association. This requires the AASL to adopt a code of conduct, develop a discipline process and to require all members to complete an education program compliant with IAA education guidelines. Given the limited number of fellow members practicing in Sri Lanka and other limitations in resources, fulfilling these criteria will be a challenge.

AP: What developments on the horizon could affect future opportunities in your country?

MS: There are several upcoming changes in the insurance regulatory environment in Sri Lanka. We are moving in to a risk based capital regime in 2016. This has created additional need for actuarial expertise within insurance companies as they prepare to meet new solvency requirements. There have been parallel runs with the current rule based solvency environment for the last two years, over which insurance companies looked to strengthen their in-house actuarial teams, invested in modeling software and also aligned their product strategies with the new regulations.

In addition, regulation requires non-life and life companies to be split in to two separate operating entities from 2015. Most companies in Sri Lanka operated as composite insurers offering both life and non-life products until now. This will create more opportunities for actuaries in future.

Both these developments in the regulatory environment have prompted an increase in M&A activity within the market. M&A activity is picking up in all of Asia, leading to rapid growth in the industry.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

MS: As insurers get over the challenges of implementing the necessary framework for reporting RBC as per regulatory requirements, they will begin to focus more on its implications and the need to consider impact on risk based capital when making business decisions. Actuaries will have to play a key role in making all parties aware of the implications on capital and explaining the impacts.

Moving to an RBC regime will also make companies increase focus on active risk management strategies. I believe the actuary's role will evolve from the current traditional valuation and pricing work to ERM and developing an overall risk culture within organizations.

AP: Who are the main employers of actuaries?

MS: Insurance Companies

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

MS: No state university offers an undergraduate program in actuarial science, although some programs focused on Physical Sciences offer several courses in actuarial science. Two local universities offer Masters programs in actuarial science. The program offered by University of Colombo is designed in line with the Institute of Actuaries curriculum and is currently preparing for accreditation by the Institute, which will allow students to get exemptions from some exams for the courses followed in the masters program.

AP: What is the credentialing procedure like for an actuary in your country?

MS: AASL does not have a credentialing procedure of its own, but requires all its members to have at least a student membership with some other actuarial organization such as the SOA or the Institute of Actuaries.

Local regulations indicate that a Fellow of a recognized actuarial organization or an associate with 10 years experience can fulfill the role of appointed actuary and provide required certifications.

AP: Do employers support the cost and time of exam preparation?

MS: Some employers provide exam support. However, the form and degree of support varies widely among the companies that employ actuaries. It can range from no support at all, to providing 10 days off as study time plus bearing the full cost of study materials and registration fees.

I believe we can fill the gap between need and availability of credentialed actuaries if the employers provide better support for students to complete the qualification process. AASL could also provide guidance for employers in developing formal student programs.

AP: What is the reputation of actuaries in your country?

MS: Not many people are aware of what an actuary is. Even within the financial sector, it is not a well-known profession. Actuaries are held in very high regard among the few who are aware of the profession.

AP: You recently made a switch from traditional actuarial work to work focusing on microinsurance. Could you share a little bit about this career choice?

MS: I have not completely switched to microinsurance yet, although this is an area I am very passionate about. I feel that microinsurance has a far greater social impact in developing countries.

I believe microinsurance benefits both the society and insurance providers in developing countries such as Sri Lanka. Insurance products with investment returns with complicated terms and conditions are difficult to sell in this market and do not address the needs of the majority. Microinsurance, with low premiums is more affordable, people see that it directly addresses their protection needs, and is not so complicated that they mistrust the product.

Actuaries Around the World
October 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Carlos Fernando Lozano Nathal, president of the Mexican Colegio Nacional de Actuarios. Carlos holds an undergraduate degree in actuarial science and a master's in business administration from the Universidad Nacional Autónoma de México (UNAM), and is the founder and general director of Nathal Actuarial Consultants, a multinational consulting firm. He is a Fellow of the U.S. Conference of Consulting Actuaries, a professor of actuarial science at UNAM, and was previously an advisor to COPARMEX on Social Security issues.

ACTEX Learning AL: How many practicing actuaries do you have in Mexico?

Carlos Lozano Nathal (CLN): There are 550 qualified actuaries in the Colegio Nacional de Actuarios (CONAC). There are many more practicing actuaries that are not registered with the CONAC or that work in nontraditional areas.

AP: What is the word for actuary in your local language?

CLN: Actuario for a male actuary and Actuaria for a female actuary

AP: When was actuarial science first introduced?

CLN: 1947

AP: What is your favorite part about being an actuary?

CLN: Serving people and pension plan design

AP: What are some of the highlights of the history of the actuarial profession?

CLN: In 1946, some university students were interested in becoming actuaries, and there was a Mexican association of actuaries (the Mexican Institute of Actuaries, which no longer exists), but no a formal program for studying actuarial science, so they and some members of the Mexican Institute of Actuaries decided to ask to Universidad Nacional Autónoma de México (UNAM) about a new professional studies program to be incorporated under the supervision of the Faculty of Sciences. Four students started taking some classes in the offices of insurance companies and in the UNAM. Over time, the actuarial program was modified to adapt to changing times. Today, in the actuarial program at the Faculty of Sciences at UNAM there are 2,000 students, and there are over 20 schools in Mexico teaching actuarial science.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

CLN: In Mexico, one must complete four years of university studies to become an actuary. The university provides the student with the degree of Actuary; however, our professional association, Colegio Nacional de Actuarios (CONAC), is the only organization that represents actuaries' interests. In this context, challenges in the next 5-10 years consist in increasing the membership, providing more continuing education programs aligned with current needs and promoting more professional certifications.

AP: What developments on the horizon could affect future opportunities in your country?

CLN: In Mexico, the labor market for actuaries is quite diversified. Traditional fields for actuaries in the areas of insurance, pension and social security have been changing to include activities in banking institutions, consulting firms and private companies. Because of this, the essence of the actuarial profession could be redefined.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

CLN: In my company I see concern regarding actuaries' continuing education. We understand that future competition will encompass talent, knowledge, practice and service; we are working on improving in these areas. In the near future (5 years), we foresee a movement to participate in companies´ governance, providing models of different phenomena to the corresponding policy committees.

AP: Who are the main employers of actuaries?

CLN: National Institute of Geography (INEGI)
Insurance companies
Banks and financial groups
Consulting firms
National Commission of Insurance and Finance
National Bank of Mexico
Government Offices (e.g. Ministry of the Treasury)

AP: What qualifications do you find most important for upcoming actuaries?

CLN: In addition to the university degree of actuary, it will be important to be certified (by the CONAC) in the areas of insurance, pension and risks.

AP: What is the credentialing procedure like for an actuary in your country?

CLN: The first step is to get a degree in actuarial science from a university. Secondly, to obtain professional experience (usually 5 years) in the selected field and finally to pass the exams administered by CONAC.

AP: Do employers support the cost and time of exam preparation?

CLN: Most of the employers reimburse examination fees, but only a few provide working time to study. Material such as textbooks and study manuals are not normally covered by employers.

AP: Are there any noteworthy non-traditional actuarial positions?

CLN: There are many actuaries working in non-traditional areas. An approximate breakdown of actuaries' areas of practice by percentages is as follows:

Area of Practice - Percentage

Insurance - 23.13%
Finance - 16.43%
Statistics - 14.43%
Pensions - 13.16%
Risk Management - 10.75%
Systems/IT - 10.72%
Planning - 3.69%
Demography - 3.28%
Logistics - 1.84%
Human Resources - 1.30%
Social Security - 1.10%
Other - 1.17%

The Art & Science of Life Insurance Distribution,
Walter Zultowski, Bennett

Available now!

THE FUTURE OF INDIVIDUAL LIFE INSURANCE DISTRIBUTION
by Walter Zultowski, October 2015

In recent years, several industry observers have commented that the industry has too much product manufacturing seeking too little distribution. Clearly, finding additional distribution outlets, and more importantly, the most appropriate distribution channels for one's company are major priorities today. This is especially true as companies look to better penetrate the vast under-served middle income market.

