Embrace the Power of One

Actuaries have a responsibility to share their viewpoints on financial risk with the public Dave Snell November 2020

Photo: iStock.com/lvcandy

The theme of the most recent grouping of articles for The Actuary is diversity of thought. This article in particular is a call to action for actuaries to step out of their comfort zones and “get involved.” Let’s embrace our power and our responsibility as individuals.

Getting involved could be as a voice within our department, our company, our Society or Academy or, more personally, in our own neighborhood and among our friends. I encourage you to volunteer in a big or small way. This can be a scary endeavor for actuaries, because as a group, we tend to be more introverted relative to those in many other professions.

There is diversity of thought among actuaries, but some of us feel it is challenging or scary to “go against” the norm. Consequently, this article may be viewed by some actuaries as heresy. But I am suggesting that subject-matter experts have a responsibility to share their personal viewpoints on financial risk subjects (wherever they have appropriate expertise) with the public.

Take a Stand

The American Academy of Actuaries (AAA) is the official political arm of the actuarial profession. But that does not mean we, as professionals trained to compute risk in general, and life/health risks in particular, can treat the AAA as a free pass to abdicate from our responsibilities on a more personal level. We must speak up and educate our families, neighbors, friends, colleagues and strangers about the likely impacts of current initiatives as reported in the media.

These are challenging times. The COVID-19 pandemic and the shift to working from home make on-site interaction with others more difficult. Yet people are dying around us because of ill-informed political attitudes that denigrate the wearing of masks and social distancing. Let’s step up and support science rather than sound bites.

The longtime motto of actuaries has been the quote by John Ruskin that “the work of science is to substitute facts for appearances and demonstrations for impressions.” We are the scientists of financial risk management—particularly the risks associated with death or morbidity. The whole premise of insurance is based upon spreading the risk of calamitous events across a broad base of people to reduce the monetary pain of unplanned tragedies upon us as individuals.

We support our fire departments under this paradigm by paying small amounts each year to provide for fire trucks, firefighter training and so on, rather than risk the catastrophic impact of having our house burn down as neighbors watch and perhaps have nothing to offer but marshmallows to toast. Additionally, we purchase fire insurance to mitigate the financial impact of that fire.

I understand the issue of a single-payor health system is rife with arguments for and against it. But several questions come to mind as I ponder this issue:

What is the actuarial argument against the related issue of universal coverage?
Isn’t this in harmony with the “spread the risk” basis of our profession?
Does it really cost more to provide a basic level of health care to all Americans than to exclude millions—and then pay for them anyway (indirectly) through their utilization of emergency room services?
What about the humanitarian aspect of this? Why is the country with the largest gross national product (GNP) in the world also the only major developed country unwilling to provide every resident at least a basic level of medical care?
Is the argument for fiscal responsibility sometimes a cover for the less socially acceptable term eugenics, when those who are denied coverage tend to be largely from immigrant populations or those born with disabilities?

I wonder if we can go beyond our traditional mindsets and develop creative ways to evolve our ways of thinking to answer these questions. How would you answer any of these questions I’ve posed?

The actuarial profession is characterized by highly educated (and highly paid), mathematically adept individuals who create sophisticated predictive models for all types of financial risks. We also are characterized (or satirized) as people who cannot state any opinion without cloaking it with conditional tail expectations (CTEs) and other exculpatory clauses that weaken the impact of our recommendations.

Several decades ago, a marketing vice president at the company I worked for at the time made a memorable joke about actuaries. He said that if you took all of the members of the Society of Actuaries (SOA) and laid them end-to-end from New York City in a line toward California, they still would not reach any conclusion.

The modification of the standard valuation regulations to embrace universal life policies typifies how a reluctance to commit to a decision on something as nontechnical as the name of the initiative can get stalled in committee to the point where the resultant regulation gets stuck with the initial holding name: XXX. A major actuarial initiative and accomplishment now has a label that conveys an image of obesity or pornography to the public that we serve.

Ways to Get Involved and Reach Out

Getting consensus on a decision was often a time-consuming process prior to the sudden shift away from interacting with others in person. You may have questions about how to get involved given our new normal. A few suggestions include seeking out mentors, looking for opportunities to share thoughts with your virtual workplace colleagues, and introducing new ideas into your children’s remote learning sessions—and sharing those with other parents.

Now more than ever, we have ways to engage through social media platforms, video conferences, blogs and an ever-widening circle of digital friends. Former boundaries of company, country and oceans are less confining. We can join hands with kindred spirits across the globe and also express our individual viewpoints from a digital soapbox with an audience of thousands.

Many have described the United States as a melting pot and have used that metaphor to explain our rise to be the most productive country on earth. I think melting pot is the wrong term, because it implies that we become homogeneous and, ultimately, blend to the extent that we all think and act alike. Instead, I suggest the metaphor that the United States is like a beautiful mosaic—where each piece contributes to the grandeur of the overall picture by celebrating our small but unique skills and perspectives.

I feel that our country ought to be guided by science rather than sound bites and polarizing hateful rhetoric. Isn’t it time we reached out personally? Isn’t it time we took “risk is opportunity” seriously—and walked the talk? Isn’t it time we spoke our truth, using our knowledge and experience, to better serve the public? Isn’t it time we embrace the power of one? This collection of articles aims to address these controversial topics.

I hope you find these articles thought-provoking, and I hope you share those thoughts with others.

Dave Snell, ASA, ACS, ARA, ChFC, CLU, FALU, FLMI, MAAA, MCP, teaches AI Machine Learning at Maryville University (and was named Outstanding Adjunct Instructor for Academic Year 2018–2019). He is also a contributing editor for The Actuary.

This editorial solely represents the thoughts and perspective of the author and does not reflect the opinions of the Society of Actuaries, its members or other groups or individuals.