Once in a while it becomes necessary to speak plainly and unambiguously. Can we talk? The SOA has decided to be hostile to the CAS and damaging to the actuarial profession.
For at least 40 years, the CAS endured numerous hostile takeover attempts by the SOA. Some attempts were overt, some covert. Most were camouflaged in benign language—such as the euphemistic “strengthening the actuarial profession” project. These attempts were uniformly unsuccessful for the single reason that none of the efforts could demonstrate any net positive value for members of the CAS or, more importantly, their clients and the public at large. The true purpose seemed to be one of benefitting the SOA in its attempt to survive and remain relevant in a deteriorating market for life and pension actuaries. At one point these efforts became so clearly desperate that they were parodied on these pages in the May 1997 issue of the Actuarial Review, under the title “How to Catch a Wild Hog.”1
The latest iteration of this quest kicked off in early 2012, when the SOA announced its intention to expand its portfolio to include general insurance (GI) with the aim of becoming the global leader in all actuarial practice areas. Concurrently, the SOA (1) conducted a fire sale, for a limited time only, by offering its FSA and ASA designations to CAS members at deeply discounted dues and soon after (2) unilaterally terminated the long-standing partnership with the CAS for the joint administration of the preliminary exams. It is difficult to mistake these heavy-handed actions for anything other than outright coercion, in an attempt at a hostile takeover of the CAS.
These attempts were uniformly unsuccessful for the single reason that none of the efforts could demonstrate any net positive value for members of the CAS or, more importantly, their clients and the public at large.
Nearly three years later, very few members of the CAS have accepted the SOA offer to add the SOA designation to their business cards. And those who did so retained their CAS affiliation. A curious and unintended consequence of the SOA actions is that during this same period, more than 20 CAS members who had dual memberships resigned their SOA affiliations, presumably in protest over the tactics of the SOA. These outcomes surely represent a huge disappointment for the SOA architects of this adventure. Moreover, these SOA actions, coupled with some other contemporaneous hostile actions aimed at the American Academy of Actuaries, contributed mightily to straining the deep, historical, and collegial relationships among the North American actuarial organizations.
Not yet convinced by the demonstrated failure of this adventure, in September 2014 the SOA renewed its offer to grant the SOA designation to CAS members. In a nutshell, the invitation contained the same old hash of arguments, still not offering any net positive value to CAS members or their clients. The SOA arguments make for truly thin gruel, easily debunked. In order of appearance in the SOA invitation:
- The SOA is well positioned to build the actuarial profession globally (especially in “developing nations”). This is an organizational goal and does precisely nothing for the individual actuary or his client. On the other hand, the CAS has been cooperating with all international actuarial organizations who seek to build their GI capabilities, as a partner, and not as a hegemon seeking global dominance.
- At SOA, an actuary can gain career flexibility by being able to move from one practice area to another without replacing [sic] credentials. This is misleading and diminishes the importance of qualification standards. The SOA fails to mention the requirement to meet actuarial qualification standards in order to be able to practice in another area. Instead, the SOA statement implies that this flexibility accrues to a casualty actuary simply by choosing to affiliate with the SOA if he or she wanted to practice in life insurance. It doesn’t. This value is illusory. Plus, the growth career opportunities are in the GI field, not the life and pension fields. While the authors of the SOA email see opportunities for their members to represent themselves as casualty actuaries with a minimum of additional qualification, they might have overlooked the Code of Conduct and the Qualification Standards.
- A CAS member can be part of the largest professional actuarial society in the world. Interesting, but useless, unsupported advertising hype. This argument is reminiscent of the Mongolian sailor bragging that he lives on the largest continent in the world—a boast of little consequence since Mongolia is landlocked and sailoring is by no means a valued occupation there. No value whatsoever accrues to the casualty actuary or his client by virtue of size. Instead, in essence, the SOA is inviting casualty actuaries to give up all the demonstrated benefits of belonging to the largest organization that is solely focused on their specialty.
- A casualty actuary can participate to help grow the GI practice across the world. The CAS is already doing that, in partnership with other actuarial groups around the world. Moreover, it is unclear how a society of life and pension actuaries has any ability to grow the GI practice across the world. A cynic might read this point as inviting the casualty actuary to “come, join us; help us bury the CAS.”
- The SOA offers a set of examinations in GI. The most interesting, and unstated, aspect of this argument is that the significant subject matter being touted by the SOA was written, for pay, by a couple of cross-over members of the CAS. The SOA has neither relevance nor qualification to credential GI actuaries with any assurance to the public. This is precisely why the Code of Conduct and the Qualification Standards exist: to prevent abuses such as those that would result from an SOA takeover.
- The SOA is beginning to develop professional development opportunities in GI [emphasis added]. This argument underscores just how bereft the SOA cupboard is of GI subject matter. Aside from the texts the SOA paid for, mentioned above, and a handful of articles in the North American Actuarial Journal, the GI literature cupboard of the SOA is essentially empty. Why would any member of the CAS go to the SOA professional development programs when he or she already has access to the best and broadest spectrum of professional education opportunities in this field? This condition casts even more doubt on the legitimacy of the SOA’s claim to offer GI actuarial credentials.
It is hard to believe, but this is it.
Results to date indicate that members of the CAS are not buying the value proposition offered by the SOA; they see through the gauzy and vacuous arguments. And the value proposition gets even worse when one considers that one who accepts the SOA offer has to pay two sets of dues for no good reason. Also, actuarial bulletin boards indicate that even members of the SOA see these moves not only as antithetical to the overall health of the actuarial profession, but also a waste of critical financial resources the SOA derives from member dues and their contributions.
The unfortunate thing is that this conflict is not necessary. Members of the SOA who want to practice in GI can simply take the necessary exams of the CAS. In the alternative, the SOA could seek out a mutual cooperation agreement with the CAS to facilitate all the things the SOA is trying to do without any of this acrimony and aggression. But then again, the most obvious solutions are not always obvious when hegemony is the goal.
The CAS is healthy, strong, and vibrant as it celebrates its Centennial. It is forging ahead into its second century with a great deal of energy and enthusiasm, supported by an enormously active and committed membership. The CAS community is incomparable. The CAS members not only know that, but they work hard to be the active life force that supports all aspects of its operations. The CAS has mapped out an ambitious future on many fronts. All of this will assure that the CAS will continue to prosper and improve all the businesses and lives it touches. Upward and forward.
K. “Stan” Khury, FCAS, is a past president of the CAS and editor emeritus of the Actuarial Review. The opinion presented here is his own and not necessarily that of the CAS, its staff or leadership.