In our recently published ACTEX book, The Art and Science of Life Insurance Distribution, we provide what is arguably the most thorough exploration of this topic to date. As recognition of this, the text has been selected for inclusion in the Society of Actuaries' life exam study notes. However, the relevancy of this text goes far beyond just that of the actuarial department in a life insurance company.

In addition to tracing the history and evolution of the various distribution channels utilized in the life insurance business today, the text also addresses such topics as the functions provided by distribution, the management of distribution, distribution compensation, the economics of life insurance distribution, and presents a model for compensation design. Perhaps most importantly, we introduce the concept of aligning distribution channels with selected target markets and products, in an attempt to answer the frequently asked question; "Which distribution channel is best for my company?"

Of all the topics covered in the text, however, the one that has proved to be of greatest interest, however, is that in which we speculate of the future success of the ten primary channels used in the distribution of individual life insurance today.

The following chart shows these ten primary distribution channels, along with our projections of their success in the near future.

Percentage of Large Employers Offering
Health Insurance to Retirees, 1991-2013

Pure direct mail, without any human interaction at all, is predicted to decline due to the consuming public's saturation with direct mail solicitations and the increasing role of technology in direct response marketing. Perhaps surprisingly, we also do not envision the internet direct channel, again without any human intervention, as growing significantly.

This is not to say that technology won't play a role when it comes to consumer behavior in the purchase of life insurance, especially when it comes to the buying behavior of younger consumers. It will. However, market research continues to show that consumers want some human interaction when it comes to the purchase of life insurance. They will shop for products on their own, but look for some validation by an "expert" that they have made an appropriate decision. Thus, the channel predicted to see the greatest growth is that of what we call "call center-mediated direct response." This channel eliminates the negative perceptions of traditional life insurance agents (e.g., overselling, pressure selling, interest only in commissions), but retains personal interaction with a professional sales advisor.

The home service distribution channel has been in decline for several decades now, and there does not seem to be anything on the horizon that will reverse this trend. Voluntary worksite marketing, which can also provide some human validation of a purchase as well as perceived "due diligence" from one's employer, has witnessed growth in recent years. However, this growth is expected to slow somewhat as this channel appears to have become somewhat saturated for life insurance. This is evidenced by voluntary product marketing companies increasingly looking to sell specialty products through this channel (e.g., identity theft protection.)

Both the IMO and the multiple-line exclusive agent channels have, in their different market focuses and business models, figured out how to sell product to the vast under-insured middle market through agents. As a result, both are seen as experiencing steady growth as life insurance distribution channels in the near future.

Finally, both the traditional career and independent agent distribution channels have seen declines in their numbers in recent decades largely due to the aging demographics of the field force and the difficulty in attracting younger people to a career selling life insurance. While not declining to the same extent as the home service channel, these channels are predicted to continue their decline as a presence in the marketplace. As many financial advisors expand their practices to include life insurance, as typically happens in a bear market, the financial advisor channel is also predicted to grow somewhat in popularity. Changes in estate planning laws, which for years provided a robust market for life insurance sales among financial advisors, however, will serve to temper this growth in the near term.

Being An Actuary: Beyond the Mathematics, An Overview of Ethics and Professionalism in the Actuarial Profession
Rolling Admission begins 10/22/15

An Interview With Warren Luckner
October 2015

Warren Luckner's new e-course Being An Actuary: Beyond the Mathematics, An Overview of Ethics and Professionalism in the Actuarial Profession, Launches October 22nd. We sat down with Mr. Luckner to talk about the new e-course and his career in actuarial science.

ACTEX Learning AL: What drew you to create an e-course on professionalism?

Warren Luckner (WL): I created this primarily because of my long-held belief that professionalism is an extremely important aspect of being an actuary. Throughout my 20 years as an actuarial educator, I emphasized in my classes that professionalism is an important part of being an actuary, and throughout my actuarial career, I have had the opportunity to give talks on professionalism at local actuarial club meetings. This e-course is a continuation of that emphasis.

Of course, the current continuing education requirements in the actuarial profession have also been a motivating factor to create this e-course to provide another opportunity to satisfy those requirements.

Also, the opportunity to create an e-course, which is a convenient way to deliver education more widely and flexibly, was attractive to me. I had not previously created an online course, and I was interested in learning how to create such a course, and demonstrate that you can teach an old dog new tricks!

AP: What is your creative process like? How do you stay focused?

WL: For this e-course, I started with PowerPoint slides from a few different past presentations. To get to the comprehensive scope I wanted, I added quite a few slides based on searches of the websites of the actuarial organizations in Canada and the United States, and the website of the International Actuarial Association. It is also based on my actuarial work and volunteer experiences, especially my volunteer work as a facilitator for the SOA's Associateship Professionalism and Fellowship Admissions Courses, and on my committee work with the International Actuarial Association.

To create the script for each slide, I first jotted down notes, usually in the notes pages of the slides. I polished the scripts with several revisions and a peer review by Linden Cole, an actuary with a long history of involvement with professionalism issues in the actuarial profession, who provided many helpful suggestions.

The recording and multiple re-recordings of the scripts for the slides, and the video editing to create the videos was particularly tedious and time-consuming, especially since this was my first time using the Camtasia software. I found that my voice was best recorded from mid-morning through mid-to-late afternoon. Taking breaks, especially from recording and editing, was essential to stay fresh and focused and often led to better ideas and results, at least I think so. During the entire process, ACTEX technology staff and actuarial staff were most helpful in making suggestions, providing technical assistance, and finalizing the videos and setting up the e-course environment.

AP: Tell us a little bit about your hobbies (outside of actuarial science).

WL: Typically, my wife and I spend at least an hour each day working out, usually either walking or riding bikes.

As a sports fan originally from Chicago and now Nebraska, I enjoy cheering on the Cubs, Bears and Huskers.

In the past, I enjoyed creating PowerPoint presentations for class, for actuarial meetings, and for surprise birthday parties. They were intended to be clever and humorous, although apparently they were not always successful in that regard. I have moved on to creating Movie Maker videos for special occasions. And, to practice my number skills, I like to occasionally do Sudoku puzzles!

AP: Do you have an interesting or funny story to share from your career or process of creating this course?

WL: Interesting? Funny? Actuary? The stereotype of actuaries would suggest that those three words don't go together. This stereotype was confirmed to me quite a few years ago when I presented a slide show at a surprise birthday 65th party for my mother. In attendance was the then President of Lutheran Brotherhood, a marketing guy. After the slide show, he commented that he didn't know actuaries had a sense of humor! I don't agree with the stereotype.

I have had the opportunity for quite a few "interesting" experiences during my actuarial career, probably a function of having a very long career.

A few examples …Twice being Curly Pi opposite Pretty Miss Polynomial in the play "Impure Mathematics" … Once at a celebration after exam results, and then at the FSA party for four of us new FSAs who hosted the party. Fortunately, I was leaving employment at that company to teach at Nebraska after the FSA party.

Many examples from teaching at Nebraska …

In the Daily Nebraskan during my first tour of duty at Nebraska, "Prof. Luckner, 97% of the students at UNL have time to be sexually active (even though they may not be) and the other 3% are Act. Sci. students. Your students". Just my contribution to the moral fabric of University of Nebraska students.

Email from former student with an interesting typo (I think). "Dear Prof, I am grateful for the information made available to me. You have been of immense hell to us. I pray that we will have a chance to meet again." From one of my second generation of Nebraska students "Did anyone ever tell you that you sound like Dustin Hoffman?" I hope that's a positive and came through in the videos for this e-course.

Finally, many t-shirts were created over the years by Nebraska's student Actuarial Science Club. My favorite: "Love An Actuary, Somebody Has To". I occasionally wear mine to remind my wife.

AP: If you could write a fiction book, what would be its title?

