SOA announces General Insurance track: Your feedback is welcomed

by Bradley M. Smith, 2011-12 SOA President

Last week the SOA Board voted to begin offering an exam track in general (property-casualty) insurance in 2013.

This move will help fulfill the SOA’s strategic vision of becoming a leading global provider of actuarial education. Currently the SOA is the only actuarial education organization with a significant international presence that does not offer education in the full range of practice areas.

For us to meet the needs of our growing member and candidate base outside the U.S. and Canada, we must offer this educational option. After all, it’s our job to ensure that our education system is equipping actuaries with the skills to address the full spectrum of risk management issues.

This is an exciting step for the SOA. I believe it will provide tremendous benefits to our candidates, members and their employers.

We’ve already heard from both members and candidates and have received many thoughtful comments on the development of this track. If you haven’t already, I encourage you to share your thoughts below or send them to membercomms@soa.org.

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Discussion

5 responses to "SOA announces General Insurance track: Your feedback is welcomed"

  • Mark Birdsall says:

    I had no idea that a desire to consolidate the professional actuarial organizations, which I support, would involve the SOA competing with the CAS rather than working together with them. I suppose that the primary candidates interested in this new exam track would be those intending to practice with international companies. For U.S. companies, I would think that this action by the SOA would likely create ill will and reduce cooperation between organizations. I think the SOA Board would have been well advised to consult with the broader SOA membership before taking such a provocative action. This course of action may reflect badly on the profession as a whole in public forums.

  • Ben Marshall says:

    I’m writing in response to Brad Smith’s invitation in his blog to express my concern about the General Insurance Track initiative. I firmly believe that the formation of a General Insurance track should only be done in collaboration with the Casualty Actuarial Society (CAS).

    The legitimacy of the track and a related designation will require widespread acceptance by key stakeholders, including but not limited to employers, regulators, and the students themselves. To achieve that acceptance and recognition would be relatively easy if the track is developed in collaboration with the CAS. To achieve that acceptance and recogniton would take many years if the track is developed in competition with the CAS.

    I believe strongly that bringing the actuarial educational organizations together under one umbrella is a great idea. However, I don’t think that it’s a good idea for the SoA to run roughshod over its potential allies and turn them into adversaries.

    On a somewhat related topic, I’m still puzzled by Brad Smith’s plan to bring the American Academy of Actuaries (AAA) under the SoA umbrella. Unlike my support for the merging of educational organizations, I believe it’s imperative to keep the actuarial bodies that act as regulatory liaisons separate and distinct if the SoA is to achieve its goal of expanding its educational influence globally. SoA’s own statistics show that 46% of writing candidates come from outside the U.S. To merge the SoA with its U.S. regulatory liaison body would act in utter opposition to the globalization initiative. There needs to be internal consistency within the SoA strategy.

    Ben Marshall, FSA, FCIA, MAAA, CERA, J.D., CLU, Ch.F.C.

  • Steven Herman says:

    As a FCAS, I know of a number of actuaries who are members of both the CAS and SOA. To me it would be best to encourage members who believe that they need to be more well versed in more actuarial areas to become members of both organizations rather than attempting to create a competing process. This competing process cannot be considered to be as valuable as being a member of both organizations.

    If one takes the statements made above supporting this, the comments below raises questions about the wisdom of this action. Specifically:
    “This move will help fulfill the SOA’s strategic vision of becoming a leading global provider of actuarial education.” Are you stating that the SOA is not already a leading global provider of actuarial education by making this statement? What if this move produces SOA members considered insufficiently educated by clients expecting the equivalent of an actuary credentialed in both societies? That might become a black mark on the SOA leading to a view that the SOA is less of a leading global provider of actuarial education than it currently is.

    “Currently the SOA is the only actuarial education organization with a significant international presence that does not offer education in the full range of practice areas.”

