The SOA leaders discuss how the organization supports actuarial thought leadership and share their perspectives on the future of the profession JUNE 2019
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.
Earlier in this series, they discussed the SOA 2017–2021 Strategic Plan and key activities from 2018; predictive analytics; and membership services, inclusion and international strategy. In this fourth and final part, they share their ideas on thought leadership and the future for actuaries.
LEVERAGING THOUGHT LEADERSHIP
Q: What impact has the SOA had on spreading awareness of the membership and the profession?
Glickman: We have a sound media outreach program that provides reporters and the public with information on a variety of topics. I also am very excited about the work that goes on in the SOA sections—they develop their own specialized expertise and cultivate members who are particularly good at communication skills to share this knowledge with the media.
I’m sure most people know that our news cycle today is very accelerated. If the media asks questions and needs to wait around for a research project to be completed to get the answer, they won’t care about it by the time you have a response. Having members who are skilled at responding to media inquiries is key. Our professional interest sections’ areas of expertise allow us to have a much bigger footprint. The more we get out there and into the media, the more they’re going to come to need us.
Heidrich: There’s been an active media effort from the SOA for many years now. We’re constantly putting reporters in touch with actuaries who can comment on important issues. These media opportunities often develop in response to our published research and continued thought leadership. Reporters have come to expect that our members can address key topics, from longevity and pensions to health care and risk management. We’ve developed long-standing relationships that we can use for that purpose.
Why is that important? Well, we have a duty to the public to help solve society’s problems. It’s part of what it means to be a professional—that you have a duty to the public. We want policymakers, business leaders and the public to know actuaries have valuable perspectives to share.
Q: What is Initiative 18|11?
Glickman: To understand what the initiative is all about, you need to understand what the 18 and 11 are. In the majority of countries around the world, about 11% of gross domestic product (GDP) is spent on health care. That number is 18% in the United States, where health care and health insurance coverages are overutilized as a share of its GDP relative to other parts of the world. If you can’t grow health costs as a share of GDP, we need to help come up with new and better ways to control costs that will be not only efficient, but also accepted by the public.
Heidrich: One of the things I really liked about the model we’re developing with Initiative 18|11 is our partnership with the Kaiser Family Foundation and the Healthcare Financial Management Association. We are bringing actuaries together with people from other professions and disciplines to work on these issues. That helps us find better solutions to problems, and it also puts actuaries in contact with people who need to know about actuarial skills. It’s helpful all the way around. As we work on other thought leadership projects, we’re looking for opportunities to partner with other associations and groups, including those outside of the profession.
Q: Speaking of nonactuarial associations, can you speak to the work we’re doing with the Association Forum?
Heidrich: We have a local project that’s just getting started with the Association Forum, the Chicago-based society for association professionals. Chicago is one of the centers of association activity in the United States and the center of health care-related associations. The Association Forum created a program where about three times a year, leaders from those associations get together and talk about issues affecting health care. By participating as a sponsor in those programs, we’re putting actuaries on panels or having them present to other associations from various sectors of the economy. That’s important for the recognition our members deserve and need. And we’re beginning to form partnerships to do research projects with groups that we might not have connected with otherwise.
Q: How is the SOA thinking about InsurTech?
Lombardi: InsurTech can mean different things to different people. Our best way to help members is to make sure that we provide the tools and continuing education to keep actuaries at the leading-edge of these developments.
Rallis: Our Board has been able to devote more of its time and resources toward strategic issues like the impact InsurTech will have on our industries, and that puts the SOA and its members in a much better place to take a leadership position as technologies develop.
Heidrich: We are making sure our major meetings this year have as much InsurTech-related content as we can reasonably fit in. It’s important that our members have access to that information and have opportunities to learn about those kinds of developments.
Q: Each of you has mentioned the significant role research plays in the profession and at the SOA. Can you expand on current and future research projects and strategies?
Lombardi: We are an education and research organization, and we don’t just pay lip service to it. We devote a lot of funds toward research—measured in the millions of dollars—and we have been doing this for a long time. We’ve tried to figure out ways to do it better, and in the recent past we started thinking about whether we could package our research into strategic research “streams.” The idea of strategic research streams and bundling our research by category allows us to have a bigger footprint and make more of an impact with our research. I’m very pleased with the developments so far, and I look forward to seeing this new approach come to even greater fruition in the future.
Glickman: As you can imagine, the regulatory world looks to us for our ability to produce experience and mortality tables. The National Association of Insurance Commissioners (NAIC) is becoming much more interested in being a database collection organization, so it looks to us to conduct a great deal of analysis. It also uses our current experience studies to create valuation tables. This helps regulators make sure they’re regulating the insurance industry properly.
Heidrich: The SOA has a big commitment to research, and we’ve been increasing it over the last five to seven years—we’ve probably doubled our activity in research over that period. It’s a big focus for us and brings value to the public and to our members. As Mike noted, the change we’re making now—which is driven by the Strategic Plan—is providing a steady stream of research in high-impact areas. We released the first of those strategic research programs (on aging and retirement) in 2018. The next one on innovation and technology programs launched earlier this year and addresses many of the issues we just mentioned in terms of InsurTech.
