Transcript STATUS REPORT TO THE CAS MEMBERSHIP Long Range Planning Committee November 16, 2005 © 2004 KPMG LLP, the U.S.

STATUS REPORT TO
THE CAS MEMBERSHIP
Long
Range
Planning
Committee
November 16, 2005
© 2004 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A.
The Road to 2014: the Centennial Goal /
Long Range Planning Committee Report
Presenters:
Aaron Halpert, Chairman CAS Long Range
Planning Committee
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Larry Haefner, Member CAS Long Range
Planning Committee
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2004 - 2005 LRPC Goals and Objectives
Focused heavily on helping CAS achieve Centennial Goal:
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1. Developed and performed an environmental scan (both inside and
outside the CAS) to evaluate whether alternative strategies were
needed in order to reach the Centennial Goal (CG).
2. Presented list of “key risk factors”, identified in the environmental
scan, to the CAS Board and facilitated discussion of them.
3. Reviewed the current set of SAM goals based upon information
developed from the environmental scan, and recommended revisions
and/or additions to the goals to ensure achievement of the CG.
4. Oversaw the work of the Centennial Goal Implementation Task Force
to assure that the CAS Operational Planning embraces the themes
expressed in the CG and supporting SAM goals.
5. Monitored activities of the CAS to evaluate progress toward achieving
the SAM Goals.
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Completed Environmental Scans
Scans completed in January, 2005:
 Inside
the CAS
 Other
Actuarial and Insurance Organizations
 Other
Professions and Organizations
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Scan results placed on CAS website and reported to
the CAS Board.
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Scans - Inside the CAS
Evaluated 8 focus areas:
1.Volunteerism,
2.Internationalism,
3.Directions in which actuaries want to grow,
4.Demographic changes,
5.Changes in work responsibility,
6.Value of CAS membership,
7.Changing attendance at CAS meetings
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8.Education
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Scans - Other Actuarial and Insurance
Organizations
US Actuarial Organizations




Society of Actuaries
American Academy of Actuaries
Conference of Consulting Actuaries
The Actuarial Foundation
International Actuarial Organizations

Canadian Institute of Actuaries

Institute / Faculty of Actuaries

Institute of Actuaries of Australia
Other Insurance Organizations
AICPCU (CPCU)

RIMS (Risk and Insurance Management Society)

AIMR (CFA Exams)

PRMIA (Professional Risk Managers Int’l Assoc)

SOFE (Society of Financial Engineers)
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
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Scans - Other Professions and Organizations
 Financial
 Rating
 Regulatory
 Academic
 Legal
Community
Profession
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 Employers
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Scanning Process — Methodology
 Data
Analysis
 Interviews
with members/officers
 Review
of other organization’s website and/or
strategic plans
Surveys
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 MAP
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Scanning Process — Key Questions
CURRENT CHALLENGES: What is the biggest risk factor (e.g.,
adverse reserve development, microscopic focus, etc.) facing
actuaries today?

LONG TERM CHALLENGES: What are the biggest
challenges/risk factors facing actuaries over the next 10 years?

LONG TERM OPPORTUNITIES: What are the biggest
opportunities that you feel the actuarial profession could
capitalize on over the next 10 years?