WL: "How the Chicago Cubs Won the World Series"

AP: What are some of the key issues and challenges facing the actuarial profession over the next 25 years?

WL: Maintaining relevance and respect for what actuaries can contribute to society; marketing our value beyond our technical skills, which ultimately may be replaced by evolving technology; the evolution of thinking robots. So, again, professionalism is a key characteristic for actuaries to maintain.

Expect the Unexpected is the title of a math education program of The Actuarial Foundation, and is a good phrase to keep in mind as the technology and economic environment changes. Actuaries and the Actuarial Profession must be able to adjust in a timely manner to a rapidly changing environment.

AP: Do you have any thoughts on how actuarial continuing education might or should change in the future?

WL: Related to the previous question, the content and delivery of continuing education must at least keep up with changes in technology, in the economic environment, and in the models and techniques available to complete actuarial tasks. Continuing education should not just be catch up but should help prepare actuaries for future changes. Educating actuaries on how to adjust to change is an important topic area for continuing education as I believe the pace of change will continue to increase.

AP: What has been your favorite course or talk that helped you to satisfy your continuing education requirements?

WL: Serving as a facilitator for the Society of Actuaries Associateship Professionalism and Fellowship Admission courses.

AP: How has the actuarial profession changed during your career?

WL: The actuarial membership organizations have significantly evolved from organizations, perceived by many to be insurance industry trade associations, to professional organizations serving members in a variety of types of employment, and serving the public interest.

The evolution of computers has changed the nature of actuarial work from primarily computational to more analytical through the ability, for example, to test the sensitivity of premiums and reserve to potential changes in interest rates, mortality, expenses, and to conduct scenario testing, combining past experience with alternative futures.

AP: What advice do you have for entry-level actuarial students?

WL: Math ability and math interest is a foundation.

Ability to effectively communicate the results of your work to your supervisor or client is critical for your work to be valuable.

Technology is your friend, but it is rapidly changing. Take advantage of those changes.

I would like to stress the importance of being an actuary beyond the mathematics. Your added value is in being a member of a profession, and what that means in terms of how you act and what you contribute.

Keep in mind that you are helping people. Your work helps individuals, organizations and society achieve financial security.

Again, expect the unexpected. Obviously easier said than done, but be prepared for surprises and be able to adjust to change.

AP: Is there anything else you would like to add?

WL: I hope that the somewhat quirky nature of this e-course, with an occasional "Wit and Wisdom" and an occasional Classic Rock or Country Western music clip will make it a fun and enjoyable learning experience. Thanks to ACTEX for giving me the opportunity to share my thoughts in both the e-course and this interview.

Actuaries Around the World
September 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month we have the pleasure of interviewing Luis Martínez, president of the Panamanian Actuarial Association (Asociación de Actuarios de Panamá). Luis holds a master's degree in actuarial science from Universidad Anáhuac in Mexico, and a Bachelor's degree in statistics from Universidad de Panamá. He is currently the Director General of the Panama Canal Area Benefit Plan and has previously worked with HSBC insurance, ANCON, the insurance superintendent's office in Panama, and for the Panamanian social security office. In his "free time" he is a professor at Universidad Latinoamericana de Ciencia y Tecnología (ULACIT).

ACTEX Learning AL: How many practicing actuaries do you have in Panama?

Luis Martínez (LM): There are 50 actuaries in Panamá, of which 20 belong to our association.

AP: What is the word for actuary in your local language?

LM: Actuario

AP: When was actuarial science first introduced?

LM: It was first introduced in the 1960s, but the first actuaries studied in the U.S. and Mexico.

AP: What is your favorite part about being an actuary?

LM: To be able to understand and measure risk.

AP: Can you share an interesting anecdote from your career?

LM: My first research project that I presented was in the International Congress of Actuaries in 2002 in Cancún, Mexico. It was my first congress, and it was spectacular.

AP: What are some of the highlights of the history of the actuarial profession?

LM: The significant participation that actuaries have had in the revolution in the pension and health systems throughout the world.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

LM: We seek to have a formal legal organization in 2015, and over the next five years, help create a legal framework for actuaries and their certification in Panamá.

AP: What developments on the horizon could affect future opportunities in your country?

LM: The widening of the Panama Canal, the growth of the insurance industry, and the imminent reforms to our social security system.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

LM: The issue of health insurance is demanding more attention from actuaries, and I believe that the contribution of our professional will be fundamental in the development of health plans that allow for universal coverage at accessible prices.

AP: Who are the main employers of actuaries?

LM: Insurance companies, banks and the social security office.

AP: What qualifications do you find most important for upcoming actuaries?

LM: The correct actuarial techniques to measure the particular risk that is being analyzed. Knowledge of the necessary technology tools and mathematical techniques. The ability to explain one's work simply and clearly.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

LM: Currently we do not have a university degree in actuarial science. There have been various attempts to create one, but there has not been sufficient student interest. The majority of actuaries have studied in the U.S., Mexico, Brazil, and other countries.

AP: What is the credentialing procedure like for an actuary in your country?

LM: We don't have a law that accredits the professional work of actuaries in Panama. This is part of our five-year plan. We do have the recognition of actuarial studies by the University of Panama.

AP: Do employers support the cost and time of exam preparation?

LM: Some businesses have supported their actuarial employees in their preparation for SOA exams. However, generally actuaries interested in working overseas pay for their own preparation for these exams.

AP: Are there any noteworthy non-traditional actuarial positions?

LM: There are very few actuaries that have worked in non-traditional areas, but there are some. They have worked in managerial positions, or in technical support in the area of environmental risks.

AP: What is the reputation of actuaries in your country?

LM: Actuaries enjoy a very solid reputation in that they are experts in probability and mathematics and are able to help future socioeconomic and demographic conditions.

AP: Is there anything else you would like to share?

LM: We are seeking to achieve full member status in the International Actuarial Association (IAA). We will receive a visit from the president of the SOA this December, as there is interest in supporting the development of our association and profession here in Panama.

Mathematics of Investment and Credit, 6th Edition,
Sam Broverman
New 6th Edition
available now!

An Interview With Sam Broverman
September 2015

Sam Broverman has been helping students pass actuarial exams since he began teaching in 1978. He is a full professor of Actuarial Mathematics at the University of Toronto, where he has taught since 1980. In addition to his ASA designation, Broverman holds a PhD in Mathematics. He is the author of numerous study guides and the textbook, Mathematics of Investment and Credit, an Exam FM official reference. Broverman has taught actuarial courses in Hong Kong, Mainland China, Mexico, and Europe and has served as a development committee member and an instructor for the "common core" portion of the SOA Course 7 seminar in applied modeling.

When he is not pondering risk management topics, Sam Broverman sings professionally with an emphasis on jazz and American songbook standards.

ACTEX Learning AL: What draws you to write?

Sam Broverman (SB): Early in my academic career, I would use established textbooks for the courses that I was teaching. As I gained experience as a teacher, I began to develop my own notes and approaches to teaching various subjects. At some point, I felt that it would be useful to me, and perhaps to others, if I "formalized" my teaching materials into textbook or study guide form. It was gratifying to start seeing others use my books and study guides in their courses and studies, and I continued to write.

AP: What is your creative process like? How do you stay focused?

SB: Writing a textbook or study guide is a very large challenge. It requires a great deal of preparation. I begin by organizing topics and material in a logical and coherent order. I then write an outline of each section and what I would like to cover in each section along with example ideas and exercise ideas. I search through references to collect background on concepts and potential detail to include.

AP: Tell us a little bit about your hobbies (outside of actuarial science).

SB: My main hobby (more than a hobby, as I once earned a fair amount of money at it, and still earn a little) is singing. I have worked as a professional singer and musician since I was an undergrad and grad student studying math at college. I currently sing professionally, mostly in Toronto, but I have performed in New York and various cities in Canada and in Hong Kong. I have recorded two albums of jazz standards, and I will have an album of math parody songs available later in the summer. Information on my musical endeavors can be found at my website www.brovermusic.com.

