What It's Like to Work in the Bureau Environment
by Stephanie Gould, CAS Candidate

Before working at a bureau, I often wondered what the work was really like in a bureau. It seemed to be this big mysterious thing.

Now that I have worked at one, when asked the question, "What's the difference between working in a bureau environment and in an insurance company," I often feel puzzled. What is the difference? My work is the same. I still get up in the morning, go to work, and then come home at the end of the day (maybe bask in the Florida sun - there's a difference!).

On a daily basis, it seems that the only real distinction is that it's a different company with a different boss and a "typically" different atmosphere associated with a company. But there certainly has to be something to truly distinguish the two environments.

Recently, because of growing competition in the insurance industry, both insurance companies and bureaus face the challenge of a changing landscape. A bureau is also faced with the challenge of an uncharted role in the future. Although I come into work and leave at the same time as in an insurance company, talk of uncertainty can take on a slightly different character in a bureau environment.

Are the customers identical in the two environments? Of course not. In an insurance company, the biggest customer is the insured. In a bureau, the direct customer is the insurance company while the insured is an indirect customer. The bureau's direct customer, simply put, is more sophisticated. In the insurance company, you worry about giving the best rate; in the bureau, you have to take that concern into account, and at the same time treat all customers equally.

How much data do you need? The insurance company is obviously limited to whatever internal or external data it can get. If it is an entirely self-sufficient company, you know all of the little quirks in the data. If it is not, then actuarial creativity or judgment can play a big part.

In a bureau, where you have all carriers' data, you would think that the world is your oyster. Sometimes it definitely is. But validating the data is a big challenge, requiring the actuary to deal with individual company quirks. Because the data comes from multiple sources, it becomes even more pertinent to ensure that all the data is "on the same playing field." This can become tedious for the student to test. But a bureau's data is definitely more credible, especially for the small states.

Getting new data is very different in the two environments. At an insurance company, if I want to create a new rating plan requiring new data, my biggest barrier is getting past systems constraints. Most of the time, ways can be found to break through that barrier. In a bureau, generally I will have most of the data necessary to create that new rating plan. Sometimes, however, special changes require that additional data be collected. In this case, I would ask the member companies for the data. Not only am I limited by their systems constraints, but I am limited also by their desire to provide the information. For competitive or other reasons, the member company may not want to give the extra data. In this case, I have to live with the data I have.

With different customers and more data, the research arena in a bureau environment can actually be pretty exciting. The Experience Rating Plan parameters that we develop from testing are as close to representative of the entire countrywide population of insureds as it can possibly be. Trending, loss development, and indications encompass a much broader base in a bureau than in an insurance company. The large volume of data can lead to more intricate and complex methods of determining the numbers. In an insurance company, you might not get this advantage.

The drawback in a bureau, from more than just a research standpoint, is that getting the ball rolling on new and exciting products can be slower than at a company. In an insurance company, you are restricted by internal concerns and inefficiencies and the insured's response to the new product. The bureau has these problems as well; but, in addition, it has the concern of approval by its primary customers, the member companies.

Everything else for me here in a bureau is definitely comparable to what I've seen at insurance companies. We still need approval from the state Departments of Insurance. The rate filings process can still be long and tedious. We are still updating old computer programs to lighten the load of creating a filing package. We have the same inter-departmental communication issues. Research is still research. Pricing is still pricing. And, of course, I still have to take the *!?# exams.

Stephanie Gould is an Actuarial Associate at National Council on Compensation Insurance.