Some Things to Think About
Arthur J. Schwartz
It's election time and holiday time, and the telemarketers seem to be relentless this season in calling up and conducting opinion polls. A recent telephone poll began with the usual queries: which candidates I liked, my position on Iraq and global warmingwhich was all fair game. Then they wanted personal information on me! The type of job I held (the interviewer was a bit flummoxed by "actuary"), my age, income, and degrees. Since I could see where the conversation was headed, I decided to have a little fun with her. To be an actuary, I told her, I needed to study law and statistics. So I told her I studied law and human rights in Havana, and then I did my post-graduate thesis on statistics by studying with the Pirahã tribe in Brazil (whose only words for numbers are one, two, and many).
Speaking of elections and polls, I recently dreamed that I was in the foreign country of Galbina at election time. In my dream, I'm in the ballot box. The following choices are presented for the office of president: Joe Galbina, Mary Galbina (his wife), Tommy Galbina (their seven-month-old infant), and Spottie Galbina ( their seven-month-old Labrador retriever). Before making my choice, I consider how fortunate that in Galbina, I actually have a choice of candidates for president
(In my dream, I pull the lever to vote for the dog. He may not be too bright, but he knows how to enjoy his time off, and he's tough on those pesky squirrels.)
Does the CAS Need an Ambassador or Two or Three?
In the past few years, the CAS, much to its credit, has undertaken sweeping changes to its election procedures. These changes grew out of two task forces, the first headed by John Purple in 2000 (members were Regina Berens, Chuck Bryan, Bill Carpenter, Ira Kaplan, and John Purple), and the second headed by Susan Witcraft in 2002 (members were Jo Ellen Cockley, Ann M. Conway, Janet L. Fagan, C.K. "Stan" Khury, Howard C. Mahler, Michael J. Miller, Deborah M. Rosenberg, and Susan E. Witcraft). All members of those task forces should take a bow! The CAS election process is more open to anyone who wants to run than ever before. This assures the Society of passionate, committed leaders serving at the highest levels. The opportunity for CAS members to keep informed of current events at the board level and to submit their own comments, if interested, has been improved with the publishing of the board's minutes and agenda for its meetings on our Web site.
There remains one area that might possibly need a closer look. The CAS has annually "elected" someone to the president-elect office. There's a touchy word, "elected." Let's say that we've been presented with a single candidate, most of the time, and we have dutifully flipped the levers in the ballot box for our "chosen one." Can there be a "chosen two?" Or a "chosen three?"
After making some informal inquiries about why we have had only one candidate to "choose" from, the reason comes down to time. The president spends about half of a normal work year on CAS activities. That level of commitment makes the office generally suitable only for those who are retired, or about to be, or for those who are self-employed, or for those whose employers are unusually understanding. The large time commitment greatly limits the pool of people who otherwise would make good leaders.
Perhaps the CAS needs an ambassador, a prime minister, or a chief poobah? Basically someone, or several someones, who carry out certain duties now held by the president, freeing the president to do more long-range planning for the Society. What a wonderful development! With a time commitment more in line with work-related needs, more qualified candidates would present themselves to run for the office. It would be nice to vote for one of several choices.
And so for my opinion (drum roll please)! I recommend that the CAS set up a task force to study the president's time commitments and to see if some commitments can be met by others. That's itbut that's a pretty large task!
I hope no one misunderstands me. I am very much pleased with our current and previous presidents! If asked to vote for each one again, in a one-person election, I would certainly do so (in preference to a write-in vote for the dog)! A real vote, though, implies a choice. Otherwise, we can simply elect an additional person to the board and have the board choose someone from their midst. At least they would have about a dozen choices, which is about eleven more than I have
Can the CAS and SOA cooperate by offering a joint designation?
Can another actuarial organization, such as the SOA, the Faculty of Actuaries in England, or the Institute of Actuaries in Australia, offer an education in non-life contingencies as good as the CAS? If the SOA can offer an optional exam path in life, health, pensions, or finance, can they offer an exam path in non-life contingencies? Taking it a step further, can any of these actuarial organizations use the same study materials as the CAS has developed? The answer to these questions is a resounding "Yes!" Knowledge, especially in the Internet-based world, is increasingly transferable and increasingly available.
The syllabus of every actuarial organization outside the United States and Canada includes a non-life component. All that such an organization needs to offer is one exam on basic aspects of non-life ratemaking, reserving, and reinsurance; and another exam on advanced topics of non-life ratemaking, reserving, and reinsurance; and their actuaries would receive an education pretty comparable to that of the CAS. Of course they would lack an understanding of our accounting, laws, and regulatory structure, but they may attain a mastery of those through additional self-study.
