The following is the Address to New Members that Roger Hayne gave at the 2023 Annual Business Session at the CAS Annual Meeting in Los Angeles.

Welcome to all new members of the CAS, an organization now with more than 10,000 members. Wow! To put that in a bit of perspective, when I joined, I was one of less than 900. No, that wasn’t the size of my ACAS class but of the entire CAS.

We have come a long way. Along the way, the CAS and our members have been instrumental in applying data science to solve insurance problems, using those tools to tease out patterns hidden in vast quantities of data. You can say our members have been instrumental in applying “artificial intelligence” to insurance problems. But will we be the victims of our own success?

If you listened to local Los Angeles television news over the past five or six months, you would have heard just how serious some see AI as a threat. The Writers Guild of America went on strike for 148 days with AI being a significant bargaining point. The actors in SAG-AFTRA have also been on strike since July, again with AI being a significant concern. These groups literally put their money (their earnings) where their mouth is when it comes to concerns about AI.

A few years ago, an Oxford University/NPR study estimated that “47% of U.S. workers have a high probability of seeing their jobs automated over the next 20 years.” In addition, they estimated that in that time there’s about a 21% chance that a machine will be able to do an actuary’s job.

In comparison they put that chance at about 98% for bookkeepers, 89% taxi drivers, and 96% for restaurant cooks. On the other hand, head chefs stood only about a 10% chance, college professors (something I used to do part time) 3%, while it’s 0.3% for mental health and substance abuse social workers.

Compared to some of these, our jobs seem pretty secure, but we still have something like one chance in five of being replaced by machines. Maybe a more optimistic view is that about 20% of what we are doing now can be done better by a machine in the future. Other similar studies done since this one offers different percentages, but not necessarily radically different results.

We should look at this as an opportunity. Calculators were once seen as a threat to actuaries. Very early in my career I can recall hearing old timers say that when programmable calculators were first introduced, some consultants worried they would reduce the billable time from their staff. We now see that automation simply freed up time to do things humans could do better.

What are those things? What separates those jobs that have a high chance of being replaced by machines and those with a low one? Generally, those jobs with a low chance of being replaced by machines require creativity, collaboration, negotiation, problem solving, and human interaction in some combination. These are things that we humans can do well and that seem to be difficult to automate (at least in the foreseeable future).

So, to help assure our continued future, we might want to think of embracing problem solving, creativity, collaboration, negotiation and, the hardest for the stereotypical actuary, human interaction. No more looking at the other person’s shoes!

My wife loves telling stories of early CAS meetings we both attended. To hear her tell it, we all were looking at our own shoes during the receptions. All right, maybe a bit of an exaggeration, but in all honesty, only a bit, and I was probably one of those most closely examining my own polish. She knew how important it was to be able to work with people. Relationships I built at those meetings and working in the CAS have lasted my entire career and helped me on both a professional, and more importantly, a personal level.

We should embrace human interaction.

We should not fall prey to the idea that there is “one right way” to solve a problem.

Teamwork or collaboration is a hallmark of a truly strong actuary. The reserving actuary needs to understand company operations and collaborate with financial and claims people to better interpret reserving analysis. The ratemaking actuary needs to understand not only the data but the market in which the company operates, but also work with underwriting and sales professionals. The valuation actuary works as part of a team, as does the actuary working in risk management.

In short, we should embrace teamwork and collaboration.

We P&C actuaries are at home with problem-solving. The wide range of hazard risks that we deal with makes it very difficult (impossible?) for a single method or type of analysis to work in all the situations we face. As such we deal with new problems quite often.

Part of problem solving is understanding the underlying nature of what we are estimating. Data science can give us insight into patterns that may exist and may give “accurate” forecasts as long as things do not change. Unless we can provide not only estimates, but also understanding what affects those estimates, we have really not solved the problem.

We should embrace problem solving.

