Actuaries in Other Countries

1999 CAS Seminar on Ratemaking

Paul Gates-Lane, Clark, Peacock (UK)Mary Frances Miller-Select Actuarial ServicesMark Scully-Tillinghast – Towers PerrinAlice Underwood-Zurich Re North America

Nashville, March 11-12, 1999

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Overview of Presentation

Introduction and International Overview (MS)

Update on Mutual Recognition among International Actuarial Bodies (MFM)

European Perspective (AU)

The Actuary in the UK (PG)

Discussion

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Overview of Non-Life Actuaries in Other Countries

Country

Number ofNon-LifeActuaries

CertificationRequirements

Degree ofActuarial

Involvement

UK >300 10 Exams3 Years Work

High InvolvementActuarial Opinion onLloyd’s SolvencyReserves

Australia 80-100 10 Exams High InvolvementNo Statutory Role

New Zealand 1 Full Time Similar toAustralia

Ver y Little

J apan 250 8 Exams Low

France 200 UniversityCourses (3yrs.Actuarial Science)

Moderate

Italy 70 Degree inactuarial science1 Exam

Moderate

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Overview of Non-Life Actuaries in Other Countries

Country

Number ofNon-LifeActuaries

CertificationRequirements

Degree ofActuarial

Involvement

Germany 350 6 Exams3 Years WorkMath degree

ModerateStatutory role ofresponsible actuary

Brazil ???(1,000 total life

and PC)

Degree inactuarial science

Low but growingNew requirement tohold IBNR reserves

Netherlands 90(10 in truePC lines)

Masters in act.Science + 2 yrspart-time study or8.5 yrs part-timestudy PLUS workexperience withmentor, writtenreports and oralexam

Low in PC lines\,High for disability(reserves myst beauthorized) andmedical insurance

United States 2,900 10 Exams High

Actuaries in Other Countries

1999 CAS Seminar on Ratemaking

Update on Mutual Recognition of International Actuarial BodiesMary Frances Miller

Actuaries in Other Countries

1999 CAS Seminar on Ratemaking

A European PerspectiveAlice Underwood

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The Continental European Insurance Industry

Many small, largely self-contained markets.(But how much will the Euro change this?)

Several different languages.

Various regulatory bodies and sets of accounting standards.

No statistical reporting agency such as ISO or NCCI.

Quality of companies’ internal systems and data collection varies from country to country.

The property-casualty actuarial profession is still relatively “new.”

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Actuarial Training and Qualifications in Europe

Professional requirements vary from country to country exam systems academic degree programs on-the-job-training

The ability to speak several languages is extremely valuable.

Generally, a greater emphasis on academic education than in the US. (A Ph.D. in mathematics is considered a big plus.)

But just as in the US, European actuaries are a very diverse group.

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Property-Casualty Actuarial Functions in Europe

Reserving: historically done by the accountants.

Pricing: historically markets had tariff rates, and/or pricing was done by underwriters.

Currently actuaries are moving into reserving and pricing roles.

Actuarial responsibilities can also include

Special data studies

Software development

Product development

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Actuaries in the European Company Structure

There may not be an “actuarial department” as such. Even if the company has several actuaries, they may be scattered about the organization.

There may or may not be a Chief Actuary.

Actuaries and/or the Chief Actuary may report to the CEO, CFO, the Chief Underwriter, or to another officer.

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CAS Actuaries in Europe

Taking exams Getting study time Expenses: materials, seminars, fees Exam (or Fellowship) raise, bonus, and/or

promotion?

Staying in touch professionally

Casualty Actuaries of Europe Seminars The internet

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Some Oversimplifications and Stereotypes: the North American point of View

European Actuaries North American Actuaries

Mathematicians Statisticians

Academics “first” Business people “first”

Theory Data

Over-complicated Mathematics Straightforward Methods

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Some Oversimplifications and Stereotypes: the European point of View

European Actuaries North American Actuaries

Mathematicians Statisticians

Highly Educated American “Educated”

Elegant Models Number Crunching

Mathematically Mathematically

Sophisticated Unsophisticated

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But here comes the part you REALLY want to know:

what about NON-ACTUARIAL

stuff?

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Language Issues

Yes, English is widely spoken. But…

You will be much more effective in business situations if you can speak (or at least understand) the local language… better yet, several languages.

