|
|
|
Retired Members
IBNR—Important But Now Retired
by Arthur J. SchwartzThis is the first in a series of articles in which The Actuarial Review plans to interview our retired members.
The AR was lucky to catch up with Charlie Hewitt, who enjoys an active life with his wife on the sun-drenched coast of southern Florida. By way of background, our interviewee has written thirteen articles or reviews in the Proceedings since 1960, has chaired or served on numerous committees, and capped it off by serving as CAS president in 1972!
How did you get into the actuarial field?
I was a sophomore at Princeton. My math professor was also the dean, and he asked me, "What are you going to major in? What do you want to work at?" I did not know. The only advice I had was from my father, who advised me not to be a teacher. Well, the dean told me that a Gilbert Fitzhugh was going to be coming down from the Metropolitan Life Insurance Company to talk about a career as an actuary. I'd never heard of the career. I went, listened, and it seemed interesting. I took a summer job at Metropolitan; New York City seemed like a nice place. I decided to major in math, and I've never regretted my choice of a major or my choice of a career. [Editor's note: Fitzhugh was an FSA and FCAS who went on to become president of Metropolitan Life Insurance Company and president of the SOA.]
What have been some of the highlights of your career?
The article I wrote called "Credibility for Severity" (PCAS, 1970). I was reading an article by Hans Bühlmann and it all came together for me: What credibility really was and how it could be best put into words. I won the Dorweiler Prize for that article. Another major accomplishment was my work on the costing of no fault insurance. In the late 60's and throughout the 70's, no fault was a hot topic. A lot of states were interested. I testified in front of eight states and the U.S. Senate. What was the best way to price it? I had the advantage of [having] a study of data from 18 states. I developed the data, fitting distributions by size of loss. I concluded there might be a savings in metropolitan areas but an increase in more suburban or rural areas. The cost estimates varied by state. It's interesting that my employer, Allstate, was against no fault. But I testified according to what I thought was right, not necessarily the company's position.
What are the most notable things you've seen in the profession?
The size of the profession has grown. When I got my Fellowship in the 50's, there were only about 400 Fellows and Associates. About half of them were retired! Now it's wonderful to go to CAS meetings and see 1,000 people there! A lot more young people are going into the field. They're building on the foundation that we laid.
Is there any topic for research on which you have not seen a paper?
One area that's always intrigued me is the relation of Markov chains and Bayesian probability to a distribution. A Markov chain changes your probability step by step—each event changes your probability of events. If a distribution has a certain a priori probability, and you get some new data, how would that affect the probability curve?
How do you see the future of the actuarial profession?
I would certainly stress communication skills. I've done that in my Presidential Addresses. However, the profession will always have a niche for the pure mathematician. There's no such thing as a "standard" actuary. We all deviate a little from the mean! Another big area is globalization. Just look at what's happening tradewise. We are trading more and more with foreigners. Also, the U.S. is the only country with actuarial societies split between life and health and property and casualty. A merger seems inevitable.
What keeps you busy these days?
My wife and I are very active socially. In addition we have four kids! I play tennis three or four times a week. In our community here, we have a social group of retired insurance executives, and I'm the recording secretary of the group.
Do you think actuaries have better mortality than average?
Yes, I'm betting on it!
*****
If you're a retired actuary who would consent to an interview for this column, please call Arthur J. Schwartz at (919) 733-3284, x259 or send him an e-mail at aschwart@ncdoi.net
A Few Anecdotes from Hewitt's Illustrious Career The state of Colorado was holding a hearing on no-fault auto insurance. At the time, no-fault was a new concept. An insurance company had sent a vice president there, who began reading from a letter prepared by an actuary in the home office. An aggravated legislator, realizing that I was there to testify, interrupted the vice president. "For the first time ever, we have a real live actuary in the state of Colorado. I want to hear what he has to say and be able to ask him questions—not have some letter read to me by an actuary who is 1,000 miles away!"
*****
I was also present at a no-fault hearing in Des Moines, Iowa. One of the actuarial calculations suggested that a $500 medical bill threshold would reduce auto bodily injury premiums by 35 percent. Picking up on this, an advocate for the trial lawyers association suggested sarcastically, "Why not triple the threshold to $1,500 and reduce the premiums to zero?"
*****
In my salad days, I had instant recall of a great deal of facts. My mother-in-law persuaded me to go on an ill-fated quiz show called 21. This was the show where a contestant was supplied the answers in advance. When caught, he lied about it to a grand jury. This led to a criminal investigation and a trial. My role in all this was rather small. On the show, in my very first turn, I lost to a Ms. Nardroff. Shortly afterward, my employer, a firm of consulting actuaries, sent me to Saudi Arabia. A company there had requested a study of workers compensation rates. While I was in Saudi Arabia, the scandal broke. The New York Daily News decided to do a follow up with the other contestants to see if anyone else had been prepped with answers in advance. My wife took the phone call, and explained that I was not there because my firm had sent me to Saudi Arabia on a consulting job. The following day the Daily News reported: "We tried to reach Mr. Hewitt about this scandal but he had already left the country!"