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Opinions
A United Actuarial Profession...
AGAINST
John B. MahonAs a CAS candidate I take issue with Clive Keatinge's proposal to replace the CAS and the SOA with a single new organization (The Actuarial Review, November 2001). This would be ill-advised for the CAS membership. The resulting organization would be mostly members from the former SOA. A quick review of the various actuarial society Web sites shows about 3,400 CAS members to about 16,000 SOA members. More importantly, the ratio of Fellows is about one to four (2,061 CAS Fellows to 8,545 SOA Fellows). In both Societies voting privileges are granted upon Fellowship. Given the overwhelming weight of life actuaries in this new organization, one would expect that most committees and votes would represent the majority viewpoint of the life actuaries. The current proposal contains an internal governance board for casualty actuaries to protect the interests of casualty actuaries. The only thing that I see changing here, as compared to the current organization, is that a "CAS-like" board would now need to fight off unwelcome decisions that come from higher up, from a majority that has its own interests.
The CAS currently sponsors many major events, including the spring and annual meetings, and ratemaking, loss reserves, and reinsurance seminars. Once a single organization is created, all the dues, organizational staffs, and other resources will be pooled, and then reduced because one organization is more efficient. The casualty governance board will have to duel for access to these resources to continue to organize and present these seminars and meetings. Any contests between the two governances undoubtedly will be arbitrated from above, where the four-to-one majority of life actuaries will shape the final result. What has improved here? From the point of view of casualty actuaries, there are fewer resources available, and they have to fight to access them.
The proposal boasts that interaction between casualty and other actuaries will be increased by a joint organization. Although this will cause modest synergies, the much greater synergistic effect is garnered from casualty actuaries gathering and sharing ideas of common interest, and it seems that this is threatened.
There is no need for the current basic educational systems of the CAS and the SOA to be coordinated. In both systems the passing student is qualified with an impressive depth of knowledge. The issue of coordinating the educational systems of the CAS and the SOA hinges on trade-offs. The benefit anticipated is more efficient use of resources, and the cost is less flexibility in exam content. History has shown that casualty actuaries consistently want different content in their exams as compared to life actuaries. These differences have been shown in the current problems with Exams 3 and 4, where the exam content has been determined by groups dominated by life actuaries and the casualty actuary students' performance has degraded. Is it really worth a small savings in examination resources to give up the ability to tailor the education to the needs of the practice?
The two-journal versus one-journal argument is unpersuasive. There are pros and cons to either situation. The current two-journal situation provides more freedom for the individual disciplines to referee their own journals; the articles are naturally grouped by interest areas. With the proliferation of the Internet, access of published material across practice lines is not a problem. Any interested person can view the contents of either of these journals. One cannot see sufficient motivation for reorganizing the entire structure of actuarial societies based on collecting actuarial publications into one journal.
Comparison of United States actuarial practice with that in the rest of the world may not be the best way of determining the future for the CAS. After all, there is more casualty insurance in the U.S. than anywhere else. In the United States, the actuarial profession evolved separate casualty and life professions in response to increasing complexity of casualty insurance, specifically, the advent of workers compensation insurance. In other countries, the actuarial profession develops based on the evolving economic, legal, and political environment of the country. The actuarial organization in a country is likely to be "right" for that country. There is no assurance that it is right for another country with a different economic, legal, and political history.
History and nature abound with examples that show that the natural progression is from generalization to specialization. For example, Sir Isaac Newton did state-of-the-art mathematics, physics, and astronomy. Today, these are each scientific disciplines in their own rights. In the natural world, one needs look no further than Darwin's evolution theory for examples of progression from generalization to specialization. It is no surprise that the U.S. actuarial profession developed the specialization represented by the evolution of the two Societies. We are the only ones, simply because we happened to get there first.
Foreign countries represent a huge diversity of economic, political, and legal environments, which are powerful influences in shaping the actuarial profession that develops within each country. Indeed, it was the promulgation of workers compensation coverage in 1911 that is almost entirely responsible for the existence of the CAS. It is ridiculous for any actuarial professional society to think that it can form itself so that it can seamlessly interface with all or most foreign actuarial professions. While it is important to continue to forge relations with actuaries around the world, this should not be a prime motivation for altering the structures of professional organizations in the United States.
Reviewing the constitution of the CAS we are reminded that the organization is dedicated to advancing actuarial knowledge concerning property/casualty issues. It is not clear how deciding to merge and losing identity and control would further this cause. The leadership of the CAS is better encouraged to continue to pursue the issues that it is presently considering, such as reducing travel time and studying the loss of students to competing careers. I would further encourage the CAS leadership to initiate the process to resume control of Exams 3 and 4, so that they can determine the content and passing scores that are optimal for the property/casualty practice.