2018 Annual Report

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From left to right: 2017–2018 SOA President Mike Lombardi, 2018–2019 SOA President James M. Glickman and SOA Executive Director Gregory W. Heidrich at the SOA headquarters in Schaumburg, Illinois. Not pictured: 2019–2020 SOA President Andrew D. Rallis. Kenneth L Dixon Photography

Leaders from the Society of Actuaries (SOA) gathered at the Schaumburg, Illinois, headquarters to reflect on the past year and to share their perspectives on the future of the organization and the actuarial profession. These discussions were with 2017–2018 SOA President Mike Lombardi, FSA, CERA, FCIA, MAAA; 2018–2019 SOA President James M. Glickman, FSA, MAAA, CLU; 2019–2020 SOA President Andrew D. Rallis, FSA, MAAA; and SOA Executive Director Gregory W. Heidrich.

In this first part of their conversation, they discuss the SOA 2017–2021 Strategic Plan and key activities from 2018.

Q: What is the SOA’s strategy, and how does it advance the actuarial profession?

Heidrich: Our Strategic Plan sets the overall direction for the organization and provides a framework that allows us to concentrate efforts and resources to advance the profession. Using the plan, we can align the objectives we’re pursuing around consistent themes. We’ve done that for many years now, and our Board of Directors uses the Strategic Plan to give us that focus and sense of purpose. We are focused on providing great education and research, maintaining the relevance of the profession and serving the public. To do that, we must continue offering the most respected credentials in the world and be global in our aspirations.

Glickman: The Strategic Plan covers a five-year period and is designed to be flexible enough to adjust to the current environment. It is the Board’s responsibility, which they take very seriously, to continually scan the environment and deal with any important issues as they arise.

Q: What strategic imperatives did the SOA focus on in 2018? Did you make progress?

Lombardi: This past year, I urged us to stay focused on maintaining our value as actuaries. That allows us—the membership—to prepare for and adapt to challenges on the horizon and act on potential opportunities. I was pleased to see how three key items played out during my presidency:

1. Collaboration with other actuarial organizations
2. International growth of the organization
3. Expansion of actuarial opportunities

We’ve made progress in each of these areas, which we’ll cover later in this discussion. However, our work is never done, and there is much more to do as we look forward.

Heidrich: We completed the nearly three-year project to bring more predictive analytics learning into our Associate of the Society of Actuaries (ASA) curriculum—that was a major push. We had nearly 3,000 new ASAs last year due to the changes in the curriculum, which is considerably more ASAs than we normally have in a given year. We think the addition of more predictive analytics in the curriculum is going to be very beneficial to our members and employers in the long term, so that was a big accomplishment in 2018.

We also brought forward a set of recommendations for young professional engagement with the organization. The Board recognized mid-year that we needed to complete a strategic review of that issue, so we created a new task force of millennial members to point us in the right direction and get us started. Their recommendations are now the basis for work we will be rolling out in 2019.

We also worked quite a bit on international efforts, which we will discuss later in greater depth.

Q: What do you think are the biggest strategic challenges facing the SOA and the profession?

Lombardi: The biggest challenge facing the profession is making sure the actuarial profession stays relevant. When we look at data science and analytics, and a variety of other changes in markets, it’s obvious other professions and disciplines are encroaching on our space. We must make sure our members remain fully up to speed and are trained to respond to the challenges we face. As an education and research organization, the SOA has much to contribute to that effort. One of the ways we’re addressing these challenges is by making sure our curriculum stays relevant. We recently changed our curriculum to incorporate predictive analytics in a much greater way than we have in the past, and as the environment changes we will continue to update the educational materials.

Heidrich: I agree with Mike. The single biggest issue is clearly the ongoing relevance of the actuarial profession when it’s faced with artificial intelligence (AI) and predictive analytics. I recently heard a story from a highly respected actuary with whom we work on many projects. He consults for insurance companies, and he noted that many of the projects he’s working on now will automate (essentially, take over) much of the reserve development work currently being done by actuaries in those organizations. He thinks we’ll see that happen within three to five years. That’s a big challenge for the profession.

Rallis: Yes, that’s the power of AI. What are the chances that machines will do the simple math for reserve calculations or the pricing calculations instead of us? Pretty high. I agree, the impact of new technologies is a critical issue for actuaries.

Heidrich: Six years ago, one of our SOA past presidents, Brad Smith, FSA, MAAA, FLMI, pointed toward this development. He was very concerned about it then, and it’s clear now that it’s happening all around us. Today, actuaries and actuarial employers are talking about these projects having a major effect in three to five years. That’s a short time frame to respond to those challenges and what they mean for the profession.