AP: What advice do you have for other aspiring authors / teachers?

SB: If you feel you have developed material or an approach to a subject that has been effective, then you might consider recording it in the form of a book or notes or even video. I began my teaching career in high school, tutoring students in junior-high and high school math. That experience was very valuable to me when I began a professional career as a teacher. That experience helped me understand how to help students deal with the difficulties that they had with elementary math concepts. It is possible to become impatient with someone who is having difficulty with concepts that you regard as very easy. I was very good at math and the experience teaching basic math in high school helped me gain patience with explaining and breaking down what I regarded as elementary concepts into even smaller pieces that the students would be able grasp.

AP: Tell us about the cover and how it came about.

SB: I can't remember. I think I wanted some actuarial symbols on the cover and it has evolved into what it is now.

AP: What was your favorite non-actuarial class in college?

SB: I took music courses and lessons while studying math. I also took a theatre course that I still remember.

AP: Tell us how you became interested in your field?

SB: When I entered college, I wasn't sure whether I would pursue engineering, physics or mathematics. I took a freshman program of various courses, but the calculus course drew me in. I was told that I was the first student in some time (maybe ever) to get a perfect mark in the freshman calculus course I took. I was drawn to study math ("pure" math as it was referred to then) and I got Bachelor, Master and PhD in math. My PhD thesis was in point-set and set-theoretic topology. I have an older brother who was studying actuarial math and he encouraged me to take SOA exams to help with getting summer jobs. That got me a good actuarial intern job. When I was a graduate student, I was able to get good paying jobs as a professional singer. At the time that was more fun than an actuarial internship. When I finished my PhD and was looking for an academic position in my area of theoretical math, I became aware of the need for academics in the actuarial area. I was an ASA not long after finishing my PhD and I considered leaving academia for a job as an actuary in industry, following in my brother's footsteps. My love of the academic life kept me pursuing an academic career and the academic opportunities in the actuarial program were more attractive than in the "pure" math direction. I had the appropriate background, and took a job at the University of Texas at Austin as an Assistant Professor of Actuarial Science. A couple of years later, 1980 to be exact, the University of Toronto made me and offer I couldn't refuse, and I have been at U of T (of the north) ever since.

AP: What do you like least and most about writing books?

SB: What I like least about writing books is feeling guilty when I miss deadlines for completion (which I almost always do). I also am not very good with graphics programs. It is time consuming to make good graphs, and, for me, it is very time consuming to make mediocre graphs. Another thing I dislike is the re- and re-re and re-re-re-reading when the final version of a book is being prepared. What I like most about writing is the freedom to include and expand upon what I feel is important. It is also very gratifying to include concepts, approaches and examples that I feel are innovative and useful to the reader.

AP: If you could write a fiction book, what would be its title?

SB: The Actuary Who Knew Too Much

AP: What advice would you give to young actuarial students to help them in their future endeavors?

SB: I encourage students to be systematic in the way they approach learning a subject. The time constraint inherent in professional exams requires a student to be able to assess questions quickly. An important part of preparation for exams is working through as many exam-type problems as possible. Repetition and rote can be helpful in building up speed. It is also true that employers are looking for people who can do more than pass exams. Good communication skills have become an essential component of a student's overall makeup, and I strongly encourage students to do whatever they can to develop those skills.

AP: How can readers learn more about you and your work?

SB: My "math" website is www.sambroverman.com, but it is somewhat out of date.

My music website is up to date, www.brovermusic.com. There are tracks from my CDs there, as well as other information and links to videos. ACTEX publishes some of my books and distributes all of the others.

AP: Can you share any other current work you'd like to talk about? What can we look forward to in the future from you?

SB: I have recorded a CD of math parody songs that will be given out to those attending the annual Actuarial Research Conference in Toronto in August, 2015. I have a sabbatical year coming up and I am thinking of writing an MFE related book or study guide during that time.

Fundamentals of Retiree Group Benefits,
Dale Yamamoto
New 2nd Edition
available now!

What To Do About Retiree Medical
by Dale Yamamoto, August 2015

Does your employer provide retiree medical coverage when you retire? Chances are, if you're not retired yet, the answer is no. The following graph shows the decline in the offering of this valuable benefit over the last couple of decades. By 2013, less than half of large employers have continued to offer retiree medical coverage to any of its retirees. Less than a third offered coverage to Medicare-eligible retirees when they retire. The good news, reading between the lines, is that these statistics show whether or not those working at the time will have retiree benefits when they retire. Many of the employers who offered coverage in the past but do not offer it today, did not take away the benefit to those who retired with medical coverage and sometimes those who were close to retirement. However, the benefit is still somewhat tenuous, even for those current retirees with coverage.

Percentage of Large Employers Offering
Health Insurance to Retirees, 1991-2013

Source: © Aon Hewitt

Many employers are feeling financial pressures in today's economy to find costs in their business that can be reduced. Oftentimes, employee benefit costs are targeted despite the fact that they are a very tax effective way to provide compensation to employees. Note that in 2013, 45 percent of employers offered coverage to early retirees while only 30 percent offered coverage to retirees eligible for Medicare. The primary reason for this difference is that Medicare-eligible retirees have access to guaranteed medical coverage with a combination of Medicare and other private supplemental coverage. Until the Affordable Care Act (ACA) was passed, early retirees didn't have comparable access to medical coverage. Now that the Supreme Court has cleared the way for federal subsidies in all states for the ACA health exchanges, that difference has evaporated. It may take some time, but the 15 percent of employers offering coverage to early retirees but not Medicare-eligible retirees will likely be terminating their coverage to early retirees.

The graph shows the decline of coverage for private sector employers. Public sector employers have a much higher percentage offering retiree coverage but their prevalence is beginning to decline also as states and cities begin to suffer similar financial constraints as the private sector.

So, early retirees without employer coverage will be seeking medical coverage in the state exchanges. And, some retirees may be eligible for the federal subsidies that are available for citizens with income between 100 and 400 percent of the federal poverty level. With some financial planning, it may be possible to coordinate receipt of any pension payments they are eligible for as well as withdrawals from retirement savings in order to keep income under the 400 percent threshold ($47,080 for a single family household and $63,720 for a two person household in 2015) while the retiree is under age 65 (the Medicare eligibility age).

For Medicare-eligible retirees, their main change will be the move to a 1960s form of insurance in Medicare where the coverage is divided between hospital coverage (Medicare Part A), professional services (Medicare Part B) and prescription drugs (Medicare Part D) as well as private supplemental insurance to fill in the gaps that Medicare does not pay. Or, retirees could enroll in a Medicare Advantage plan (Medicare Part C) instead of Parts A, B and D, where coverage is more similar to many of the employer options they may be familiar with. The decisions of which plan is best for any given person depends on a multitude of pros and cons for each program. Things to think about include whether they will live in the same location throughout the year or travel a lot (meaning any network based plan like most Medicare Advantage plans will likely not be a good choice), health status (many over-insure themselves in rich Medicare supplement plans however they should note that it is sometimes difficult to increase coverage if they become less healthy) and the prescription drugs they currently take (some prescriptions may not be covered by all plans). And, it's important to get coverage as many estimates show that a couple at age 65 will need about $250,000 to pay for their future medical costs. The ACA did make some changes to Medicare but most will not affect retirees for a few years.

Actuaries Around the World
August 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Jacek Skwierczynski of Poland. Jacek is president of the Polish Institute of Actuaries, Chief Risk Officer of Open Life in Poland, and loves bowties. He holds a Ph.D. in Applied Mathematics from Warsaw Technical University and started his career as a university professor until a colleague told him of a strange and new science - actuarial science. He learned more about this strange science under the tutelage of Harry Panjer, Chris Daykin and many others in the Actuarial Summer School established in Warsaw to help the growth of the actuarial profession. He was the 10th actuary certified under the exam system in Poland, and used ACTEX materials to help him study. During his career he worked in non-life and life insurance in Poland, Ukraine and Russia.