WORKING WITH OTHER PROFESSIONS: What do you see
developing in your field of practice that may have a significant
impact on the way actuaries think, respond or work with you to
achieve your field of practice goals?
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
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What did the SCANS tell us? – Inside the CAS
1. INTERNATIONALISM AND CAS MEMBER PERSPECTIVES:Internationalism and the global
perspective of CAS members is a crucial consideration in identifying appropriate strategy for
achieving the Centennial Goal. To this end, we conducted a survey of the Membership
Advisory Panel to better understand CAS member perspectives on the globalization of the
casualty actuarial profession.
2. ENHANCING CAS MEMBER RESPONSIBILTIES: While a significant (and perhaps growing)
percentage of our membership is currently focused on ratemaking and reserving issues,
actuaries are aspiring to enhance their responsibilities in corporate risk management, and
senior level management. Business acumen and business communication skills are key
barriers keeping actuaries from growing into these roles.
3. FELLOWSHIP EXAMINATIONS: While the number of casualty actuaries writing the higher
examinations is flat or decreasing, the number of Fellows continues to grow at a faster pace
than the SOA.
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4. VOLUNTEERISM – DEMOGRAPHIC MONITORING: Levels of CAS members’ participation
need to be monitored in light of demographic changes in the composition of the membership
(e.g. number of retirees, number of members residing outside US, number of members
serving other societies).
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What did the SCANS tell us? –
Other Actuarial and Insurance Organizations
1 COMPETITION ON GLOBAL ISSUES: On the GLOBAL part of our Centennial Goal
side of the Centennial Goal, the CAS is encountering only modest competition from
other actuarial organizations. The lack of international focus among our own
membership is the greater risk to achieving this part of the Centennial Goal.
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2. COMPETITION ON RISK MANAGEMENT: Other organizations may pose a much
greater threat to our achievement of the RISK INTEGRATION portion of the
Centennial Goal. Significant strides towards developing expertise in the area of risk
integration have been undertaken by other organizations (e.g. SOA, CFA, etc.)
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What did the SCANS tell us? – Other Professions
1. NEED FOR NEW SAM’S: The current SAM Goals do not seem sufficiently
comprehensive to address some of the strengths/weaknesses, risks or
opportunities noted by constituents outside of the actuarial profession.
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2. VIEW OF THE FINANCIAL COMMUNITY: In the context of the actuarial
profession’s desire to be seen the preeminent source in educating actuaries and
conducting research in casualty actuarial science, professionals in the financial
community seemed to think the profession was losing ground to other financial
professionals in areas including convergence (e.g., advanced capital
management techniques, enterprise risk management,…) and in areas of
structured finance (an area well-suited to applied mathematics).
3. LEADING EDGE IN MODELING: Professionals outside of the CAS expect
actuaries to be on the leading edge of harnessing ever-expanding computing
power to fuel advancement in actuarial science to the betterment of risk
management broadly. Actuarial involvement in the recent advances in
application of technology to personal automobile ratemaking (advanced pricing
techniques, data mining, etc.) may not be widely understood.
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What did the SCANS tell us? – Other Professions
4. ACTUARIAL CREDIBILITY: The credibility of the actuarial profession has been
damaged by the poor performance of insurance companies during the last soft
cycle. This view was shared by many constituents outside of our profession
(rating agencies, regulators, and the financial community). In the absence of a
coordinated effort to address and communicate changes within the actuarial
profession (implemented post-soft market), we face the risk of becoming
increasingly irrelevant in the eyes of many users of insurance company
financial statements.
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5. THE ACADEMIC COMMUNITY: A sampling of the academic community points to
concern that the actuarial profession may not be quantitatively prepared to
contend with sophisticated risks (enterprise risk management) or that
individuals with other educations (e.g., MBAs, CFAs) will be perceived as better
suited to contend with these challenges.
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Next Steps After Reporting Scan Findings
1.Develop recommended strategies for mitigating risks
identified in the six areas.
2.Recommend additional SAM Goals as necessary.
3.Review progress to date on current SAM Goals, and
identify areas of concern.
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4.Prepare a report to the CAS Board for consideration at
the November meeting.
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Key Risk Factors Uncovered in Six Areas
From the scans, the LRPC identified the following key
risk factors:
Competition on Risk Management
Internationalism
Marketing Actuarial Skills
Quantification Skills
Volunteerism
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Actuarial Credibility
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Competition on Risk Management – Bob Wolf, Chair
Key Focus Area:
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Recent failures of insurance companies and other financial
institutions have generated new demand for successful
management of risk-bearing organizations. Other
professional groups are seeking recognition in risk
management and rapidly moving into this area and drawing
significant attention. Indeed CAS members are not
generally perceived as among the most capable managers
of risk and risk-bearing entities.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Competition on Risk Management – Bob Wolf, Chair
Recommendations:
• Membership Buy-In

Enhance internal communication on the Centennial Goal and the tie to
Enterprise Risk Management.
• Resources


