Diversity, broadly defined, means appreciating each individual’s uniqueness and recognizing our individual differences as a source of strength. These differences can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs and political ideology among others. In the United States, diversity efforts generally refer to opportunities to increase the inclusion of women, as well as individuals from various races, ethnicities, religious affiliations, sexual orientations and differing abilities. It has been well-documented why diversity is important from society’s standpoint. As a nation founded on the key principle of equality, that goal will not truly be realized until all segments of society, including businesses, occupations and professions are composed of individuals having diverse backgrounds in proportion to their share of the general population. This article serves to highlight the reasons why increasing diversity and building an inclusive work environment is crucial to the future of the actuarial profession.

Why is diversity particularly important to the actuarial profession? Diversity allows us:

• To advance actuarial science’s body of knowledge: Today, many talented minorities with exceptional math, statistics and business skills are not exposed to the actuarial profession and are being heavily recruited into other science, technology, engineering and math (STEM) careers. Many potential employees with the ability to develop new techniques for managing actuarial risks may be in a different profession today, simply because they have never been exposed to the field.
• To ensure diverse points of view: As recently as the mid-60s, some companies underwrote and priced insurance products based on characteristics such as race that are now illegal. For years many of these rating variables were not appropriately challenged, in part because the majority of actuaries were from homogeneous backgrounds and largely oblivious to the controversial usage of certain variables. As the number of women and minorities in the profession increased, actuaries have found more objective, practical and causal risk classification plans to replace some of these inappropriate and illegal factors; this is in no small measure due to increased diversity of the profession.
• To improve the financial results of employers of actuaries: Employers want to attract the most talented employees who are likely to be successful at their companies. Financial success is defined as directly or indirectly improving revenues and ultimately profits. Employers are not solely interested in the theoretical advancement of actuarial techniques, but the practical benefits of actuarial work products that enhance the company’s financial results as well. Increasing the pool of talented actuarial candidates from diverse backgrounds increases the likelihood of employing people with the ability to positively impact financial results.¹
• To improve the overall diversity in the insurance industry: Actuarial science is one of the least diverse professions within the insurance industry. Moreover, many studies have shown that the insurance industry overall is not attracting its share of the Millennial generation, which is also the most diverse generation in the history of the United States. Millennials expect to see a diverse workforce throughout all the functions of a company. If they don’t observe a similar level of diversity to their generation, they may be less attracted to the industry.
• To contribute to the overall economy: While often employed by insurance companies, actuaries are also making an impact on other sectors through consulting, government and nontraditional roles. Many consulting actuaries provide risk management services to all sectors of the economy. Diversity plays a crucial role here since many clients will expect their service providers to mirror their diverse workforce. Clients who value diversity in all forms may be apprehensive of a service provider who doesn’t seem to share the same values. This could result in lost revenue and opportunities.
• To attract the best candidates to the profession: By excluding or marginalizing certain segments of society, we reduce our opportunity to attract some of the brightest and most capable candidates to our profession.

Diversity Benefits Many

Diversity in the actuarial profession is significant not only to the future of the actuarial science body of knowledge and to the profitability of employers of actuaries, but it is essential to actuarial practitioners as well.

• From the underrepresented community’s perspective: Having a higher percentage of underrepresented communities such as Black/African-American, Hispanic/Latino and Native Americans in the actuarial profession increases the number of potential role models for young people in their communities to emulate. This will, in turn, steadily increase the economic success of these respective communities as more members pursue lucrative careers in this field.
• From the actuarial candidates’ perspective: Actuary has been rated the number one profession² for many years in terms of compensation, work environment, stress levels and other factors. For individuals with an affinity for math, computers and a business environment, matched with the ability to pass the actuarial exams, this field can provide a rewarding career.

What We’re Doing Now and in the Future

There are a significant number of activities being undertaken by the actuarial professional societies and by academia to increase the diversity of the actuarial profession. For example, the primary efforts of the Joint CAS/SOA Committee on Career Encouragement and Actuarial Diversity are directed toward increasing the number of African-American, Hispanic and Native American actuaries.

Diversity is not only integral to the prosperity of our society but to each and every profession. Increased diversity benefits the actuarial profession in a myriad of ways including advancing actuarial methodologies, contributing to richer perspectives on various issues, improving financial results for employers and the industry, and increasing opportunities for underrepresented groups. Acknowledging that diversity and inclusion are essential to the future of the profession is only the first step. While many efforts are underway to address this gap, there is still much more to be done to make the profession mirror the larger society. All contributions to diversity, regardless of size, stand to benefit us all.

The question to you, dear reader, is what will you do next? What diversity initiatives are underway in your firm? How will you get involved in making the profession more inclusive?

Linda A. Shepherd, FCAS, MAAA, is a member of the Board of Directors and a past president of the International Association of Black Actuaries. Kwame Akil Davis, FCAS, is a consulting actuary with Towers Watson in Arlington, Virginia.

¹For more information on the financial impact of diversity, see “Why Diversity Matters,” McKinsey & Company (January 2015), http://www.mckinsey.com/insights/organization/why_diversity_matters.

²CareerCast, “The Best Jobs of 2015,” http://www.careercast.com/jobs-rated/best-jobs-2015.