In the United States and Canada, the designation I receive from the CAS or SOA allows me to practice on only one "side of the house" (in life or non-life contingencies). Yet a designation in any other country in the world allows me to practice on both "sides of the house." Now that the CAS is signing Mutual Recognition (MR) agreements with some of these international organizations, the likelihood that a new student from a foreign country would choose to take CAS exams is very low. It makes more sense for that new student to take the FIA or IAAust exams. They can then practice on either side of the house in their own country, and, if they come to the United States or Canada, they can obtain their Fellow designation by Mutual Recognition. There is no rational reason for a foreign student to limit their future employment opportunities by taking the CAS or SOA exams.
I propose a new designation: FRC, Fellow in Risk Contingencies. An FRC is someone who has passed some exams from each Society, and who would be qualified, in the eyes of both Societies, to sign actuarial Statements of Opinion.
Let's consider the advantages of this suggestion:
- The FRC could practice on both sides of the house in the United States and Canada. Therefore it would be attractive to those who want a designation comparable to a foreign Fellow.
- The FRC has an incentive to pursue just a few additional exams to get an FCAS or an FSA.
- The value of the current designations (FCAS, ACAS, FSA, and ASA) is preserved. There would be no confusion as to the meaning of the FRC versus any of the current four designations.
- The new designation allows the CAS and the SOA to offer an exam path to foreign students that is more attractive than the FIA, because they can practice on both sides of the house if they later move to North America. The foreign student does not have to obtain a designation by MR; that student is already qualified!
- The new designation does not require the CAS or the SOA to create any new exams. Indeed we can build on the joint exams so that the FRC only has to take a few more exams (beyond the three joint exams) from each society. The travel time could be set at a level so that it's comparable to the travel time of a foreign Fellow.
- The new designation eliminates or minimizes the possibility that the SOA would create its own non-life exam track.
- The FRC would be a blockbuster designation with immediate worldwide acceptance because it would be offered by both key North American actuarial organizations. It would carry unquestioned and exceptional international prestige.
- The FRC would fill a gap for SOA students desiring a possible future practice in the non-life field and fill a gap for CAS students desiring a possible future practice in the life, health, and pensions fields.
- The FRC would allow the CAS to draw on the SOA's existing resources internationally (exam centers, testing methods, and other resources) rather than trying to build a competing international network ourselves.
- As the lines between life and non-life insurers blur, the ability to practice on both sides of the house will become more important. This will be one effect of a) the Gramm-Leach-Bliley Act, and b) increasing internationalism with foreign insurers that handle both types of risk.
- Employers may favor someone who can practice in multiple business units as the line between life and non-life insurers blurs.
- The new designation would be a natural future designation to swap for a foreign Fellow's designation. For example, FIA for FRC or vice versa.
The new FRC designation would require unprecedented cooperation between the CAS and SOA to keep the travel time about the same as that of obtaining a Fellow from the Faculty of Actuaries in England or the Institute of Actuaries in Australia.
The paradigm of the FRC is that of two neighboring colleges, each with complementary course offerings, choosing to offer a joint degree. Some courses would be taken at one school and some courses at the other school, recognizing each school's unique expertise and resources.
This arrangement is rather common today. Most colleges offer credit for course work taken at other accredited colleges. Most colleges, especially those in the same geographic area, offer credit for certain courses that they do not offer, yet which round out a student's knowledge. In this light, the CAS "course offerings" nicely complement the SOA "course offerings," and vice versa!
I hope no one misunderstands me. I do not recommend a merger of the CAS and SOA! Nor is my proposal intended to be a step along that path! Rather, in a global world, I think it makes increasingly more sense for a North American designation that would allow the holder thereof to practice on both sides of the house, just as can be done in any foreign country. My proposal is intended to respect the unique resources and expertise of each organization.
The SOA already offers some non-life contingencies on their syllabus. What if they expanded that to a complete exam path? Would the CAS respond by offering a life exam path? There would be more gained through cooperation.
The new FRC designation is a natural evolution that does not diminish the value of any current designation, but draws on the strength of each organization's expertise. I predict current students in the United States and Canada who are forced to make a difficult choice today would receive the new designation with enthusiasm. I recommend that the CAS set up a joint task force with the SOA, to explore this concept. Both societies would benefit.
The two issues described above are among the more important issues facing the CAS today. Whether my opinions prompt you to say "Aye, Mate!" or "No way, Jose!" please feel free to send your thoughts on these topics by clicking the link below. Thank you; we all gain from a thoughtful discussion!