Beyond Risk Management

The primary functions and responsibilities of actuaries have transformed considerably over the life of the profession. In the February/March 2019 issue of The Actuary, the dynamic role of an actuary was explored, highlighting some of the new and changing opportunities emerging in the field.

Our goal for this issue is to continue exploring and celebrating the diversity of what actuaries do, and to move beyond what can feel like an obscure definition of “measuring and managing risk.” We explore how actuaries are involved in researching, analyzing and developing solutions related to different benefit needs—from the beginning through the end of life, and the evolution and future of these solutions.

Several changes to life-cycle solutions have occurred in recent years. One example is changes to post-retirement income, as we’ve seen a significant shift away from employer-driven and employer-funded pension plans in favor of employee-contribution/employer-matching 401(k) plans. Similarly, employers that previously provided medical benefits to employees after they retire are looking at retiree medical plans to wrap around standard Medicare plans as health care becomes more expensive. In both examples, the trend of people living longer is altering what benefits are provided, as well as how they’re structured and funded.¹

It might be easier to identify changes related to the end of the life cycle. After all, one of the primary functions of actuaries is to project future costs, and we can derive a direct correlation to our work as we see a change in the length of that trajectory. But these alterations aren’t limited to that area. Insurers and providers alike are introducing new strategies with regard to health plan benefit designs and delivery, such as high-deductible health plans and accountable care organizations. Transparency in both medical procedure and drug pricing, as well as the concept of “Medicare for all,” are becoming prominent themes and part of political platforms.

In this issue, we examine the current options to meet different population needs and where those solutions are headed:

• The development and growth of the voluntary benefits market continues to be a response to employers’ desire to provide supplemental benefits to employees and their need to remain competitive. Mike Prendes, FSA, MAAA, gives an overview of these products and the risk management issues associated with them.
• As with anything life cycle-related, there is a generational aspect to consider. The article by Ronald Poon-Affat, FSA, FIA, MAAA, CFA, explores trends in life insurance specifically for the millennial demographic, a population that is close to surpassing baby boomers as the largest generation population, if it hasn’t already.
• Tim Rozar, FSA, CERA, MAAA, provides his top seven predictions on the future of insurance, while the online exclusive by Bill Bade, FSA, MAAA, highlights the four key market forces driving changes in the insurance industry.
• Scientific research developments and advances with regard to genetics are no stranger to the insurance space. Philip Smalley, M.D., FRCPC, provides an in-depth look at cancer genomic profiling and speculates on how that science could affect the future of insurance products in terms of plan design, pricing and underwriting.
• John Dawson, FSA, MAAA, walks us through the evolution of health care in the United States and highlights some of the key forthcoming initiatives that may change the market.
• We end the features with an article by Al Klein, FSA, MAAA, with tips for living a longer, healthier life.

While the three contributing editors for this issue (Dave Snell, ASA, MAAA; Ricardo Trachtman, FSA, MAAA; and I) have very diverse insurance backgrounds—ranging from reinsurance to life to health—we recognize this still doesn’t begin to cover all the areas in which actuaries can work to provide solutions to various life-cycle needs. As we all think about the future, we need to keep this fact in mind: As the population changes, so do the needs and ultimate solutions in the areas where we work, and beyond. As the population changes, so do the needs and ultimate solutions in the areas where we work, and beyond.

Copyright © 2019 by the Society of Actuaries, Chicago, Illinois.