Glickman: I would look to the flipside. I certainly see the external risks, but I also see the opportunities that are presented when you get a group of very smart people together and have them figure out how they’re going to work within this type of environment. The opportunities are multifold in terms of actuaries becoming recognized for their skill sets in other industries and in other departments inside traditional industries. We need to spend our time and effort to help actuaries realize they need to develop their skill sets and apply them in new areas.

All this comes right in line with one of my big focus areas for 2019. I see our new fellows are at that point in their careers where they have technical skills, they can do great work, but they haven’t necessarily yet moved up very far within their organizations. They need to develop their communications skills, so they’re recognized for their leadership capabilities. Once they do that, I predict they’ll also be in demand in other industries. For example, new private equity firms, venture capital—there are all sorts of opportunities for smart people who can work with numbers and data.

Rallis: I’m somewhere in between those perspectives, because certainly we’ve seen opportunities expand, especially in the data analysis and predictive analytics spaces, as Jim said. And we need something that will distinguish actuaries from the overall population of talented and skilled individuals. I see our professionalism as a differentiator. Sure, you can have somebody crunching numbers. If that was all there was to it, there are many mathematicians, statisticians and engineers to do the work. However, you need someone to analyze those numbers in a context of being socially responsible and adhering to certain professionalism guidelines. That is the premium we bring to the table—understanding the context of how those numbers will be used and for what societal purposes.

Q: Building on this topic, where do you see opportunities?

Glickman: In addition to professionalism, actuaries have earned respect. You can work on trying to solve almost any type of societal issue, and most people will come at it from a perspective that is in line with their own best interest. It is rare for actuaries to be viewed as anything other than the objective arbitrators of where the numbers fall and the possible solutions. That may be our biggest asset, not only in our traditional industries, but in terms of moving into other industries. I picture a number of areas in banking, for example, where that kind of respect would be held in high regard.

Lombardi: Data analytics is in our DNA as actuaries. It is a part of who we are, it’s in our skill set. We’re the ones who can convert data analysis into actionable information that businesses can use.

Heidrich: Actuaries also bring to the table deep knowledge of the industries in which they work. Contextual knowledge is vital as those industries undergo rapid change and development. Companies need people who are smart, quantitative thinkers and understand the business model and how it works. That’s where there are opportunities for actuaries.

For instance, if you’re an InsurTech entrepreneur who knows very little about insurance, but you know about technology and getting products to people in ways that people want them, you need a guide. An actuary can serve as an adviser, someone who understands the business fundamentally and deeply from both a financial and quantitative point of view. An actuary is someone who understands regulation and its importance to a sound insurance industry. That type of contextual knowledge is one of the critical values our members bring to the table.

Q: Let’s talk about the proposed combination with the Casualty Actuarial Society (CAS). What drove that, and where did the idea come from?

Lombardi: Well, the idea has been around for a long time. People have talked about there being many different actuarial organizations in the United States and wouldn’t it be great if they (the SOA and CAS) could be combined. Once we started talking with each other, we realized it might make sense because we’re both education and research organizations. I felt it would have been a great opportunity to leverage our mutual strengths. At the same time, we were hearing a lot from universities and employers: Universities said a single education system would be helpful, and many employers have been very supportive of the idea, too.

Glickman: It seemed to me to be a very natural concept for us to come together—for students, academics, employers and, especially, the members. However, there was a big challenge—the fact that the CAS membership has a very tight affiliation with their organization in terms of their unique identity.

Heidrich: When I look back at 2018, certainly you can’t tell the year’s story without mentioning the combination discussions. It was one of the big ideas that has been talked about for decades in the profession in the United States. The SOA put everything we could into trying to make it happen because we thought it was the right thing to do.

Both boards clearly saw the major challenges and opportunities facing the profession from the rise of predictive analytics and AI and the need to address those issues. The SOA leadership felt that having a combined single organization able to focus all of its resources, all of its membership, and all of its energy on these issues would benefit the profession and the public in the long run.

I’m very proud the SOA took on a project of this scope and magnitude, all while staying focused on our constituents’ needs and the strategies we’ve already identified.

Glickman: We were pleasantly surprised by the reactions from so many other organizations and parts of the profession. I sincerely hope that at some point in the future, the effort, time and relationships we built this year will help make a combination organization a natural conclusion somewhere else down the road.

Now that the combination project has concluded, we will be laser-focused on important issues that are happening at an accelerated pace. As the environment changes, the SOA is ready to change with it and will be at the forefront of whatever those changes are.

Read the next part of this series, where the leaders discuss predictive analytics.