Lifelong Learning and Professional Persistence
Q&A with Liu Qu, FSA, FCAA, vice president, chief financial officer, chief actuary and chief risk officer at Taikang Insurance Group December 2023Photo: Olmo Reverter
What is your view of the actuarial career path?
The actuarial profession is highly specialized and requires long-term professional learning and training. This includes not only learning from school curriculum but also striving to obtain professional qualification certification through various actuarial association exams and accumulating practical work experience.
In life insurance companies, actuaries have many specific job positions, including traditional roles in product development, reserve valuation, financial forecasting, value management, experience study, profit analysis, asset-liability management, reinsurance management, risk management and more. We also are seeing actuaries moving into front-end positions.
The work of actuaries serves the long-term business strategy of insurance companies. Therefore, as an actuary, one must maintain lifelong learning and always pay attention to development trends and changes in the industry. The value of actuarial work is often reflected in these cross-cycle business practices and long-term professional persistence.
Video Exclusive: Liu Qu Discusses Trends in the Life Insurance Industry in China
Which aspects of your job bring you the most joy and satisfaction?
The life insurance industry in China is constantly changing and rapidly developing. In this environment, working in actuarial science easily can provide opportunities to participate in the industry’s development and transformation. Being able to personally participate in these changes brings a sense of achievement.
Over the years, my colleagues and I have experienced changes in accounting standards. We have gone from the earliest statutory reserves, to the Chinese Accounting Standards (GAAP), to the International Financial Reporting Standard (IFRS) accounting standards. We also have witnessed the establishment and development of our country’s solvency system. Solvency I focused on scale, C-ROSS focused on risk and now we have C-ROSS Phase 2.
There have been many product innovations, including participating, universal and linked insurance products. We have innovated by combining virtual financial instruments with daily life wellness services, as represented by the Taikang Happiness Guide. Additionally, we have launched new products such as million medical insurance, long-term care and exclusive commercial pension insurance. Each of these was a significant challenge for actuaries, and when looking back after experiencing it all, there is indeed a sense of achievement and satisfaction.
In addition to participating in these major events, the charm of actuarial work lies in frequent exposure to different types of work and maintaining a global, long-term perspective. Actuarial work involves all aspects of an insurance company’s operations, requiring frequent communication with the back-end finance, operations and IT departments, as well as communication with the product, investment and front-end business departments. To be successful, actuaries must have a broad knowledge base, learn and understand different types of work, extract useful information from their work, process and analyze data using actuarial tools and always maintain a global perspective to provide suggestions for their company’s long-term operation. This is what makes actuarial work attractive to me.
As vice president, chief financial officer and chief actuary, how do you plan the company’s overall development and operational strategy? Can you share any inspirational team-leading strategies?
The key to actuarial and financial work lies in how to help companies achieve long-term, stable and sustainable profits, which can be divided into three levels:
- The strategic level. Under the framework of the company’s long-term business strategy, I consider the company’s long-term profit model in actuarial and financial language, propose feasible profit models and goals, and apply them to the internal management of the company.
- The resource level. Based on the company’s strategic development direction, I allocate resources appropriately. As the chief financial officer, I first ensure that the input of various resources is consistent with the company’s strategic direction. Then I establish a clear and accurate data and reporting system to track and analyze the efficiency of resource investment and use, and I provide timely feedback to the company’s various management levels to maximize the overall operating efficiency of the company.
- The professional level. My professional expertise plays a big role in my work. I must do various basic work tasks well and guard against the bottom-line risks. To establish a complete and effective governance structure and system in the financial and actuarial line, I must ensure the accuracy of financial statements and that we have adequate provisioning of liability reserves and stable solvency. At the same time, I aim for sustainable operations, always paying attention to the various risks the company faces and constantly evaluating and predicting the company’s operating situation. I also alert shareholders and management to potential risks in a timely manner.
In terms of leading and motivating teams, I always have encouraged actuaries to accumulate experience in different positions. Newcomers to the industry can rotate through different actuarial roles to solidify their foundation. Taikang Insurance Group has a short-term rotation system for newcomers, arranging for them to learn from other departments.
More experienced actuaries can work in the frontline business departments for a full-time rotation, which not only helps their growth but also maximizes the value of actuarial talent for the company. Taikang has many actuaries who have moved from the back end to the front line successfully.