    That statement might ring true if it read “Currently the SOA and the CAS are the only actuarial education organizations with a significant international presence that do not offer education in the full range of practice areas.” Please identify all the actuarial education organizations with significant international presence that offer education in the full range of practice areas.
    One could maintain that many of the organizations providing that education do not have a significant enough international presence to meet that statement

    “For us to meet the needs of our growing member and candidate base outside the U.S. and Canada, we must offer this educational option.” That need could easily be met by encouraging members to become joint Society members as the CAS also has a growing member and candidate base outside the U.S. and Canada,.

    “After all, it’s our job to ensure that our education system is equipping actuaries with the skills to address the full spectrum of risk management issues.” it appears that encouraging members to become members of the CAS accomplishes the same result.

    These statements supporting this decision appear to be insufficiently developed rather than honest thinking of the best approach to advance the education of the members of both the CAS and the SOA.

  • Conrad M Siegel FSA MAAA says:

    Comments on SOA Decision to Add a Property-Casualty Track

    By Conrad M Siegel FSA (1959) MAAA (1965)

    Great decision – what took so long? The Board argues that to compete in the world market for students and future members we need a general insurance track. I agree. In the developing countries it makes no sense to ask students to sit for both SOA exams and CAS exams while our competitors offer the complete package in one set of examinations and one dues payment. The rapid growth of the economies of East Asian countries with populations exceeding one billion is opening the need for actuaries as the need for insurance and benefits grows.

    When I was writing my SOA examinations in Canada there were less than 5 FCAS actuaries in Canada. That would have been the ideal time to cover general insurance subjects since we regarded the US and Canada as the territory the SOA served. In fact if a merger was appropriate, the 1949 merger of the Actuarial Society of America and American Institute of Actuaries might well have included the CAS to provide a comprehensive organization in the two countries.

    I began to attend IAA and IACA meetings and marveled at the European actuaries who were fluent in several languages and in all aspects of insurance and benefits. Recently I had dinner with an Israeli consulting actuary and he proceeded to tell me of assignments he had in pensions, automobile insurance and health benefits. He couldn’t understand why the SOA didn’t cover general insurance.

    I had lunch with a retired FSA who is teaching compound interest mathematics to actuarial students at a major public university. The conversation turned to recommendations each of us was making to students as to which examination route to take – SOA or CAS? It turned out that we both were recommending the CAS route.

    We both had spent the major portion of our careers in pensions. We gradually found we were shifting from creative benefit and funding designers to become government compliance officials. Furthermore the number of single employer private company plans insured by the PBGC dropped from 112,000 in 1985 to 27,000 in 2009. Further that number includes many plans that have frozen benefit accruals and are waiting for changes in interest rates and/or asset prices to enable them to deep six their plans and drop PBGC coverage (and their actuaries!).

    The defined benefit plan attrition has already and will continue to reduce the need for actuaries and create significant unemployment or early retirement in this sector of SOA membership. The SOA section of LinkedIn lists available job offers in all fields where actuaries are employed, but almost none are for US pension actuaries.

    The second reason for recommending the CAS route to students is the uncertainty caused by the move of the federal government into the health benefit arena. Opportunities in the health field may become curtailed.

    The general insurance route has the advantage of state regulation, giving 50+ different legislator/regulators the opportunity to experiment with new ideas on a state basis.

    Now let’s look at the economic reasons why a farsighted student may decide to go the CAS route. Money!

    The inside front cover of a recent issue of contingencies has an advertisement by an actuarial recruiting firm which shows two graphs of salary data. They fitted this data to least-squares lines. For FSA’s the formula for average compensation related to years of experience is $107,710+ 5,562*(years experience). For FCAS’s the formula is $91,824+ 8,401*(years experience).

    Putting the two lines in one graph shows the following

    The FCAS line overtakes the FSA line in the 6th year. Over 33 years the FCAS total exceeds the FSA total by $1,250,000. While the source of the salary data may be questioned, my point is that this is what the student sees when he or she opens the magazine.

    Actuaries have a tendency to switch careers over their working lifetime. Many qualified working for life insurance companies and then switched to pension consulting. Some recent switches have been to investment advice, currency hedging, risk management, post retirement medical valuation, etc. Clearly some SOA members will want to switch to general insurance or have already done so. The SOA must provide courses and/or examinations to bring existing members up to speed. This one time effort follows similar efforts by the SOA or AAA in providing qualification for Health Benefits, CERA, ERISA EA’s, etc.

