Actuaries Abroad

...Of Cabbages and Kings....

by Kendra M. Felisky-Watson

After the last issue of The Ac-tuarial Review came out, I decided to take an informal poll of U.K. actuaries since I thought they might have a view on the matter of Mutual Recognition. The response was interesting though not unpredictable.

Generally, Fellows of the Institute or Faculty recognize that the CAS qualification involves specialized training in property/casualty insurance. While they would like to get a "free" FCAS designation without taking any exams, they believe that it would be unfair since the non-life training of the FIAs/FFAs is much less rigorous. Similarly, they believe that it should not be possible for a FCAS to come to the U.K. and get a FIA since people would assume that this person could then calculate the appraisal value of a life company or perform a pension valuation.

Comments also ranged from:

"The CAS exams are regarded as excellent—wide ranging and challenging."

"[It is] Difficult to compare the two exams for difficulty since they are testing knowledge and ability in different ways."

"If you don't know which exams they took, then you don't know how qualified they are to perform certain functions."

The general consensus over here was that Mutual Recognition should not automatically be granted. Instead, a few extra exams should be required. For FIAs wanting to be FCASs, they should be required to take some of the CAS exams in order to boost their knowledge of property/casualty insurance. For FCASs wanting to be FIAs, they should be required to take some exams in life insurance and pensions to be on an equivalent knowledge base.

The other problem is that Mutual Recognition only seems to go one way. The CAS designation is highly respected in London and the rest of Europe. CAS actuaries are in high demand. Also, FCASs can already sign the Lloyd's reserving opinions. There is no reason for FCASs to want to become FIAs, though many people see a reason for FIAs to want to become FCASs.

Conference

The Faculty and Institute of Actuaries held their General Insurance Convention at the Grand Hotel in Brighton, 25 years since the first such convention was held in Norwich. The numbers attending have increased from around 30 to nearly 400, reflecting the vast increase in the involvement in actuaries in general insurance over that period.

Over the three days of the conference, ten new research papers were presented to the whole conference as well as lectures by a variety of guest speakers. In addition, more than fifty workshops were run on a wide range of topics for audiences of between 10 and 50. This year the General Insurance Research Organising Committee (GIRO) convention has branched out from its traditional emphasis on technical papers to cover wider corporate finance, professional, and public interest issues. This development reflects the greater maturity of actuarial involvement across all areas of general insurance, both at Lloyd's and in the company market.

Among the themes covered by the main plenary sessions were developments in the motor market, reinsurance and corporate finance, and reserving. There was also a session on professional matters, which included a lively debate on public interest issues within general insurance and the role of the actuarial profession in their resolution.

The quality of the papers presented to the GIRO conference was agreed to be of a very high standard, and many of them will be used as a good reference source for many years to come. A copy of the papers can be obtained from the Institute of Actuaries.

A variety of guest speakers were invited to the conference. Thomas Mack, of Munich Re, discussed the appropriateness of some of the reserving techniques currently in use. Tom Bolt, from the Berkshire Hathaway Group, gave an interesting comparison of the changes in the reinsurance market over the last 10 years, and Michael Tillett QC gave his views of the likely impact of the Woolf reforms from the legal perspective.

One of the most successful sessions was a "mock acquisition exercise," held on the last day, where delegates used electronic voting equipment to value an insurance company that was up for sale as various pieces of information were made available.

An informal opinion poll was also conducted with hand-held polling devices. There was a strong difference of opinion on the likely insurance cost of the year 2000 claims. While the majority felt that costs would not be great, a significant minority believed that the cost could be extremely high. Much debate took place in the final session as to how best to reserve for potential claims, particularly given the uncertainty over whether companies will be able to reclaim costs of remedial work. There was a strong view that it was all a bunch of nothing hyped up by information technology consultants who screwed it up in the first place. I guess by the time this article comes out, we will have a better idea of the potential exposure.

The event closed, as is now traditional, with the convention dinner on Friday evening where magicians provided entertainment. The after dinner speaker was Mary Spillane of Color Me Beautiful who gave a brilliant talk on how actuaries could present themselves better. An image consultant at a conference of actuaries! What is this world coming to?