What trends are you seeing in the life insurance industry in China?
As the country’s population structure and macroeconomics have changed in recent years, the life insurance industry in China has quietly been transforming. In the future, the commercial, profit and marketing models of the life insurance industry will change as well.
In terms of the commercial model, more insurance companies are starting to have a presence in service-oriented physical industries and are exploring the empowerment of insurance products by retirement communities and comprehensive hospitals. This represents the gradual shift of the life insurance industry toward a customer-centric “payment + service” business model. Focusing on the three major needs of retirement, health and wealth management, insurance companies combine life insurance (life insurance, annuities) with medical and nursing services; health insurance (critical illness, medical) with medical services; and financial management products with investment services to provide customers with multifaceted solutions for their entire life cycle. This builds a closed-loop industrial chain of “payment + service + investment.”
Looking at the profit model from the mortality, expense and interest margin perspectives, the life insurance industry mainly was dominated by the interest margin. But with the current decline of interest rates, this situation will soon become a thing of the past. Life insurance companies need to shift to a profit model that balances the interest, mortality and expense margins:
- Stabilizing interest margins by controlling liability costs
- Improving efficiency and optimizing expense margins through refined management
- Solidifying mortality margins through customer health management
The traditional agent management model in marketing, which focuses on increasing staff and large inputs and outputs, is also being transformed and upgraded. The new era of agents will shift toward professional, specialized and performance optimization. The change in population structure makes the traditional model unsustainable, and customer needs are changing. Only professional agents can effectively link customers and provide differentiated services.
Overall, the life insurance industry in China is once again at a crossroads, and actuaries will play an important role in the transformation process.
What is your opinion of artificial intelligence (AI) and other technologies? How would you advise actuaries to respond to them?
Actuaries are not unfamiliar with the application of new technologies. The earliest actuaries used pen and paper to price and reserve valuation work by looking up tables. Today, these tools have evolved into Excel, Prophet and Python. In the future, AI and big data technology may become the new generation of actuarial tools.
As mentioned, actuarial science is a profession that requires lifelong learning. Faced with new technological changes, actuaries should always keep an open mind. When presented with new technologies and tools, the first thing to do is learn and master them and think about how to improve existing work using these new technologies. For example, you can design more flexible products, optimize the efficiency of reserve valuation work, conduct more refined experience analysis and research, conduct more financial forecasts in more simulation scenarios and so on.
I am pleased to see that the Society of Actuaries (SOA) curriculum and exam syllabi have updated with the times. This means that young people entering this industry can access cutting-edge knowledge and technology during the learning stage.
Do you have any advice for young people and those seeking to enter the actuarial profession in China?
Now is a good time to enter the actuarial field. As China’s life insurance industry transforms, the demand for actuarial talent will continue to increase, and actuarial professionals will have more opportunities to shine in different positions.
For young people who want to enter the actuarial field, the first step is to solidify their professional foundation, master solid actuarial skills by studying actuarial courses at school and taking actuarial exams, make good use of internship opportunities and develop rigorous and pragmatic work habits. The second step is to broaden their horizons, cultivate their knowledge of the market and industry, and strengthen their understanding of the macroenvironment, operational situation, business models and other aspects of China’s life insurance industry. Finally, they should have an open mind and be brave enough to accept new things, including learning and mastering new technologies and engaging in some nontraditional actuarial roles.
From your viewpoint, what are the most critical actuarial skill sets?
To be an excellent actuary, one must master many skills, including actuarial modeling, which describes the real world through abstract mathematical models and can predict cash flows and reserves under different scenarios in the future. In addition, clear, logical thinking that assesses the business situation and risk level of the company by summarizing and analyzing data and indicators is also important. Of course, having good communication skills when dealing with different departments is equally critical.
In addition to these basic skills, an excellent actuary also should have outstanding abilities to filter and digest information. In this era of information explosion, the difficulty of obtaining various types of data has decreased greatly, but at the same time, the noise around information has become increasingly complex. Quickly filtering out the noise, capturing effective information and having it play the correct role are becoming more important for actuaries. To achieve this, one needs to have a high sensitivity to numbers and information, maintain a clear mind and systematic thinking at all times, and undergo long-term professional training. Actuaries with this skill often stand out.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.
Copyright © 2023 by the Society of Actuaries, Chicago, Illinois.