    Likelihood of future merger of organizations. Some history is of interest. The British Institute and the Scottish Faculty just merged. The organization is called the Institute and Faculty of Actuaries. Fellows may use either the FIA or FFA designation. “ Communities “ of members exist in Hong Kong, India, Kuala Lumpur, Luxembourg, Singapore, Shanghai, and Beijing. In addition examinations have been given in many countries that were or are part of the British Commonwealth.

    ASPPA has extended its reach to a former organization of pension actuaries.

    As mentioned earlier the SOA is the result of the merger of one organization started by Midwestern stock insurance company actuaries and another by East Coast mutual insurance actuaries. Some actuaries had completed examinations for fellowships in both organizations. The office location was selected to be Chicago because train travel was more accessible.

    The CAS was formed by actuaries engaged in worker’s compensation insurance. Its education and examination program now parallels much of the SOA structure in finance and risk. The CAS has expanded its interests into developing countries in Asia.

    There are many areas where the SOA and CAS now cooperate –joint early examinations, the Actuarial Foundation, ABCD, CERA, the AAA, the CCA, the IAA, IACA, regional actuarial clubs, etc. Clearly there is economic justification for a merger of the CAS and SOA. The elimination or reduction in costs of duplicate facilities, staff expense and foreign expansion could provide welcome relief for employers paying membership dues for 2 to 5 or more actuarial organizations. The contraction to one research/education institution will offer a public relations benefit eliminating explanations of why we have two and how they are different.

    While the CAS has currently indicated its desire to remain independent, over time this position may change, just has it has in the other mergers listed above.

    I congratulate President Brad Smith and the Board of the SOA for taking this bold step.

    Comments on SOA Decision to Add a Property-Casualty Track

    By Conrad M Siegel FSA (1959) MAAA (1965)

    Great decision – what took so long? The Board argues that to compete in the world market for students and future members we need a general insurance track. I agree. In the developing countries it makes no sense to ask students to sit for both SOA exams and CAS exams while our competitors offer the complete package in one set of examinations and one dues payment. The rapid growth of the economies of East Asian countries with populations exceeding one billion is opening the need for actuaries as the need for insurance and benefits grows.

    When I was writing my SOA examinations in Canada there were less than 5 FCAS actuaries in Canada. That would have been the ideal time to cover general insurance subjects since we regarded the US and Canada as the territory the SOA served. In fact if a merger was appropriate, the 1949 merger of the Actuarial Society of America and American Institute of Actuaries might well have included the CAS to provide a comprehensive organization in the two countries.

    I began to attend IAA and IACA meetings and marveled at the European actuaries who were fluent in several languages and in all aspects of insurance and benefits. Recently I had dinner with an Israeli consulting actuary and he proceeded to tell me of assignments he had in pensions, automobile insurance and health benefits. He couldn’t understand why the SOA didn’t cover general insurance.

    I had lunch with a retired FSA who is teaching compound interest mathematics to actuarial students at a major public university. The conversation turned to recommendations each of us was making to students as to which examination route to take – SOA or CAS? It turned out that we both were recommending the CAS route.

    We both had spent the major portion of our careers in pensions. We gradually found we were shifting from creative benefit and funding designers to become government compliance officials. Furthermore the number of single employer private company plans insured by the PBGC dropped from 112,000 in 1985 to 27,000 in 2009. Further that number includes many plans that have frozen benefit accruals and are waiting for changes in interest rates and/or asset prices to enable them to deep six their plans and drop PBGC coverage (and their actuaries!).

    The defined benefit plan attrition has already and will continue to reduce the need for actuaries and create significant unemployment or early retirement in this sector of SOA membership. The SOA section of LinkedIn lists available job offers in all fields where actuaries are employed, but almost none are for US pension actuaries.

    The second reason for recommending the CAS route to students is the uncertainty caused by the move of the federal government into the health benefit arena. Opportunities in the health field may become curtailed.

    The general insurance route has the advantage of state regulation, giving 50+ different legislator/regulators the opportunity to experiment with new ideas on a state basis.

