Uniting the actuarial profession

By Bradley M. Smith, FSA, MAAA
Depending upon your point of view, the actuarial profession is either “blessed” or “burdened” as the country faces societal problems that  have substantial actuarial components. These issues include the funding and potential reform of Social Security,  Medicare, and healthcare, and the underfunding of public pension plans.

Are we the cause of these problems? I maintain that we are not. But if we do not become part of the solution, we risk becoming facilitators of the problems. This is something that few, if any of us, want to live with.  We must become more active participants in developing solutions to these problems.

So what am I asking you to do?  I am asking every actuary to speak out about these issues. At cocktail parties. At neighborhood barbeques. At family gatherings. At your place of work. I’m asking you to give presentations to your local community clubs. To write your congressman. To write letters to the editor of your local newspaper. To tap the power of social media—be it Twitter, Facebook, LinkedIn, YouTube, or other media—in order to deliver this message. The SOA staff will be creating PowerPoint presentations on each of these four topics targeted to non-actuarial audiences for you to use as you deem appropriate. Incidentally, the Academy has developed some very helpful issues papers on these and other topics to help educate you and the general public. I encourage you to take a look.

But it’s going to require more than just a grassroots effort to create this kind of change. The structure of our professional organizations in the United States is an impediment to the profession, even as we look to help be part of the solution to these problems. In the last year, after a seven-year hiatus from serving as an elected official, I have observed that our professional bodies are more fractured than ever, and at a time when we can least afford bickering and infighting.

In the past couple of years we have received a message from many of the large employers of actuaries that the existing structure of the U.S. actuarial organizations is both inefficient and ineffective. The markets in which our employers work are highly competitive and are becoming more so. At a time when we most need concentrated, focused effort, we spend hours and days of precious volunteer, leadership, and staff time and effort finding ways to collaborate with one another and we duplicate our spending on many aspects of our separate infrastructures. These efforts are always well-meaning and often very helpful, but they are aimed almost solely at making our divided and disparate systems work. I believe we can put those resources to more effective use and gain important efficiencies as well.

The SOA’s members, when asked to vote on a proposal to  combine and make more efficient just one aspect of this structure, the recent  Joint Disciplinary proposal – voted by a margin of 94% to 6% in favor. Over 80% of the CAS voters had the same view, as did 93% of the Academy members who  voted and 93% of CCA voting members. In other words, you, our members, strongly supported such efficiencies.

Many of the profession’s leaders and its employers, in  private conversations and public statements, have expressed the view that a more efficient and rational structure for the U.S. profession makes sense. Several of them have tried in various ways over the years to achieve change. Steve Kellison, former president of the SOA and former executive director of the Academy, stated in an article in the October 2005 issue of The Actuary:

“Put simply, there are too many actuarial organizations for a profession of our relatively small size. Our overall organizational structure collectively is too complex and the end result is sub-optimal…I see this  largely, perhaps uniquely, as a problem facing the profession in the United States…There is no strategic vision for the profession as a whole…Despite repeated good-faith attempts to define “who is responsible for what”, lack of clarity still pervades everything we do…Effectiveness and efficiency are difficult to achieve under the current structure…the current structure requires a lot of communication and coordination…Every hour spent in coordination and communication activity is an hour not spent actually doing something to advance the goals of the profession…competition among the organizations invariably arises…To the world outside our profession we appear to be a fractured, convoluted, even disorganized profession.”

The Critical Review of the US Actuarial Profession (CRUSAP) report issued in late 2006 stated:“….the organizational structure of the profession results in a significant distraction to the profession’s leadership at a time when it is facing unprecedented challenges in meeting its goal of best serving the public…the current organizational structure is an impediment to an effective voice for the profession… Accordingly, we recommend that the actuarial profession establish the consolidation of the actuarial profession as a long-term goal.”

Since then, a number of our leaders have attempted to address these issues and in the most recent election, several of our candidates for president-elect also expressed the view that structural change is needed.

The current structure is not positioned to compete in the global marketplace. It seems clear that 10 years from now this structure will no longer be in place. It has been my experience in the commercial world that if you know you are destined to go a certain direction eventually, you are better off getting there sooner rather than later. There is no need for three separate professional organizations—the SOA, the CAS and the AAA—to exist. They must be merged into one efficient, effective organization. Despite the obvious difficulty, I am prepared to focus energy and time during my term as president seeking this change, while we continue serving members and candidates in our current structure.

