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Actuaries in Other Countries. 1999 CAS Seminar on Ratemaking. Paul Gates-Lane, Clark, Peacock (UK) Mary Frances Miller-Select Actuarial Services Mark Scully-Tillinghast – Towers Perrin Alice Underwood-Zurich Re North America. Nashville, March 11-12, 1999. Overview of Presentation.
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Actuaries in Other Countries 1999 CAS Seminar on Ratemaking Paul Gates-Lane, Clark, Peacock (UK) Mary Frances Miller-Select Actuarial Services Mark Scully-Tillinghast – Towers Perrin Alice Underwood-Zurich Re North America Nashville, March 11-12, 1999
Overview of Presentation • Introduction and International Overview (MS) • Update on Mutual Recognition among International Actuarial Bodies (MFM) • European Perspective (AU) • The Actuary in the UK (PG) • Discussion
Actuaries in Other Countries 1999 CAS Seminar on Ratemaking Update on Mutual Recognition of International Actuarial Bodies Mary Frances Miller
Actuaries in Other Countries 1999 CAS Seminar on Ratemaking A European Perspective Alice Underwood
The Continental European Insurance Industry • Many small, largely self-contained markets. (But how much will the Euro change this?) • Several different languages. • Various regulatory bodies and sets of accounting standards. • No statistical reporting agency such as ISO or NCCI. • Quality of companies’ internal systems and data collection varies from country to country. • The property-casualty actuarial profession is still relatively “new.”
Actuarial Training and Qualifications in Europe • Professional requirements vary from country to country exam systems academic degree programs on-the-job-training • The ability to speak several languages is extremely valuable. • Generally, a greater emphasis on academic education than in the US. (A Ph.D. in mathematics is considered a big plus.) • But just as in the US, European actuaries are a very diverse group.
Property-Casualty Actuarial Functions in Europe • Reserving: historically done by the accountants. • Pricing: historically markets had tariff rates, and/or pricing was done by underwriters. • Currently actuaries are moving into reserving and pricing roles. • Actuarial responsibilities can also include • Special data studies • Software development • Product development
Actuaries in the European Company Structure • There may not be an “actuarial department” as such. Even if the company has several actuaries, they may be scattered about the organization. • There may or may not be a Chief Actuary. • Actuaries and/or the Chief Actuary may report to the CEO, CFO, the Chief Underwriter, or to another officer.
CAS Actuaries in Europe • Taking exams Getting study time Expenses: materials, seminars, fees Exam (or Fellowship) raise, bonus, and/or promotion? • Staying in touch professionally Casualty Actuaries of Europe Seminars The internet
Some Oversimplifications and Stereotypes: the North American point of View European Actuaries North American Actuaries Mathematicians Statisticians Academics “first” Business people “first” Theory Data Over-complicated Mathematics Straightforward Methods
Some Oversimplifications and Stereotypes: the European point of View European Actuaries North American Actuaries Mathematicians Statisticians Highly Educated American “Educated” Elegant Models Number Crunching Mathematically Mathematically Sophisticated Unsophisticated
But here comes the part you REALLY want to know:what about NON-ACTUARIALstuff?
Language Issues • Yes, English is widely spoken. But… • You will be much more effective in business situations if you can speak (or at least understand) the local language… better yet, several languages. • Probably some of your coworkers will be uncomfortable speaking English. • You will almost certainly need to use the local language outside the office. • If you don’t speak the language perfectly, this is a limitation. But it’s one you can overcome.
Cultural Differences • Will vary, of course, from country to country. Possible issues include: • Shopping hours (and variety) • Women in the workforce and/or at home • Formality and informality • Other “working style” aspects • Meals -- type, length, importance • Government agencies • “Ugly American” syndrome
Lifestyle issues • Again the nature and importance of these issues will vary from country to country. But possible considerations include: • Married, or single? • Children • Pets • Cost of living • Vacation • Laundry
Bureaucracy • Once again these issues are strongly country-dependent: • Work permits • Other government paperwork • The hiring process • Notice period • Pensions • Taxes
Potential “Downsides” of Living Abroad • Culture shock • Language barriers • Expense • Isolation Professional From family and friends From US politics and popular culture
Potential “Upsides” of Living Abroad • Travel • Vacation • Tax savings? • Cultural enrichment • Developing language skills • New solutions to the “two body” problem • Isolation from US politics and popular culture
General Pointers • Set your preconceived notions aside. • Learn more about the country you’ll be working in. Topics: as previously mentioned Sources: books, internet, people • Brush up on your language skills. • Once there, watch and listen to how other people interact. • Be patient. • Don’t assume that the North American way of doing things is always the best way. (Or at least don’t say that is is!)
Actuaries in Other Countries 1999 CAS Seminar on Ratemaking The Actuary in the UK Paul Gates
Actuaries in the UK • Belong to these organisations : • Institute of Actuaries • England, Wales & Ireland • Faculty of Actuaries • Scotland • Others • CAS, SoA, CIA, IAA, European qualifications
UK Actuarial Demographics • Institute of Actuaries • Qualified actuaries in the UK = 3,500 • Non-qualified actuaries in UK = 2,900 • Institute fellows overseas = 1,300 • Faculty of Actuaries • Qualified actuaries in the UK= 700 • Non-qualified actuaries in UK = 400 • Faculty fellows overseas = 300
Do they need us? • Life assurance - statutory role • Pensions - statutory role • P&C - no statutory role • Exception is Lloyd’s • Future?
Do they want us? • P&C • Significant growth in 25 years • GISG conference attendees in 1984 = 90 • GISG conference attendees in 1998 = 350 • [GISG = General Insurance Study Group] • New areas of work • reinsurance companies • Lloyd’s managing agencies • consultancy start-ups
Where are UK P&C Actuaries? Here's a clue...
Pricing Role of Actuaries • Primary business & reinsurance • International flavour in London • Data quality varies • Market bodies • Market information
Pricing role of actuaries (2) • Casualty • US, UK, other countries • Medmal, D&O limited outside US • Motor • UK very large • not much US • GLIM • Reinsurance
Pricing Role of Actuaries (3) • Marine & Aviation • London market • airlines, light aircraft, airports, satellites • hull, cargo, rig, LMX • Property • direct (GLIM/stat modelling) • catastrophe • Financial reinsurance
Reserving role of P&C Actuaries • Similarities with US • same techniques • Bornhuetter-Ferguson • chain ladder • stochastic • sometimes even same business! • Sparse data sets - “actuarial judgement” • Unusual lines of business
Lloyd’s • Earlier problems • APH, LMX, late 80s/early 90s • Change in make-up of Lloyd’s • regulatory, corporate capital, Equitas • Actuarial involvement • statutory requirements • managing agents • Equitas
Institute of Actuaries • Founded 1848 • Professional interest • Exams • CPD • Papers • Sub-committees • General Insurance Board
Training • 100 Series • actuarial principles • 300 Series • four practice areas • 400 Series • specialisation in one area • 200 Series • communications • CPD requirements (practising certificates)
Exams • Syllabus changes frequently! • Currently 9 exams (moving to modular approach) • Requires fairly detailed knowledge of four practice areas - specialisation at late stage • Coursework less intense • Exams questions more random
Into the Future... • P&C • Actuarial work to grow! • consultancies • brokers • reinsurance (global) • underwriting? • market rationalisation • new areas of activity