    Now let’s look at the economic reasons why a farsighted student may decide to go the CAS route. Money!

    The inside front cover of a recent issue of contingencies has an advertisement by an actuarial recruiting firm which shows two graphs of salary data. They fitted this data to least-squares lines. For FSA’s the formula for average compensation related to years of experience is $107,710+ 5,562*(years experience). For FCAS’s the formula is $91,824+ 8,401*(years experience).

    Putting the two lines in one graph shows the following

    The FCAS line overtakes the FSA line in the 6th year. Over 33 years the FCAS total exceeds the FSA total by $1,250,000. While the source of the salary data may be questioned, my point is that this is what the student sees when he or she opens the magazine.

    Actuaries have a tendency to switch careers over their working lifetime. Many qualified working for life insurance companies and then switched to pension consulting. Some recent switches have been to investment advice, currency hedging, risk management, post retirement medical valuation, etc. Clearly some SOA members will want to switch to general insurance or have already done so. The SOA must provide courses and/or examinations to bring existing members up to speed. This one time effort follows similar efforts by the SOA or AAA in providing qualification for Health Benefits, CERA, ERISA EA’s, etc.

    Likelihood of future merger of organizations. Some history is of interest. The British Institute and the Scottish Faculty just merged. The organization is called the Institute and Faculty of Actuaries. Fellows may use either the FIA or FFA designation. “ Communities “ of members exist in Hong Kong, India, Kuala Lumpur, Luxembourg, Singapore, Shanghai, and Beijing. In addition examinations have been given in many countries that were or are part of the British Commonwealth.

    ASPPA has extended its reach to a former organization of pension actuaries.

    As mentioned earlier the SOA is the result of the merger of one organization started by Midwestern stock insurance company actuaries and another by East Coast mutual insurance actuaries. Some actuaries had completed examinations for fellowships in both organizations. The office location was selected to be Chicago because train travel was more accessible.

    The CAS was formed by actuaries engaged in worker’s compensation insurance. Its education and examination program now parallels much of the SOA structure in finance and risk. The CAS has expanded its interests into developing countries in Asia.

    There are many areas where the SOA and CAS now cooperate –joint early examinations, the Actuarial Foundation, ABCD, CERA, the AAA, the CCA, the IAA, IACA, regional actuarial clubs, etc. Clearly there is economic justification for a merger of the CAS and SOA. The elimination or reduction in costs of duplicate facilities, staff expense and foreign expansion could provide welcome relief for employers paying membership dues for 2 to 5 or more actuarial organizations. The contraction to one research/education institution will offer a public relations benefit eliminating explanations of why we have two and how they are different.

    While the CAS has currently indicated its desire to remain independent, over time this position may change, just has it has in the other mergers listed above.

    I congratulate President Brad Smith and the Board of the SOA for taking this bold step.

    Comments on SOA Decision to Add a Property-Casualty Track

    By Conrad M Siegel FSA (1959) MAAA (1965)

    Great decision – what took so long? The Board argues that to compete in the world market for students and future members we need a general insurance track. I agree. In the developing countries it makes no sense to ask students to sit for both SOA exams and CAS exams while our competitors offer the complete package in one set of examinations and one dues payment. The rapid growth of the economies of East Asian countries with populations exceeding one billion is opening the need for actuaries as the need for insurance and benefits grows.

    When I was writing my SOA examinations in Canada there were less than 5 FCAS actuaries in Canada. That would have been the ideal time to cover general insurance subjects since we regarded the US and Canada as the territory the SOA served. In fact if a merger was appropriate, the 1949 merger of the Actuarial Society of America and American Institute of Actuaries might well have included the CAS to provide a comprehensive organization in the two countries.

    I began to attend IAA and IACA meetings and marveled at the European actuaries who were fluent in several languages and in all aspects of insurance and benefits. Recently I had dinner with an Israeli consulting actuary and he proceeded to tell me of assignments he had in pensions, automobile insurance and health benefits. He couldn’t understand why the SOA didn’t cover general insurance.