ACTEX Learning AL: How many practicing actuaries do you have?

Jacek Skwierczynski (JS): In Poland there are 313 actuaries (the Financial Regulator manages the register). One hundred seventy-five of them are full members of The Polish Society of Actuaries

AP: What is the word for actuary in your local language?

JS: Aktuariusz

AP: When was actuarial science first introduced?

JS: In 1920, but the profession disappeared after World War II and was re-introduced in 1991 with the new Insurance Law introduced after the fall of the communist state in Poland and the introduction of a free market economy.

AP: What is your favorite part about being an actuary?

JS: The need for continuous education.

AP: Can you share an interesting anecdote from your career?

JS: I recall one CEO in the 90s saying to me - "I know I have to employ you by law, but I really don't know what you do."

AP: What are some of the highlights of the history of the actuarial profession?

JS: The Polish Institute of Actuaries was created in Warsaw in 1920 soon after the country regained its independence after World War I and was active until World War II. The aim of the Institute was to promote actuarial science and to form a solid basis for actuarial training and research. The first president of the Institute, Dr Samuel Dickstein, was a professor at Warsaw University.

In 1920, the Institute published the first set of professional guidelines for actuaries working in Poland and outlined the principles of actuarial education.

In 1922, the Institute began publication of "Wiadomosci Aktuarialne", the first Polish scientific journal devoted solely to problems of insurance mathematics, which appeared, with interruption, until World War II.

Polish actuaries participated in actuarial congresses and Poland was one of the 17 European member countries in the International Actuarial Association (IAA).

World War II interrupted these developments, but the tradition of actuarial research and high professional standards were very important as they made it possible for Poland to continue some form of cooperation with international actuarial bodies.

The monopolistic nature of Polish insurance between 1945 and late 1980s successfully eliminated any form of competition, while the state control did not promote actuarial professionalism. The Polish Institute of Actuaries was never reestablished after World War II, and the word "actuary" disappeared from Polish encyclopedias.

After half a century of both neglect and purposeful destruction, the recreation of the actuarial profession in Poland was not an easy task. With the fall of communist system, a new insurance law came into force on July 28, 1990. It took into account laws in European Community countries and required insurance companies to go through a licensing process and provide business plans before establishing operations as well as using "an expert in insurance mathematics, finances, and statistics (an actuary)".

However, the country had not a single licensed actuary at that time. As the new insurance law was being prepared, in July 1990, the first intensive summer courses in actuarial science were organized in Warsaw. They were requested by the Polish Ministry of Finance, which also acted as the insurance supervisory authority in Poland. The school is still in operation as an annual event as a continuing education program for actuaries from Poland and other Eastern European countries.

The insurance company regulation of December 27, 1990, consolidated the insurance law of July 28, 1990, and promoted a strong role for actuaries in insurance company management. A group of students of the first summer courses in 1990 decided to form a support group to promote the actuarial profession as well as actuarial education and research. One year later, as a direct result of the 1991 summer school, the idea of creating a truly professional organization crystallized, and after discussion, the founding Statute was adopted and submitted for registration.

On August 9, 1991 the Polish Society of Actuaries was registered. The first elected president of the Society was Dr Krzysztof Stroinski who held office until 1996.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

JS: Supporting modern actuarial education at Polish Universities

Obtaining recognition by the general public and spreading actuarial knowledge to legal and regulatory bodies

Moving the profession into new areas (not, as now, concentrated only in insurance and reinsurance)

Creating modern Actuarial Standards of Practice

AP: What developments on the horizon could affect future opportunities in your country?

JS: Modern actuarial education in Poland

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

JS: Most challenges are related to Solvency II and consumer protection.

AP: Who are the main employers of actuaries?

JS: Direct insurance companies, (one) reinsurance company.

AP: What qualifications do you find most important for upcoming actuaries?

JS: Solvency II and consumer protection related issues.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

JS: There are no formal actuarial courses at universities - a major change in the education process has been initiated by the Polish Society of Actuaries in 2015 (a new regulation by the Ministry of Finance).

AP: What is the credentialing procedure like for an actuary in your country?

JS: There are state exams as well as additional exams or courses organized by the Society. The Polish Society of Actuaries is a full member of the International Actuarial Association (IAA) and the Actuarial Association of Europe (AAE).

AP: Do employers support the cost and time of exam preparation?

JS: It depends on the employer, but in general, they do not.

AP: Are there any noteworthy non-traditional actuarial positions?

JS: We have a member of our Society working for the Financial Markets regulation Office of the Ministry of Finance.

AP: What is the reputation of actuaries in your country?

JS: As the President of the Society I may not be objective, but we are recognized and valued by the Ministry of Finance, the Financial Markets Regulator and the Polish Chamber of Insurance. We are not held in high esteem by the Insurance Ombudsman and Office of Competition and Consumer Protection. I do hope this will change in the coming years. The average consumer does not know what the strange bird known as an "actuary" is.

AP: Is there anything else you would like to share?

JS: As a small association we appreciate the help and support we receive from the IAA the AAE and well-established actuarial associations. We count on more.

Probability and Statistics: A Problem Solving Text, New 2nd Edition Textbook
July 2015

The new edition is available right now! To celebrate the release this month, ACTEX sat down with the authors Len Asimow and Mark Maxwell and discussed their approach to developing this textbook, among other things!

Len Asimow joined Robert Morris University in the fall of 2001 as Professor of Mathematics and Actuarial Science, and was the founding Director for the Actuarial Science Program at RMU. The RMU program was designated a Center of Actuarial Excellence in 2010.

ACTEX Learning AL: What do you like most and least about writing books?

Len Asimow (LA): Writing formulas in Mathtype can be tedious and time consuming. On the other hand, the process can be relaxing and therapeutic, sort of like playing solitaire on the computer. So I don't mind it so much. Without a doubt the worst part is the endless struggle to rid the text of those bedeviling tyops (ðŸ˜€). Not to mention the embarrassing math errors.

AP: What is your creative process like? How do you stay focused?

LA: Well, first I read the Wall Street Journal for a couple of hours, then I answer emails, prepare for class, go for a walk, eat lunch, etc. By the time the muse strikes, it's pretty much time to head home for the day. This will help explain to the publisher why it took so darn long.

AP: How much do you enjoy writing on a scale of 1 to 10?

MM: The answer is a probability distribution with mean around 5 and an exceedingly large standard deviation.

AP: Tell us a little bit about your hobbies (outside of actuarial science)?

LA: I used to be a runner; then I became a jogger; then a walker. Now I pretty much shuffle along like an old man (which of course I am)â€¦but I do try to get in a few miles every day in the great outdoors. I also read and park myself in front of the TV watching sports. I know, get a life.

AP: If you could write a fiction book, what would be its title?

LA: The Pronghorn Chronicles. It's about a math professor at the University of Wyoming who runs every day out on the vast and barren prairies surrounding Laramie, WY, encountering nothing but sagebrush and the occasional herd of Pronghorn antelopes. He also has a penchant for writing acerbic letters to the editor of the Laramie Daily Boomerang (a real newspaper) under the pseudonym Colonel Pronghorn. It would be loosely autobiographical.

AP: What first led to this book idea?

LA: I really wanted to write a best-selling novel of international intrigue and romance; a riveting page-turner impossible to put down. Unfortunately I have neither the skills nor the aptitude for that. So I settled for a book on prob/stats instead. That happened to be something I had a handle on since I've been teaching the material since roughly the time when Pascal and Fermat became pen pals and invented probability.

AP: How was the process different than you would have imagined it?

LA: It took a lot longer than I would have predicted.

AP: What advice do you have for other aspiring authors?

LA: Just do it. It's fun to see your name on a book cover, even if it's just an obscure math text.

AP: Do you have an interesting or funny story to share from your career or the book writing process?