Although the SOA Board has expressed no view on the matter, I plan to ask our leadership and Board to support my efforts to make our professional organization’s structure more rational, more efficient and more effective, much as a previous generation of the SOA’s leaders did in 1949 when they formed the SOA by merging the Actuarial Society of America and the American Institute of Actuaries.

I am asking the leaders of other U.S.-based actuarial organizations – principally the Academy and CAS – to join in this effort for the good of the profession, its members and candidates, and the stakeholders we serve.

I am asking the members of the SOA and the employers of its members – who I believe strongly support this idea – to express their views in support of this objective, both to me and to the leaders of the other organizations and to encourage them to participate in this effort. Write emails. Express your views on blogs like this and on other relevant online locations.  Contact the members of the boards of these organizations.  Get the word out to members not at this meeting.  Use social media.  Call for change. Today, I am asking that we do what needs to happen so that we as a profession can meet the societal challenges that face us. With your help, we can be a part of the solution.

Please share your thoughts below.

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13 responses to "Uniting the actuarial profession"

  • Mary Pat Campbell says:

    I know the comments have to be individually moderated by SOA staff, so perhaps others making the exact same points I’m about to make have already submitted comments.

    1. Both the SOA and CAS are international educational and research organizations. The AAA is a U.S.-only organization that can get involved in lobbying. So while I can see a merger of the SOA and CAS feasible, it’s not going to work with a merger with the Academy for some very basic, practical reasons.

    2. The SOA has a lot more members than CAS. It is somewhat rude that we keep pressing them to join our society – P&C actuaries know that they will be only a few special interest sections dwarfed by the membership that already exists. I’m thinking CAS members aren’t going to be that enthused about it. Suppose the U.S. President proposed a merger with Canada, announcing it in a speech before Congress without much notification to the Canadian PM. Your proposal is not as serious as my hypothetical, but you can imagine what the Canadian response would be to such a proposal (also, going back to my first point – I’m sure Canadian actuaries would be delighted to be considered so irrelevant to this proposal. Are they supposed to be getting involved in development of U.S. regs via the new U.S. org they’d be members of? That would be fun.)

    I think you’re going to find tepid response from SOA members (what’s in it for us? bigger annual meetings? whee.) and highly negative responses from CAS members (not interested in getting lost in a larger crowd). Given that this proposal has come to SOA membership out of the blue, forget about surprising CAS membership, it would be hardly surprising that the response would be anything else.

  • Ruth Ann Woodley says:

    I strongly agree with Brad’s comments and am thrilled to see him starting his tenure with this push. It’s one of the reasons why I voted for him, and in fact is the most important issue I look for in voting for any SOA or AAA leadership position. I’ve done various volunteer jobs and projects with both organizations, and this has always been a source of frustration. In fact, it is a big reason why I’ve cut back my volunteer work over time and planned to continue to do so. It’s too discouraging to hear “we can’t do that because it would step on another organization’s toes” or see one organization spending money (our money!) and time duplicating the work of another. And of course to anyone outside the profession our organizations make no sense, and that confusion is another reason to ignore our important input.

    So I respectfully disagree with Mary Pat’s comments. She raises some valid issues that must be solved, but I cannot believe these are insurmountable. Especially since I hope others like me will demonstrate an anything-but-tepid response from SOA members to this initiative.

  • Sam Cox says:

    I agree with Brad.

    Mary Pat Campbell’s comment about Canadian actuaries seems to imply they are SOA members. The actuarial professon in Canada is represented by the Canadian Institue of Actuaries. One does not need to be a member of the SOA to be a member of the CIA. It is true that the CIA replies on the SOA and CAS for exams so many CIA members earn SOA or CAS membership enroute to CIA membership. But that may change as the CIA seems to be moving toward more independence. Also, some CIA members used the UK or Australian systems for qualification. There are CIA members who are not SOA members and there may be more in the future.

  • Mary Pat Campbell says:

    Sam, so the thought is that Canadian members of the SOA and CAS would just be excluded from the new U.S. actuarial “supergroup?

    Including other non-U.S. members?

    That’s not made clear in the proposal. Currently, there is a non-trivial number of Canadian members of the SOA. If the idea is that they’ll just be CIA members, they may not be happy with this. You do know that a lot of Canadian actuaries like the flexibility of the SOA & CAS credentials so that they may more easily transfer between working in Canada and working in the U.S. Other non-American members probably also like this. So with this proposal, you’re theoretically annoying not just current CAS members but all non-American SOA members.

    It has been complained that the SOA is too U.S.-centric for a putatively international organization, so I guess I congratulate you for making that less of a question.