Increase CAS participation in the Joint SOA-CAS Risk Management
Section, the IAA Task Force on Risk Management, and the AAA ERM Task
Force.
Create a new ERM credential and public policy strategies on ERM.
• Leadership
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
Develop an international journal of ERM as a CAS/ERMII sponsored
research initiative.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Internationalism – Roger Hayne, Chair
Key Focus Area:
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One key aspect of the Centennial Goal is for the CAS to be
globally recognized as the pre-eminent resource in
educating casualty actuaries. However, the CAS is primarily
focused on North America, both on the part of our
membership in general and our image to the rest of the
world. There is a general lack of interest by our members of
the profession outside of North America.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Internationalism – Roger Hayne, Chair
Recommendation:
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•Build active working-level partnerships with existing
actuarial organizations that have a distinct general
insurance (non-life, property & casualty) practice, including
joint task forces or committees and would at least involve
cross-membership in each other’s committees.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Marketing Actuarial Skills – Kevin Bingham, Chair
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Key Focus Area:
Achieving the Centennial goal requires the CAS to be
recognized and acknowledged as the pre-eminent resource
for educating casualty actuaries in the traditional areas as
well as the newly emerging area involving risk integration.
To achieve this, we must gain broad recognition for the
skills and capabilities of our members. Casualty actuaries
are not recognized within areas outside of insurance.
Within the insurance space, we are not given sufficient
credit for what we do well. Our website does not attract
visitors from outside the profession.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Marketing Actuarial Skills – Kevin Bingham, Chair
Recommendations:
• Present ways to improve the CAS message within the
AAA/SOA Image Campaign.
• Develop a marketing campaign to enhance the image of
the CAS.
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• Create a staff actuary position working for the CAS to
speak at non-actuarial meetings to highlight the ways that
the actuary provide value.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Quantification Skills – Larry Haefner, Chair
Key Focus Area:
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Over the past fifteen years, a number of significant analysis
tools have been developed by professionals who were not
CAS members. These developments have led to the
perception by some academicians and some insurance
professionals that the CAS members have not continued to
enhance and improve their collective modeling skills.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Quantification Skills – Larry Haefner, Chair
Recommendations:
• Develop a wider audience for developments in
quantification methods produced by CAS members by


sponsoring research by CAS members to be presented in other
(refereed) journals; and
including more research by non-CAS members in CAS publications
• Build awareness of developments in quantification
techniques produced by other professional groups by

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
reviewing journals/papers from other groups identified by LRPC as
having similar type skills to us; and
creating additional partnerships similar to the recent one on
Enterprise Risk Management.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
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Volunteerism – Stan Khury, Chair
Key Focus Area:
The lifeblood of the CAS has been the willingness and
ability of CAS members to volunteer considerable time and
effort in support of various activities of the CAS. During a
time of increasing scrutiny of the performance of CAS
members and increasing opportunities to expand the reach
of casualty actuaries, it is critical for the CAS to maintain
(and even increase) the levels of volunteerism. However, a
number of factors are emerging which may make it more
difficult to maintain, let alone increase, levels of
volunteerism.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Volunteerism – Stan Khury, Chair
Recommendations:
• Review and evaluate the issue of volunteerism in the life
of the CAS from a strategic perspective with emphasis on
the following elements:




Annual cost of the CAS paying for all volunteers’ travel expenses
Possible employer resistance to granting time for CAS activities
Competing successfully with other life priorities
Identify and evaluate ways to better recruit members for senior
leadership positions (Board, VP’s, and PE).
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• Examine the 50% volunteer rate to determine its feasibility.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Actuarial Credibility – Aaron Halpert, Chair
Key Focus Area:
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Recent negative articles and reports concerning the
performance of the casualty actuarial profession
unfavorably impact our ability to achieve the CAS
Centennial Goal. The statements last January by Standard
and Poor’s, in particular, created the need for a quick
response by the CAS. More efforts, however, are needed to
maintain the reputation of our membership.
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Addressing the Key Risk Areas –
Six LRPC Subgroups Formed
Actuarial Credibility – Aaron Halpert, Chair
Recommendations:
•
Develop goals to monitor improvement in our reputation:




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

The difference between the actuary’s best estimate and the recorded
reserve for a sample of the insurance industry should approach zero.
Changes in the actuary’s best estimate of reserves over time should be
randomly distributed around zero.
Changes in legislation/regulation that would require management to record
the Appointed Actuary’s best estimate.
Salaries for Casualty Actuaries should rise at a greater rate than
comparable professions
The number of casualty actuaries employed by rating agencies should
quadruple in the next five years.
The pipeline of applicants for actuarial positions (examinations) would grow
more significantly than in the last five years.
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Results of November Board Discussion
1.The Board accepted the report of the LRPC.
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2.The Board charged the EC to develop an action plan
for each recommendation and present to the Board.
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Monitor CAS Progress on Achieving the SAM Goals –
SAM Goal Metrics
1.CAS staff has provided ongoing progress reports to
the LRPC.
2.On many SAM goals initial progress relative to
October, 2003 benchmarks seems encouraging.
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3.Focused efforts are underway to enhance the CAS
website in support of SAM goal #7.
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Future Work of the LRPC
•Review the Centennial Goal to determine if any
modifications are necessary.
 “International”
 Role
wording
of the actuary in risk integration
•Review the SAM Goals to determine if any
modifications are necessary.
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•Review progress towards achievement of the
SAM goals to determine if any modifications in
strategy are necessary.
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THANKS
FOR YOUR ATTENTION TODAY
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