LA: One day in 1996 or 1997 the FBI knocked on my door in St. Louis. They wanted to know how well I was acquainted with someone named Theodore John "Ted" Kaczynski, aka The Unabomber. Turned out that Kaczynski and I were both mathematicians at UC Berkeley in 1967. I would have loved to have told the agents that, yeah, there was something definitely off about that guy and I just knew that he would be revealed to be a serial murderer someday. Sadly though, I had no recollection of him whatsoever. But we worked in the same general area and chances are good we met at a seminar or something. It's definitely weird to think I probably shook hands with the Unabomber.

Mark Maxwell joined the faculty at the University of Texas - Austin in summer 2009 as Clinical Professor of Mathematics, Paul V. Montgomery fellow, and to direct the UT actuarial program. He served as program director of actuarial science and math department head while collaborating with Dr. Asimow at RMU.

ACTEX Learning AL: What do you like most and least about writing books?

Mark Maxwell (MM): Creating questions is a favorite activity. Each semester I like to construct an entirely new comprehensive final examination for my probability class.

Discovering typos after our book is printed is least favorite. Losing several hours of work due to issues with technology and my failure to save work is my penultimate favorite.

AP: What is your creative process like?

MM: Many of the questions in our text came from life experiences. For example, determining the probability of winning three prizes under the lids of 12 coke bottles was inspired by the time I won three prizes under the lids of 12 coke bottles.

Early each morning I walk my two dogs for an hour (so they are less likely to destroy my house). When I am not scolding Harmon and Lilly for chasing cats, squirrels, armadillos, and/or skunks, I like to think about an activity to try in class or how to combine probability concepts for an exam question or textbook exercise. Early morning voicemails and e-mails to myself are common.

Note: Dogs are currently 0 for 4 against skunks.

AP: How do you stay focused?

MM: Deadlines

AP: Tell us a little bit about your hobbies (outside of actuarial science)?

MM: I enjoy playing bridge, playing basketball, attending cactus league spring training baseball games, and working outside my cabin on the Colorado river. Traveling and spending time with family and friends is great. Sometimes activities are accompanied by cold beer.

AP: If you could write a fiction book, what would be its title?

MM: "Drive Right. Pass Left"

It would be a fictional book where drivers were thoughtful, considerate, and used the passing lane to pass. All drivers would signal, stop at stop signs, and not block intersections. Drivers would not litter. Drivers would pay attention. I know that my plot is way too unreasonable.

AP: What first led to this book idea?

MM: After I sat for my last actuarial exam, I discovered a lot more free time. The original idea was to create a teaching notebook. I compiled former exam questions and began to make detailed notes for a probability class I was teaching at Robert Morris. Once Len Asimow and I began collaborating, then we had a worthwhile project. If something is well written, then we can thank Len. If something is obnoxiously written, then we can thank me.

AP: How was the process different than you would have imagined it?

MM: We had a nearly completed draft of our text prior to contacting ACTEX.

AP: What advice do you have for other aspiring authors?

MM: Life is short. Do things that you enjoy and fulfill you. Try to minimize activities that you do not enjoy are rob you of your most undervalued commodity (time).

"Instant success typically takes about 15 years."

AP: Do you have an interesting or funny story to share from your career or the book writing process?

MM: I do, but the statute of limitations has yet to expire.

AP: What do you find most rewarding?

MM: The well-earned accomplishments of my students: 1) Watching a smile form on the face of a student because they made a connection warms my soul, 2) I dig emails from students with the words "I Passed!" in the subject line, and 3) Students appearing 3 inches taller because they just received a job offer from their first choice employer.

AP: In addition to not littering and driving right, what advice do you have for students?

MM: While doing homework, you should write your best possible solution and not try to "get the answer" as quickly as possible.

Many people would benefit by eliminating the words "uh", "um", "so", "like", and "it" from their vocabulary. "I'm not going to lie, you know".

Actuaries Around the World
July 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month we have the pleasure of interviewing Rodrigo Silva from Colombia. Rodrigo Silva is a Principal at Mercer. Rodrigo currently serves approximately 110 clients in Colombia in the areas of local actuarial valuations, implementing international financial standards (US-GAAP / IFRS) and the valuation and accounting of benefits.

Rodrigo is actively involved in the development of the actuarial profession; he is leading the process for the AsociaciÃ³n Colombiana de Actuarios to become a full member of the International Actuarial Association (IAA) and he is the current delegate to the IAA. He is a past president of the Colombian Actuarial Association.

Prior to joining to Mercer in 2013, Rodrigo worked with AsesorÃas Actuariales, DecisionWare and with Universidad de los Andes as a physics professor. Rodrigo is an ASA, has a Bachelor's degree in Physics and Electric Engineering, and a Master's in Industrial Engineering (Operations Research and Statistics) from Universidad de Los Andes.

ACTEX Learning AL: How many practicing actuaries do you have?

Rodrigo Silva (RS): The best estimate is between 200 and 250.

AP: What is the word for actuary in your local language?

RS: In Spanish: Actuario

AP: When was actuarial science first introduced?

RS: The first actuary in Colombia was Julio Garavito (1865 â€“ 1920). He was a Mathematician and Civil Engineer and he was proficient in many fields such as astronomy, optics, economics and the human factors which affected it, such as war or overpopulation. This last field of studies is what we now label actuarial science.

Because of his contributions in astronomy, a crater on the Moon's far side is named after him, and therefore you can see his face and the Moon's far side on the Colombian $20,000 Peso bill (about US$10)

AP: What is your favorite part about being an actuary?

RS: To be able to explain, in simple terms, the conceptual framework that affects one of the most important issues that everybody faces in their life -- retirement.

AP: Can you share an interesting anecdote from your career?

RS: In Colombia it is not so clear what do we do, "actuary" is an unknown word for laypeople. Let me give you an example. In my previous job, I worked for "AsesorÃas Actuariales" (Actuarial Consulting). We appeared in the yellow pages and one day, very early in the morning, I received a call from a worried young boy. He explained to me that he was very concerned about his fish; he noticed that the fish was not as active as usual. I listened to him very patiently, and he described the situation very well. The fish did not go after his food and was not enthusiastic about eating it. He did not move in the aquarium or chase anything. I asked him why he called my office and he told me that he was overjoyed when he found a company that could help him in aquarial matters. I had to tell him that I could not help him and that I worked as an actuary, that he was very clever for doing such research in the yellow pages and I hoped that his fish would get better.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

RS: To be more visible to the government and to the general public.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

RS: I work in the retirement field, and the local regulation is very complex. The retirement situation faced by people is obscured by this complexity and we need to be able to communicate with the general public, in order for the lay person to understand the basic foundations of the retirement system and to make logical decisions.

AP: Who are the main employers of actuaries?

RS: Consulting firms, insurance companies, pension funds and the government.

AP: What is the credentialing procedure like for an actuary in your country?

RS: The "AsociaciÃ³n Colombiana de Actuarios" has recently became a full member of the International Actuarial Association. In order for anybody to become a member of our association, we have to compare his or her studies to the international syllabus.

AP: Do employers support the cost and time of exam preparation?

RS: Most of the companies do not support it, but some of them reimburse the cost of the exams, after the student passes them. Some of the big insurance companies have more formal programs -- once the person has a few years working in the field and shows the potential to have a promising career, they send the student overseas.

Actuaries Around the World
June 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month we have the pleasure of interviewing Yuriy Krvavych from Ukraine. Yuriy Krvavych has professional experience in actuarial work, risk management, consulting and research in insurance and finance, with fourteen years of experience working in the general insurance industry.

He currently works for Price Waterhouse Coopers and provides consulting services to the Lloyd's market and London company market in enterprise risk management including Risk and Capital Modelling, Model Validation, Advanced Risk Analytics and Reporting, Capital Model Use and Solvency II, ORSA, Risk Management Framework and Corporate Governance. He previously worked at Insurance Australia Group (IAG) as a DFA and Capital Modelling manager. Prior to IAG, he worked for seven years in the general insurance sector - Hollard Insurance (Sydney) and Oranta Insurance (Kiev). He also taught actuarial courses at the Australian School of Business of the University of New South Wales and is currently serving on the ASTIN Committee of the International Actuarial Association. He holds a Ph. D. in Actuarial Studies and is a Fellow of the Society of Actuaries of Ukraine. He plays the violin and enjoys tennis, volleyball, football, fishing, hiking and cycling. .