  • Sam Cox says:

    I do not know how Brad’s proposal treats members of the CAS or SOA practicing in Canada. My point is that actuaries practicing in Canada need not be SOA or CAS members, as you seemed to imply.

    There are signs that the CIA is developing a qualification route that is much more independent of the CAS and the SOA; one that would not require CAS or SOA membership. Eventually the relationships that the CIA has with the CAS and the SOA may be similar to the relationships the UK Institue has with the CAS and SOA, which are based on mutual recognition. If that happens (I think it will), Brad’s proposal will have no more relevance to actuaries practicing in Canada than it does to actuaries practicing in the UK.

  • Alice Fontaine says:

    In order to voice a strong opinion (either for or against) this proposal, I would like to see how the current visions of these organizations would be merged. Is the main benefit of having 1 organization to compete effectively in porviding international education? or is it to represent US actuaries with 1 voice? I see these as two very distinct visions that would result in different “solutions” to the “problems” currently cited. I would think that significant communication would still be required is we have more “sections” in a larger organization…

  • Alan Cooke says:

    I agree with Brad that the fragmentation of our profession in the US makes us less effective and efficient than if we were a consolidated profession. A good model for us may be the UK profession? Until recently, the Faculty of Actuaries was the main professional body for Scottish actuaries whereas the Institute of Actuaries was the vehicle for English actuaries. These two long-established and fiercely independent bodies merged recently to create the Institute and Faculty of Actuaries which not only covers all actuarial disciplines in the UK but also does so on a broader international basis than the SOA. It was not an easy merger but that challenge should not discourage us from trying?
    Before retirement I was an FCIA which is recognized in Canadian legislation as an acceptable designation for all Canadian signing requirements (pension valuations, insurance company financial statements, etc.). For the US work I used to do, I had to maintain a number of different actuarial designations depending on the type of work I did. I think employers will increasingly balk at paying several annual professional fees. In particular, the SOA may suffer financially as the FSA is not a required designation for most actuaries.
    I agree with the previous blog contributors that this will not be an easy merger but the status quo would be worse.

  • Bob Boeckner says:

    I have been a CIA and SOA member for over 40 years. As a Canadian actuary I have been proud of being a member of an international SOA. However, if a merger of several actuarial bodies with primarily US membership (AAA, SOA, CAS) is what US actuaries feel is needed to make them a stronger profession then I would give them my best wishes. I would not see the need for many Canadian actuaries to remain part of such a body. I assume that Mr. Smith feels the loss of revenue from the dues of Canadian actuaries would be more than covered by the efficiencies to be gained. I suspect that if Mr. Smith’s goal is realized a stronger CIA would also be a result since those Canadian actuaries who are currently SOA volunteers could devote their time to CIA or IAA matters.

  • Alan Cooke says:

    Unfortunately Brad’s speech does not talk about what a consolidated US actuarial profession might mean for Canadian or other foreign SOA members. However there were two major initiatives approved at the October 2011 SOA Board of Directors meeting that I personally found encouraging as a non-US SOA member. The first initiative involves allocating more SOA resources to Canadian activities and the second initiative sets out a new international strategy for the SOA. Given these new initiatives I would interpret an attempted consolidation of the US actuarial bodies as not only a way to strengthen the actuarial profession within the US but also a way to provide a stronger base for its non-US activities. Assuming that is the case I would strongly support a merger initiative and would continue my 36 years of SOA membership. However if my interpretation is incorrect and the proposed merger of US actuarial bodies will result in a new body that is almost exclusively focused on US matters than, like Bob and many other Canadian actuaries, I would redirect my energies to CIA and IAA activities.

  • Mary Pat Campbell says:

    I got the email about the task force on this item. Will members of CAS be invited to this task force?

    I think that might be a good idea. If you go off formulating plans without consulting those rather important stakeholders, you may find this to be another failed proposal with a lot of time wasted as with FEM.

  • Marie Gnaoré says:

    I want to say together we are strong..

  • Mary Pat Campbell says:

    Could some non-U.S. actuaries also be invited to be on this task force?

    After all, 30% of the SOA membership is non-U.S.-based.

  • Sebastien Fortin says:

    I have to echo Mary’s comments as I am an FCAS and FCIA working in Canada.

    The CIA doesn’t have much P&C specific content compared to the other disciplines which is normal since most of the membership comes from the SOA. I feel our needs are well served by having the CAS as an independent body and would definitely be worried if it was merged within the SOA.

    To be honest, I have more interest in the CAS then in the CIA. It speaks volumes.

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