    I had lunch with a retired FSA who is teaching compound interest mathematics to actuarial students at a major public university. The conversation turned to recommendations each of us was making to students as to which examination route to take – SOA or CAS? It turned out that we both were recommending the CAS route.

    We both had spent the major portion of our careers in pensions. We gradually found we were shifting from creative benefit and funding designers to become government compliance officials. Furthermore the number of single employer private company plans insured by the PBGC dropped from 112,000 in 1985 to 27,000 in 2009. Further that number includes many plans that have frozen benefit accruals and are waiting for changes in interest rates and/or asset prices to enable them to deep six their plans and drop PBGC coverage (and their actuaries!).

    The defined benefit plan attrition has already and will continue to reduce the need for actuaries and create significant unemployment or early retirement in this sector of SOA membership. The SOA section of LinkedIn lists available job offers in all fields where actuaries are employed, but almost none are for US pension actuaries.

    The second reason for recommending the CAS route to students is the uncertainty caused by the move of the federal government into the health benefit arena. Opportunities in the health field may become curtailed.

    The general insurance route has the advantage of state regulation, giving 50+ different legislator/regulators the opportunity to experiment with new ideas on a state basis.

    Now let’s look at the economic reasons why a farsighted student may decide to go the CAS route. Money!

    The inside front cover of a recent issue of contingencies has an advertisement by an actuarial recruiting firm which shows two graphs of salary data. They fitted this data to least-squares lines. For FSA’s the formula for average compensation related to years of experience is $107,710+ 5,562*(years experience). For FCAS’s the formula is $91,824+ 8,401*(years experience).

    Putting the two lines in one graph shows the following

    (graph wouldn’t print )

    The FCAS line overtakes the FSA line in the 6th year. Over 33 years the FCAS total exceeds the FSA total by $1,250,000. While the source of the salary data may be questioned, my point is that this is what the student sees when he or she opens the magazine.

    Actuaries have a tendency to switch careers over their working lifetime. Many qualified working for life insurance companies and then switched to pension consulting. Some recent switches have been to investment advice, currency hedging, risk management, post retirement medical valuation, etc. Clearly some SOA members will want to switch to general insurance or have already done so. The SOA must provide courses and/or examinations to bring existing members up to speed. This one time effort follows similar efforts by the SOA or AAA in providing qualification for Health Benefits, CERA, ERISA EA’s, etc.

    Likelihood of future merger of organizations. Some history is of interest. The British Institute and the Scottish Faculty just merged. The organization is called the Institute and Faculty of Actuaries. Fellows may use either the FIA or FFA designation. “ Communities “ of members exist in Hong Kong, India, Kuala Lumpur, Luxembourg, Singapore, Shanghai, and Beijing. In addition examinations have been given in many countries that were or are part of the British Commonwealth.

    ASPPA has extended its reach to a former organization of pension actuaries.

    As mentioned earlier the SOA is the result of the merger of one organization started by Midwestern stock insurance company actuaries and another by East Coast mutual insurance actuaries. Some actuaries had completed examinations for fellowships in both organizations. The office location was selected to be Chicago because train travel was more accessible.

    The CAS was formed by actuaries engaged in worker’s compensation insurance. Its education and examination program now parallels much of the SOA structure in finance and risk. The CAS has expanded its interests into developing countries in Asia.

    There are many areas where the SOA and CAS now cooperate –joint early examinations, the Actuarial Foundation, ABCD, CERA, the AAA, the CCA, the IAA, IACA, regional actuarial clubs, etc. Clearly there is economic justification for a merger of the CAS and SOA. The elimination or reduction in costs of duplicate facilities, staff expense and foreign expansion could provide welcome relief for employers paying membership dues for 2 to 5 or more actuarial organizations. The contraction to one research/education institution will offer a public relations benefit eliminating explanations of why we have two and how they are different.

    While the CAS has currently indicated its desire to remain independent, over time this position may change, just has it has in the other mergers listed above.

    I congratulate President Brad Smith and the Board of the SOA for taking this bold step.

  • Conrad M Siegel FSA says:

    Sorry about printing my comment twice. The graph wasn’t accepted by the software.

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