ACTEX Learning AL: How many practicing actuaries do you have?

Yuriy Krvavych (YK): 73 practicing actuaries (11 Fellows and 62 Associates)

AP: What is the word for actuary in your local language?

YK: ÐÐšÐ¢Ð£ÐÐ Ð†Ð™ ([ a k t u a: r i j ].)

AP: When was actuarial science first introduced?

YK: Actuarial Science was first introduced in Lviv, Western Ukraine in 1909.

AP: What is your favorite part about being an actuary?

YK: Being able to assess and model risks in insurance, finance and social science.

AP: Can you share an interesting anecdote from your career?

YK: Two hydrogen atoms walk into a bar.
One says, "I think I've lost an electron."
The other says, "Are you sure?"
The first replies, "Yes, I'm positiveâ€¦"

AP: What are some of the highlights of the history of the actuarial profession?

YK: Actuarial Science was first introduced in Lviv, Western Ukraine in 1909. There are records of Ukrainian actuaries who participated in the International Congress of Actuaries during the period from 1909 to 1939. The actuarial profession was prohibited in Ukraine during Russian Soviet occupation (1939-1991). The Society of Actuaries of Ukraine (SAU) was established in 1999 after Ukraine regained its independence.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

YK: Improve professional actuarial standards and become a full member of the International Actuarial Association.

AP: What developments on the horizon could affect future opportunities in your country?

YK: Integration into EU (European Union) markets

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

YK: An increased role of actuaries in life insurance, pensions and investments

AP: Who are the main employers of actuaries?

YK: Life/general insurers

AP: What qualifications do you find most important for upcoming actuaries?

YK: Good (traditional) university education in probability and statistics as well as formal professional actuarial qualification via well-recognized professional institutions

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

YK: Actuarial programs within university specialization in Mathematics/Statistics are available in : Kiev, Lviv, Kharkiv and Odesa.

AP: What is the credentialing procedure like for an actuary in your country?

YK: Students sit for professional actuarial exams of the UK Institute of Actuaries, the US Society of Actuaries or the US Casualty Actuarial Society. SAU Fellowship requires successful passing of the following professional exams:
Part 1 exams (the level of UK/US Associate and higher, i.e. IoA, SOA, CAS); and
Part 2 exams (local Ukrainian exams jointly administered by SAU and the Ministry of Finance of Ukraine).

AP: Do employers support the cost and time of exam preparation?

YK: Yes

AP: What is the reputation of actuaries in your country?

YK: High

Q & A with Jeff Blacker on His upcoming Book Actuaries in Microinsurance
June 2015

In August, ACTEX will be releasing Actuaries in Microinsurance, an innovative anthology touching on the actuarial aspects of this growing area of insurance. This month we interview Jeff Blacker, the editor of this book along with Mary Yang, as he tells us about microinsurance and why you should read the book he helped put together.

ACTEX Learning AL: Tell us briefly about Microinsurance (MI).

Jeff Blacker (JB): Microinsurance protects low-income people in developing regions around the world. Compared to traditional insurance markets, MI premiums are lower, polices are easier to understand with fewer exclusions, and administration is designed to be lower cost per policy.

The volume of microinsurance is large and growing, but it has not yet reached its full potential. The MunichRe Foundation website provides "landscape studies" which summarize the number of lives covered, amount of premiums inforce, and types of products available. MI initiatives face many challenges, such as achieving scale and sustainability.

AP: Why would actuaries be interested in reading Actuaries in Microinsurance?

JB: First of all, it will be an entertaining way to learn about a field of actuarial work that has direct positive social impact. By inserting an anecdote between each technical chapter, my hope is that the book will be enjoyable to read. It is not meant to be a textbook.

This book should also save actuaries time. The number of resources online is almost overwhelming (e.g. the Microinsurance Network alone has over 500 high-quality resources). Most of the resources online are written for a broad audience of MI experts and contain information that is less useful to actuaries. This book is a more efficient place for actuaries to gain knowledge. Our chapter "Data Sources" includes a table to help actuaries locate helpful information online.

AP: How did you first get interested in this topic?

JB: I left a traditional actuarial job in 2007 in search of more fulfilling actuarial work that involved travel and helped others. I stumbled onto microinsurance shortly thereafter. I began reading articles and publications that were online. I searched the internet for organizations that were involved in the field. I wrote several offering to volunteer. Eventually the volunteering and networking led to consulting projects, which have been some of my most rewarding work experiences.

AP: What is unique about Actuaries in Microinsurance?

JB: Half of the chapters are short anecdotes, or personal stories, from actuaries working around the world in this field. The personal anecdotes give non-microinsurance experts a sense of what it is like to work in developing regions.
The remaining chapters are more technical. The technical chapters are written and edited by actuaries with the aim of discussing and educating on a wide variety of topics directly relevant to other actuaries.

AP: What was it like to write this book?

JB: I only wrote a couple of chapters myself. We have over 20 authors who contributed, so my biggest task was staying organized while editing the chapters. The associate editor, Mary Yang, was a big help.

We also contacted many organizations involved in microinsurance to see if they would provide a high-level review of an early draft. Their feedback was outstanding and made this a better product.

Jeff Blacker FSA, MAAA: Jeff is an independent consulting actuary and actuarial exam instructor. Most of his career has been in the U.S. supplemental health insurance market. In Guatemala and Nicaragua he priced microinsurance products including life, cancer, and accident insurance. In Kenya, he analyzed health microinsurance claims experience and provided recommendations to improve the sustainability of an insurance product. He has also enjoyed working in India as a microinsurance volunteer. As an actuarial exam instructor with The Infinite Actuary, he prepares students through online seminars for Society of Actuaries exams.

Mary Yang, FSA: Mary is an actuary practicing in the international retirement and investment space. From 2008-2013, Mary led the Capacity Building Programme of the Microinsurance Innovation Facility, housed at the International Labour Organization. She is experienced in addressing international human resources (HR) issues and has carried out multi-country projects on a range of HR topics including benefits policy, design, valuation and risk management. Mary is a Fellow of the Society of Actuaries in the U.S. She holds a Master in Business Administration from INSEAD in France as well as a Bachelor of Science from the University of Illinois â€“ Urbana.

Actuaries Around the World
May 2015

This month, ACTEX continues offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing of Taylan Matkap. Born in 1978 in Antakya, Taylan graduated from Ankara University, Department of Statistics and completed his master's degree in the Department of Actuarial Sciences and Finance at Boston University. He is currently pursuing his doctorate studies at Ä°stanbul University, Department of Labor Economics and Industrial Relations. Taylan serves as the Secretary General of the Actuarial Society of Turkey, is the Society's representative on the International Actuarial Association and is a volunteer on the Ruin Theory Dividends working party (IFoA). In addition, Taylan has served as a member on the Committee on Ratemaking of the Casualty Actuarial Society (2006-2007).

ACTEX Learning AL: How many practicing actuaries do you have?

Taylan Matkap (TM): There are 122 registered and 147 trainee and assistant actuaries in Turkey.

AP: What is the word for actuary in your local language?

TM: Actuary is written as AktÃ¼er in Turkish

AP: When was actuarial science first introduced?

TM: Actuarial science was first introduced in 1951 with the foundation of The Actuarial Society in Turkey.

AP: What is your favorite part about being an actuary?

TM: Since there are very few actuaries in Turkey, there are strong career opportunities. Also, estimating the future, the realization of your estimates and creating new models for your company makes me happy. While deciding on which subject to pursue in university, the main criterion I looked for was the ability for me to successfully perform and enjoy my work.

AP: Can you share an interesting anecdote from your career?

TM: A lot of people in our country still do not know what an actuary is. In 2007, there was a seminar about the best jobs in the world and people mixed it up with "actor". They asked me all about the movies.

