In an August 1993 article, “Entropy, Workers’ Compensation, and the Casualty Actuary,” Richard Fein writes about the importance of casualty actuaries in a time of rapid change in the insurance industry. His observations are still valid.
1. Actuaries serve business.
They measure the costs of alternative risk transfer and retention protocols. As such, they have to participate in the environment that businesses operate in: competition. We need to have the same skill sets that every business person needs today: financial skills, communication skills, management skills, and a heavier knowledge of the macro forces which shape the business operating environment.
2. Actuaries serve the consumer.
The risk transfer and retention product serves a valid social need. It is the safety net which permits the fluid operation of commerce and the protection for the economic stability of society. As such, actuaries should participate in the environment in which the product exists. Actuaries need to be students of the forces and trends which shape the fluctuating needs and demands, as well as the perceptions of the members of society . . .
3. Actuaries serve the actuarial craft.
Researchers need feedback on the direction for their work. We are lucky to have among us individuals with the skills that can advance the tool sets we use and expand our capabilities. We have to do a better job of communicating with these special craftsmen by identifying the areas in which we must become facile if we are to continue to serve. We need more tractable work on risk assessment and profitability, particularly the contribution to profitability of financial and risk transfer/retention products. Improvements on a micro scale, while technically interesting and satisfying, will do nothing to improve management’s ability to reach its goals . . .
4. Actuaries serve as professionals.
We have garnered a high degree of respect amongst ourselves and some of the people we contact, but an unfortunate number find us a profession to be tolerated (at times barely), overly analytical, and an obstacle. In the natural drive in many to “succeed” and be accepted, there is a tendency to try to fit in and perhaps acquiesce. There is a balance between adherence to rigid and dogmatic application of process, and the recognition that some of our methods of analyses, by their nature, do not directly consider all of the variables of risk. We need an even greater and widespread communication of the role of ethics and how to maintain professionalism under fire . . . .
Walt Wright, FCAS, is the former editor in chief of Actuarial Review.