Key Characteristics of the Actuarial Leader
Richard Fein, Ph D, FCAS, MAAA
RIF Consulting, LLC
rfein@rifconsulting.com
CAGNY Meeting June 2010
The Actuary as Leader
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Agenda
• Goals
• Characteristics of Teams of Professionals
• Guiding Principles
• Expectations of Stakeholders
• Characteristics of Leaders of Pros – Chief Actuary
• The Rubber Meets the Road
• Conclusion
Characteristics of Professional
Teams
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Working with Professionals
Many discussions and characterizations are available
Good site: Bob Kizlik reference on my site
• Self motivated to learn profession
• Takes on responsibilities and obligations
• Cannot dictate/coerce professionalism
• Work “with” as opposed to “manage”
Characteristics of Professional
Teams
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Identified need/service
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Defined body of knowledge which supports decision
making
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Highly Educated/Broad Areas
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Protracted preparation process
High level of public trust
Strong service motivation
Authority to practice from the client
Accountability by the practitioner
Guiding Principles
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CAS Credentialing
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CAS Statements of Principles/Exposure Draft of
Foundational Statements
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Regulatory/Financial/Jurisdictional Requirements
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ASOP’s
Codes of Professional/Ethical Conduct
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Precept 3 : 3-1, 3-2, 3-3
Precept 8 : 8-1
Personal Beliefs - Individual, Family, Community
Stakeholders
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Board of Directors, Owners/Shareholders
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Auditors, Regulators, Others
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CEO, CFO, Chief Underwriter, Executive Management
Team
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Actuarial management staff, Actuarial team
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Family, Friends, Community
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Yourself
Expectations
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Expectations of Stakeholders
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Honesty & Integrity
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Professionalism
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Knowledge - Business & Technical
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Credible Understandable Analysis of Alternatives
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Acknowledgement/Communication of Risks
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No surprises
Key Characteristics of Chief
Actuary
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Clear line of sight to CEO/Audit
Committee/Board
Acceptance of and support for Authority over
Actuarial Matters - Who sells vs. Who books.
Credibility among Executive Management
Experienced, qualified and communicative team
with open 2-way communication at all levels training and rotations? 2 edged sword.
Assures team’s high level of active knowledge of
firm’s businesses and operations
Key Characteristics
Chief Actuary
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Identifies and shares risks and uncertainties of
estimates with Executive Management
• Has clear understanding of assumptions and
bases for conclusions drawn by support team and
across operating areas in which teams operate Consistency matters
• Formalizes communications with key stakeholders:
Senior Executive Management, Claims,
Underwriting, Pricing, Reinsurance, Finance
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Clear, well-documented presentation to
management of support for methods,
estimates and relevant changes
Key Characteristics
Chief Actuary
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Assures stable and responsive methodologies,
updated and supplemented by objective tests and
special studies
Vision/Proactive
Anticipates future areas requiring additional
analyses/data
Assures a sound, high quality, relevant database
to support methods - Who owns/secures?
Assures clear professional and managerial
direction to all staff
Assures continuing education and training
The Rubber Meets the Road
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Example - Sample Quotes
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“You need to be a team player”
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“We can’t afford to price it that high”
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“Forget the tail, it gets washed out by competition”
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“This is an important client/quarter/year/result/etc.”
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“Ignore that aberration - it won’t happen again”
The Rubber Meets the Road
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“Just take 3 year averages and use them - can’t go wrong
as it’s a time tested and utilized methodology”
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“There goes the bonus!”
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“My supervisor insists on looking at all my assumptions rude and unprofessional.”
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“Guess what, my supervisor doesn’t look at any of my
assumptions, unless the overall result is unexpected - no
worries for me.”
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“The Auditor is challenging our results - YIKES, you did
what???”
The Rubber Meets the Road
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Words have power:
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“We can’t afford another hit to income this
quarter/year” “This kills our earnings”
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Leader
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Team Members
“Just use the “tail” factors we developed in 19XX.
Used the last year. We always use them. “
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Leader
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Team Members
Conclusion
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Environment - Professional, Business, Personal
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Broad Spectrum of Stakeholders
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Broad Expectations - At Times Conflicting
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Miscommunication is high risk
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Theoretical vs. Actual
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Had to pick one: Personal Accountability
Key Characteristics of the Actuarial Leader
Richard Fein, Ph D, FCAS, MAAA
RIF Consulting, LLC
rfein@rifconsulting.com
CAGNY Meeting June 2010