AP: What are some of the highlights of the history of the actuarial profession?

TM: Although the actuarial society was founded in 1951 in Turkey, the actuarial profession became well known and popular in the 2000s. The value of the actuarial sciences and actuaries are increasing day by day. Most of our colleagues are young, open-minded and open to improvement. Since 2008, all the financial statement tables of insurance companies are signed off by a registered actuary.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

TM: One of the main projects is to obtain full responsibility for actuarial exams in Turkey. In addition, our association is aiming to be a full member of the IAA. Finally, we want to host a large Congress of Actuaries in Ä°stanbul.

AP: What developments on the horizon could affect future opportunities in your country?

TM: The insurance sector has just started to play a critical role in the financial and economic development in our country. Becoming a member of the EU could speed up everything.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

TM: Currently almost 80% of the insurance companies are part of international groups. So, actuarial work is done under local regulations and international group standards. Our regulatory board is aiming to be in line with European Union / EIOPA â€“ Solvency II standards. So, for the next five years, actuarial work will proceed according to that development.

AP: Who are the main employers of actuaries?

TM: Insurance companies and consulting firms.

AP: What qualifications do you find most important for upcoming actuaries?

TM: Training or education in actuarial sciences with analytical thinking and programming skills.

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

TM: Since there are very few schools for actuarial education in our country, schools are not organized enough for studying overseas, but a significant part of the current registered actuaries have MSc degree from other countries. Also some small part of the students are very interested to receive training and work opportunities in other countries.

AP: What is the credentialing procedure like for an actuary in your country?

TM: In total, there are 13 examinations with 3 levels, where those examinations are organized by the Regulatory Board (Treasury), Universities and Actuarial Association. The first level has 4 exams where your basic statistics, mathematics, financial mathematics and regulation knowledge is tested. When you have the first level, you get the trainee actuary degree. The second level also has 4 exams, where your actuarial knowledge in life and non-life insurance mathematics, actuarial risk theory and financial theory and accounting standards knowledge is tested. After obtaining the second level, you receive the assistant actuary degree. The third and last level has 5 exams where your detailed knowledge of life, non-life, health, pension business and financial investment knowledge is tested. If you have third level, which means that you have 13 exams in total, and if you have at least 3 years of working experience as an actuary, you will obtain the title of registered actuary.

AP: Do employers support the cost and time of exam preparation?

TM: Most of the companies support the cost of the exams. But time given for exam preparation is not common in the market.

AP: Are there any noteworthy non-traditional actuarial positions?

TM: Not yet.

AP: What is the reputation of actuaries in your country?

TM: As mentioned before, actuarial science and the actuarial profession was first introduced in 1951 with the foundation of the Actuarial Society in Turkey. It became more well-known and popular in the 2000s. Since 2008, all the financial statement tables of insurance companies are signed off by a registered actuary. This obligation caused companies to focus on actuaries; however, as a profession, it is not as popular as being a lawyer, doctor or other traditional professions in Turkey. This is a challenge for us, but the new business cycle, new risks and the importance of technical profit will increase the popularity and the reputation of actuaries. The attitude of the insurance companies has started to change visibly with respect to the last decade.

AP: Is there anything else you would like to share?

TM: The Actuarial Society of Turkey is ready to become a Full Member of the IAA.

Actuaries Around the World
April 2015

This month, ACTEX will begin offering a series of interviews with actuaries from around the world.

This month, we have the pleasure of interviewing Slagjana Mailjkovikj, Ph.D., who works as an actuary in the Insurance Supervision Agency of the Republic of Macedonia (Wikipedia link) since 2010. After earning a bachelor's degree in Applied Mathematics - Mathematical Programming in 2007, she continued her education on the field of Applied Mathematics and 5 years later she earned her Ph.D. in Numerical Optimization and Generalized Inverses from the Faculty of natural science and mathematics at the University of Nish. In 2013, she finished her formal actuarial education in Macedonia after which she became a licensed actuary and a regular member of the Macedonian Actuarial Association.

ACTEX Learning AL: How many practicing actuaries do you have in Macedonia?

Slagjana Mailjkovikj (SM): 25

AP: What is the word for actuary in your local language?

SM: Aktuar (Ð°ÐºÑ‚ÑƒÐ°Ñ€ - in Macedonia, the Cyrillic alphabet is the official one)

AP: When was actuarial science first introduced?

SM: 2002

AP: What is your favorite part about being an actuary?

SM: Working on problems not many other people could solve or even understand. It is not boring; every other task represents a new challenge. It is not based on rules, rather principles, so actuaries have lot of space for creativity. I also enjoy being a part of a quite new profession in our country, however heavily regulated and also a part of a recognized global profession

AP: Can you share an interesting anecdote from your career?

SM: Once, I was asked about my job, and I answered that I'm an actuary. The person asked me, isn't your job boring spending all your time doing nothing but classifying documents? I was a bit confused, and I asked "How do you mean? This is not my job." And the person said, "As I understood, you are an archivist" (in my language it is arhivar). Then I explained to him what I really do. The answer was "Oh, I heard that you didn't say archivist, but since I didn't recognize the word that you said, I thought I heard you wrong and archivist was the most similar word. (arhivar vs. aktuar)

AP: What are some of the highlights of the history of the actuarial profession?

SM: In 2004, the Macedonian Actuarial Association (MAA) was formed In 2006, MAA became an associate member of IAA. In 2013, the third generation of actuaries finished their education, so for the first time there was a minimum sufficient number of actuaries on our market.

AP: What are some of the main challenges and projects for your association over the next 5-10 years?

SM: To promote the role of the actuarial profession and to increase its reputation and recognition on a national level; To establish cooperation with other actuarial associations; To facilitate the continuing actuarial education for the members of MAA; To become a full member of AAE and IAA.

AP: What developments on the horizon could affect future opportunities in your country?

SM: Certainly it is the new EU Solvency 2 regime. Although Macedonia is not an EU country and it is not obliged to implement SII, most of the companies are daughter companies of greater corporations placed in EU. So this regime is imposed by their mother companies, and as it is more principles-based as opposed to the current rules-based system, the work that the actuaries are going to perform will significantly increase and will move into non-traditional actuarial work.

AP: What have you seen from inside your company? Where do you think the changes to actuarial work in your country will happen in the next five years?

SM: The recognition of the actuarial profession hopefully would imply an increased demand for actuaries in the insurance industry. Nowadays, most of the insurance companies have engaged only one actuary. Also, other industry branches will find the benefits of using actuarial skills.

AP: Who are the main employers of actuaries?

SM: The insurance industry

AP: What qualifications do you find most important for upcoming actuaries?

SM: Mathematics, Data analysis, and Risk management

AP: Do the schools in your country have actuarial majors, minors, concentrations or do students study on their own or overseas?

SM: Currently, there are no complete school programs for actuaries. It is the Insurance Supervision Agency who organizes actuarial education according to the demand and the program is in compliance with the requirements of the educational program prescribed by the IAA. Usually, due to lack of appropriate professionals who can teach students, the Insurance Supervision Agency mostly hires professors from other countries to fulfill the need.

AP: What is the credentialing procedure like for an actuary in your country?

SM: A person with a bachelor's degree in mathematics, economics, etc. must first finish the actuarial education mentioned in the previous point, which lasts for 2 years and has 15 exams, and after that the person should have a minimum of 1 year of experience in order to become a fully qualified actuary. However, in order to become a member of MAA, an actuary must have a minimum of 3 years of previous actuarial experience.

AP: Do employers support the cost and time of exam preparation?

SM: The employers, except the Insurance Supervision Agency, are not usually involved in exam preparation. However, they usually pay the fee for the education for their employees who are willing to become actuaries.

AP: Are there any noteworthy non-traditional actuarial positions?

SM: No

AP: What is the reputation of actuaries in your country?

SM: The recognition of the actuarial profession in Macedonia, is not at a satisfactory level.