We also are partnering on several research efforts with the Casualty Actuarial Society (CAS) and the American Property Casualty Insurers Association. We’re also helping to fund research the Institute and Faculty of Actuaries (IFoA) in the United Kingdom is doing. We leveraged data accessible through the Centers for Disease Control and Prevention (CDC) in the United States to get information we can use to develop population mortality research.
In 2018, we signed a new data access agreement with the NAIC, which gives us access to insurer data it is collecting for certain research purposes. We’re also a partner with the Health Care Cost Institute, which gathers insured health claims data.
Glickman: We’re able to bring that economy of scale to projects with others, and the fact that we’re working with them makes for a much better actuarial profession. When we all work together toward the same goal, the actuarial profession as a whole gets better.
Heidrich: When we’re successful in research, it’s because we’re seen as offering high-quality, unbiased, objective information. In 2018, we released the first-ever mortality table based solely on public pension plan data and continued our focus on producing morality improvement models and scales that actuaries can use. Public employee pensions in the United States are a very important topic, and there’s potential for controversy around the calculation of life expectancies for participants in these plans. We’ve been working on that project for several years, and we obtained great data participation in that project from almost all of the major public employee pensions in the United States. As a result, we built and released a study that appears to be widely accepted in the industry. That’s the importance of having a reputation as an objective, fact-based organization in research.
Q: What is the future of the actuarial profession from your perspective?
Glickman: As we educate the next generation of actuaries, everybody is going to have a basic skill set in predictive analytics, and as such they’re going to bring these skills into their practice in ways we can’t understand or predict yet. Around 45% of our fellows are younger than age 38, which is where the millennial demographic hits right now. We’re dealing with a group that wants to build skills in predictive analytics, and you’ll see it coming from both directions—from those developing their skills through the new ASA curriculum and into their fellowship studies, and from FSAs going back to learn about this topic through professional development.
Rallis: The most urgent needs in the profession are predictive analytics—which we are addressing in our syllabus, continuing education and programs—and other technologies, especially in the domain of artificial intelligence (AI) and machine learning techniques. These are techniques that actuaries typically would not have been trained in during their schooling, and these technologies are changing every industry, including the industries in which actuaries work. Actuaries need some type of fundamental understanding of these technologies so they can apply them to the challenges in the insurance industry. The SOA will need to incorporate some of the international practices and standards into our education system, in both basic education and continuing education, to prepare our candidates and members who work for multinationals.
Glickman: There’s also an opportunity to expand our footprint into areas outside of insurance. We worked with three other actuarial organizations around the world to put on a banking seminar in Washington, D.C., in May 2019. As you can picture, there are lots of areas where the banking industry could benefit from actuarial analysis. Some of the more obvious might be in developing appropriate loan/loss reserves and determining how to run them off, and working with the banking regulatory agencies to make sure banks do things on a sound financial basis. The more we get involved, the more we’re going to get drawn into the center to create opportunities for actuaries. Eventually, perhaps, we might even develop or tap into whole career fields that are not currently known for actuaries.
Q: What would you like to see the SOA and the profession accomplish over the next several years?
Lombardi: First, let’s look back to who we are. We are an education and research organization, and I’d like the SOA to continue to excel at education and research. We’re expanding globally, and our China strategy has been very successful. As we previously said, there may be opportunities in Latin America and many other regions, as well.
Heidrich: We need to take a hard look at how we can renew, build and strengthen our professional development offerings to our members. We need to engage our youngest members in the work of our organization. Additionally, we need to be part of the great growth opportunities that exist for the profession today.
Glickman: Right now, the SOA is recognized in all environments, from employers to regulators to society at large, as a very objective, technically competent group of professionals. Our members can opine on their areas of expertise, which include analyzing financial risk and providing solutions to financial problems. I would like to see us expand into other industries such as financial services. We want to provide our members with the skills and confidence to take on more leadership roles outside of the actuarial profession and to become much more well-known.
However, there is still a large percentage of people who have never heard of actuaries, and this includes people who are interested or working in math and sciences. If we can increase our communication skills, keep our competency and rigorous training, and gain awareness and insights among other industries, we can create more jobs and more excitement about the profession.
Lombardi: I’m proud of how the SOA membership has made the effort this year to share feedback, volunteer on so many projects and make a difference in other impactful ways. As an organization, we have a simple process to help us identify emerging issues, such as AI and InsurTech. However, by sharing and discussing these observations, members are tapping into their own viewpoints and resources of what is emerging—either a risk or opportunity. We need more of this activity. So, I say to all of our members—let’s rise to the occasion. If you’ve been meaning to volunteer, now is the time to step up. There’s so much for us to gain as a group through these individual efforts as actuaries.
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