Actuaries in Other Countries

1. 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

2. 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

3. Overview of Non-Life Actuaries in Other Countries

4. Overview of Non-Life Actuaries in Other Countries

5. Actuaries in Other Countries 1999 CAS Seminar on Ratemaking Update on Mutual Recognition of International Actuarial Bodies Mary Frances Miller

6. Actuaries in Other Countries 1999 CAS Seminar on Ratemaking A European Perspective Alice Underwood

7. 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.”

8. 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.

9. 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

10. 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.

11. 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

12. 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

13. 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

14. But here comes the part you REALLY want to know:what about NON-ACTUARIALstuff?

15. 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.

16. 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

17. 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

18. Bureaucracy • Once again these issues are strongly country-dependent: • Work permits • Other government paperwork • The hiring process • Notice period • Pensions • Taxes

19. Potential “Downsides” of Living Abroad • Culture shock • Language barriers • Expense • Isolation  Professional  From family and friends  From US politics and popular culture

20. 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

21. 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!)

22. Actuaries in Other Countries 1999 CAS Seminar on Ratemaking The Actuary in the UK Paul Gates

23. 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

24. Institute of Actuaries’ “Home”

25. Faculty of Actuaries’ “Home”

26. 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

27. UK Actuarial Demographics

28. Do they need us? • Life assurance - statutory role • Pensions - statutory role • P&C - no statutory role • Exception is Lloyd’s • Future?

29. 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

30. Where are UK P&C Actuaries? Here's a clue...

31. Pricing Role of Actuaries • Primary business & reinsurance • International flavour in London • Data quality varies • Market bodies • Market information

32. 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

33. 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

34. 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

35. 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

36. Institute of Actuaries • Founded 1848 • Professional interest • Exams • CPD • Papers • Sub-committees • General Insurance Board

37. Training • 100 Series • actuarial principles • 300 Series • four practice areas • 400 Series • specialisation in one area • 200 Series • communications • CPD requirements (practising certificates)

38. 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

39. Into the Future...

40. Into the Future... • P&C • Actuarial work to grow! • consultancies • brokers • reinsurance (global) • underwriting? • market rationalisation • new areas of activity