Random Sampler

Globalization—Some Implications for the Actuarial Profession

by Patrick J. Grannan

The globalization of the business world has important implications for actuaries, both individually and as a profession. Actuaries are aware of globalization in a broad sense, but it is easy to underestimate the impacts, especially in cases where no direct effect is visible on the horizon.

A growing amount of business is being done across geographic and political boundaries. This trend will almost certainly continue, because an important driver is the advance of communications technology. It is impossible to predict many advances that will occur in the future, but two examples of advances that are likely to make it easier to do business internationally are better, cheaper video conferencing and instantaneous translation between languages by computer.

Globalization opens up a world of additional interesting work and location opportunities for actuaries who are interested and who develop the right skills. For many actuaries with no interest in moving to another country, it will be important to learn at least the basics of insurance and related fields in other countries, and to be able to work with actuaries based in other countries. The need for these capabilities can arrive suddenly as a result of a merger or acquisition.

What should actuaries do as a group, through the actuarial profession, to prepare for the more international world of the future? I would suggest two key goals. One is to make sure our basic and continuing education systems include appropriate international components, which will need to grow over time. The other is to facilitate the ability of actuaries in different countries to work together by helping them become colleagues and "speak the same language" to a much greater extent.

As one important step toward both of these goals, I believe we should make a major effort to develop more commonality among the basic education systems (for the CAS, this means the exams) of the various actuarial organizations around the world. Some of the education should differ among countries because of differing insurance coverages, accounting rules, and legal environments. There is a lot to be gained from comparing the education systems in detail, both to learn from one another and to bring about convergence where practical, while keeping our standards high. For example, there is little difference in the basic mathematical knowledge needed by casualty/general insurance actuaries in different parts of the world. The differences in basic education needs of actuaries are likely to be smaller between countries than between disciplines (for example, casualty and life insurance) within a country.

Another important step is to undertake efforts, probably via committees, to make it easier for actuaries to find relevant papers and other sources of information from different countries. Much of the material is accessible via the Internet, but finding it is not easy without help. This effort will be valuable in helping the best practices emerge and become more widely recognized. It will also lead to more convergence of practices, which will make it easier for actuaries from different countries to work together and will make actuarial skills more portable.

Each of these steps is simple in concept but will require a great deal of effort and creative, open-minded thinking. I would encourage others to develop and share their thoughts on how best to prepare actuaries for a future in which international issues will be increasingly important.