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CAS Career Profile Actuary As Black Belt By Louis P. Sugarman, Candidate Representative to the Candidate Liaison Committee James Kunce, mild-mannered actuary and family-man, is a Master Black Belt. But this is not his hobby, it is his job title! Employers Reinsurance Corporation (ERC) is part of
General Electric (GE), where "6-Sigma" application of statistical methods
to business problems is a way of life. Motorola engineer Bill Smith is
credited with coining the term 6-Sigma to describe the goal of eliminating
variance from manufacturing processes out to six standard deviations,
resulting in fewer than 3.4 defects per million operations. 6-Sigma has
grown beyond manufacturing to become a pervasive business tool, with
companies such as GE claiming that 6-Sigma defines their core business
philosophy and culture. Those employees who complete GE 6-Sigma training
are named 6-Sigma Black Belts. Black Belts generally spend two years in a
special assignment Kunce leads a team of five Black Belts, one of whom is also an actuary. In addition to handling compliance and finance issues, their task is to improve the actuarial pricing and reserving for ERC's Commercial Primary Insurance Operation's $3B portfolio of business. Though 6-Sigma was originally an engineering discipline, it has also been applied in financial and accounting disciplines; there are entire journals and software packages devoted to this. The challenge for Kunce and his team has been to see where 6-Sigma insight can add value to fundamental actuarial analysis. It turns out that actuarial principles have required changes in the basic 6-Sigma calculations. 6-Sigma hypothesis testing or analysis of variance relies on simple averages: think of producing one-million units of product—each unit gets equal weight in any analysis. Similarly, in an accounting audit, sampling procedures assign an equal weight to each measurement. For actuarial analysis, however, one does not usually give equal weights toeach of the loss ratios from the past five years, nor does one give equal weight to policies with different underlying exposures. Kunce and his team have had to adapt the standard 6-Sigma software for their work, developing what they call the Data Ninja software package. Yes, that is really what they call it. In college Kunce studied physics and astronomy. The reality of starting a family, however, led him to look for a practical use of his math skills. His father-in-law suggested insurance. Kunce enjoys actuarial work, because he feels it gives him a license to learn. "Actuaries can go to any department in the company and ask serious questions." Kunce urges all young actuaries to take advantage of this license at every opportunity. There are always business problems, and Kunce suggests that being at the center of solving those problems is the main reason to be at work. "Why show up just to plug and chug routine formulas?" poses Kunce. Why, indeed, should you be satisfied doing routine work, when you could be a Master Black Belt? 
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applying their skills to a key business problem; this is a real
opportunity to do highly visible, cutting-edge work.