Creativity often works hand in hand with problem solving. When faced with a problem that normal techniques cannot address, we are forced to think creatively to find new approaches. Our syllabus is quite good at exposing us to a wide range of methods to deal with a large portion of the hazard risks we will face. Our exams test whether we select the most appropriate one to deal with a particular problem. However, we should not fall prey to the idea that there is “one right way” to solve a problem. Historically our exams tended to promote that idea, though current steps toward more integrative questions help recognize creativity more in our exams.

Our oldest son has a BFA in photography, a creative craft based on rather technical science. I too dabble in photography and have learned quite a bit from him. Photography is almost natural for an actuary. The interaction of light reflected off a subject and film speed (I use the old term though film is nearly impossible to find), shutter speed, lens opening or f-stop, and lens focal length, appeals to the quantitative bent of an actuary. In addition, these “parameters” can be manipulated to achieve certain effects in the final image. All this is a science and appeals to the actuary’s mathematical talents.

The art comes in with seeing the image you want to capture. A good way to expand your creativity is to challenge yourself to capture interesting images, with minimal use of Photoshop. I take advantage of my son’s experience and knowledge to challenge me. If you don’t have access to a built-in mentor, photography classes in local colleges or adult education facilities might be good places to look. These classes first deal with photography mechanics, fundamentals and techniques. Once that foundation is set, there are various exercises to expand the photographer’s creative eye.

A word of caution, though. The NPR/Oxford calculator gives a 2.1% chance of the job of photographer being replaced by machine. However, that is not to say automation is not a threat. Current feature-rich digital cameras and photo editing software have automated a significant portion of the mechanical part of a photographer’s job. Now a lot more folks can take technically correct photos and rely on Photoshop to hide their mistakes. Just look at social media sites. In short, it is now much easier to be a mediocre photographer.

Truly accomplished photographers will still rise above the crowd. Just as automation makes it easier to take technically correct photos, it will mean it will be easier for non-actuaries to do actuarial calculations. As the true photographer, the true actuary must understand not only the mechanics and fundamentals but be able to apply them to create their final product. This understanding is a value we bring to our principals.

We should embrace creativity and understanding.

This leaves the last characteristic of a future-proof job – negotiation.

We all know that actuarial estimates are just that – estimates. As such, there is usually a “range of reasonable estimates” and a range of methods for obtaining estimates, making negotiation a key feature of an actuary’s job. Just about all of us have had or will have to engage in negotiation at some point or another.

What sets us apart though, is the fact that we are professionals and not just practitioners. We have the code of professional conduct, a duty to our profession and our principals, essentially putting limits on our ability to negotiate. This also is a significant asset for us. Our principals can trust we will abide by our code of conduct.

I had a direct experience of this difference not too long ago. I was hired as an expert witness in a case involving statistical sampling and inference. Not going into too many details, the opposing expert was a Ph.D. in econometrics from Princeton and came up with a rather convoluted (and creative) methodology to come up with his own inference. I was able to show in court, using marbles and buckets, that he could get any result he wanted with his methodology.

The judge ended up ruling that his methodology was essentially “junk science” and not admissible as evidence. As a result, I have it in writing, from a Federal judge, that “[the opposing expert] was not able to show Hayne has lost his marbles.” I cannot believe that a Ph.D. in econometrics from Princeton was not aware that what he was suggesting had no basis in statistical theory, yet he went forward with this “junk science” with the result that his client essentially had the crux of his case thrown out of court. I could never have done the same thing, because as an actuary I have to abide by our Code of Professional Conduct.

We should embrace negotiation and professionalism.

In summary, I have long seen technology taking over portions of the actuary’s job. Rather than eliminating the job, technology has freed me to be more creative in my problem solving, allowed me more time to collaborate and interact with others, granted me more time to delve into the data to give my principal a better insight into what is happening in the company, and given me the ability to understand the limits of my negotiation.

With care and foresight, you too can survive and thrive with technological change — embrace the future.

Thank you and congratulations on a fantastic accomplishment.