Probably some of your coworkers will be uncomfortable speaking English.

You will almost certainly need to use the local language outside the office.

If you don’t speak the language perfectly, this is a limitation. But it’s one you can overcome.

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Cultural Differences

Will vary, of course, from country to country. Possible issues include:

Shopping hours (and variety)

Women in the workforce and/or at home

Formality and informality

Other “working style” aspects

Meals -- type, length, importance

Government agencies

“Ugly American” syndrome

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Lifestyle issues

Again the nature and importance of these issues will vary from country to country. But possible considerations include:

Married, or single?

Children

Pets

Cost of living

Vacation

Laundry

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Bureaucracy

Once again these issues are strongly country-dependent:

Work permits

Other government paperwork

The hiring process

Notice period

Pensions

Taxes

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Potential “Downsides” of Living Abroad

Culture shock

Language barriers

Expense

Isolation

Professional

From family and friends

From US politics and popular culture

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Potential “Upsides” of Living Abroad

Travel

Vacation

Tax savings?

Cultural enrichment

Developing language skills

New solutions to the “two body” problem

Isolation from US politics and popular culture

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General Pointers

Set your preconceived notions aside.

Learn more about the country you’ll be working in.

Topics: as previously mentioned

Sources: books, internet, people

Brush up on your language skills.

Once there, watch and listen to how other people interact.

Be patient.

Don’t assume that the North American way of doing things is always the best way. (Or at least don’t say that is is!)

Actuaries in Other Countries

1999 CAS Seminar on Ratemaking

The Actuary in the UKPaul Gates

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Actuaries in the UK

Belong to these organisations : Institute of Actuaries

England, Wales & Ireland Faculty of Actuaries

Scotland Others

CAS, SoA, CIA, IAA, European qualifications

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Institute of Actuaries’ “Home”

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Faculty of Actuaries’ “Home”

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UK Actuarial Demographics

Institute of Actuaries Qualified actuaries in the UK = 3,500 Non-qualified actuaries in UK = 2,900 Institute fellows overseas = 1,300

Faculty of Actuaries Qualified actuaries in the UK= 700 Non-qualified actuaries in UK = 400 Faculty fellows overseas = 300

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UK Actuarial Demographics

Pensions

Life Assce

P&C

Investment

Other

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Do they need us?

Life assurance - statutory role

Pensions - statutory role

P&C - no statutory role Exception is Lloyd’s Future?

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Do they want us?

P&C Significant growth in 25 years GISG conference attendees in 1984 = 90 GISG conference attendees in 1998 = 350 [GISG = General Insurance Study Group] New areas of work

reinsurance companies Lloyd’s managing agencies consultancy start-ups

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Where are UK P&C Actuaries?

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Pricing Role of Actuaries

Primary business & reinsurance

International flavour in London

Data quality varies

Market bodies

Market information

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Pricing role of actuaries (2)

Casualty US, UK, other countries Medmal, D&O limited outside US

Motor UK very large not much US GLIM Reinsurance

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Pricing Role of Actuaries (3)

Marine & Aviation London market airlines, light aircraft, airports, satellites hull, cargo, rig, LMX

Property direct (GLIM/stat modelling) catastrophe

Financial reinsurance

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Reserving role of P&C Actuaries

Similarities with US same techniques

Bornhuetter-Ferguson chain ladder stochastic

sometimes even same business!

Sparse data sets - “actuarial judgement”

Unusual lines of business

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Lloyd’s

Earlier problems APH, LMX, late 80s/early 90s

Change in make-up of Lloyd’s regulatory, corporate capital, Equitas

Actuarial involvement statutory requirements managing agents Equitas

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Institute of Actuaries

Founded 1848

Professional interest Exams CPD Papers

Sub-committees General Insurance Board

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Training

100 Series actuarial principles

300 Series four practice areas

400 Series specialisation in one area

200 Series communications

CPD requirements (practising certificates)

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Exams

Syllabus changes frequently!

Currently 9 exams (moving to modular approach)

Requires fairly detailed knowledge of four practice areas - specialisation at late stage

Coursework less intense

Exams questions more random

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Into the Future...

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Into the Future...

P&C Actuarial work to grow!

consultancies brokers reinsurance (global) underwriting? market rationalisation new areas of activity