November 2004 Actuarial Review

From the Readers

Dear Editor,
I found unintended humor in the August 2004 issue of The Actuarial Review. The lead story on the front page, "CAS Board Debates the Status of Associates," describes the Task Force on Classes of Membership recommendation to eliminate an interim milestone in the exam process, the ACAS designation. The article right below this carries the headline, "Why Interim Milestones are Important." It struck me as funny….
Shantelle Thomas, FCAS
Dear Ed I. Tor,
The "Random Sampler" by Clive Keatinge in the February 2004 edition of The Actuarial Review raises several points deserving further discussion. To this end, here are some contrasting viewpoints—mine.
1. Should the Proceedings be discontinued? The Proceedings currently serves multiple functions including being the formal record of the CAS and being a forum for reviewed papers. Regardless of what we call it, as a professional society we need a formal record and this responsibility cannot be achieved through a joint publication. In regard to the second purpose, a casualty publication is needed to achieve the proper focus and emphasis on casualty actuarial science. Relying on the North American Actuarial Journal as a sole source for casualty actuarial publication of reviewed articles is inappropriate, whereas encouraging casualty actuaries to publish more widely is totally appropriate. To sum, we need the Proceedings.
2. The Actuarial Control Cycle. On reading Understanding Actuarial Management: The Actuarial Control Cycle, edited by Clare Bellis, John Shepherd, and Richard Lyon (The Institute of Actuaries of Australia, 2003), I felt like the man who was told that he would have to learn to respirate after breathing all his life. Concepts like testing rates in light of experience, assessing the uncertainty in loss reserves, establishing feedback loops and other controls in data flows, and managing projects to successful completion are inherent in being a casualty actuary and have been for almost a hundred years. I could recognize new vocabulary in the text, but I did not find any recommendations that would actually help casualty actuaries breathe better. To introduce another metaphor, a rose by any other name would smell as sweet. For this reason, I see little benefit in expending effort to incorporate the linguistics of the Actuarial Control Cycle into our professional education. Until it clearly enhances our ability to provide value to clients and employers it is an unnecessary frill.
3. Enterprise Risk Management (ERM). Clive is absolutely right in saying that ERM deserves more attention by casualty actuaries. In fact, the field is still young with much work to be done in establishing basic definitions and concepts. Now is the time to demonstrate the importance of casualty concepts to an actuarially sound foundation for ERM.
4. Restructuring the Actuarial Profession/Unifying Actuarial Societies. Checks and balances are crucial to American politics and protection of the rights of minorities. In a professional sense, the checks and balances of multiple actuarial societies are crucial to protecting the rights of casualty actuaries. A single actuarial society in the United States immediately creates the need for a countervailing society. Phrased differently, I would no more trust SOA leaders to represent the interests of casualty actuaries than, if I were a life actuary, I would trust CAS leaders to represent the interests of life actuaries.
Restructuring is not needed to advance the profession at this time and might never be needed. Members' accomplishments and contributions to economic value are far more telling.
Casualty actuarial science is a wonderfully diverse profession. I look forward to refining my opinions in light of further commentary in The Actuarial Review.
Alfred O. Weller, FCAS
Clive Keatinge responds:
I agree that the North American Actuarial Journal should not be the sole source of reviewed casualty papers. As I stated in my article, I believe we also need "to join with actuarial organizations outside North America to create a new journal that focuses on topics of interest to practicing casualty actuaries worldwide." If we expect to attain the stature required by the CAS Centennial Goal, the Proceedings will not do for this purpose. We need a casualty journal that is published more than once a year and that does not contain extraneous material. I agree on the need for a formal record of CAS activity, but it does not need to be mixed in with journal articles. The Actuarial Control Cycle is an idea around which to structure actuarial education, not just a text to be added to the syllabus. The particular book to which Mr. Weller refers may or may not be appropriate as source material for us. Experienced actuaries like Mr. Weller may find the Actuarial Control Cycle to be of little use; those new to the profession may feel otherwise. I find it interesting that Mr. Weller chooses to point to the government of the United States as a model. The United States has a single central government with checks and balances built in to ensure that no one branch dominates the others. I agree that this is an excellent blueprint for the actuarial profession in the United States.