My Entrepreneurial Itch
For most of my life the phrase, “Owns his own company” was synonymous with wealth and prestige. I mean, it was the epitome of success! Someone that owned their own company must be brilliant and hard-working and a true businessman or woman. To be honest, owning a business felt like an unattainable dream for this humble kid from Sacramento. Not that I gave it much thought, and perhaps that’s the point. I did not know anyone personally that ran their own business so the mythology of it led me to never consider it as a career option.
At the same time, there must be something funny in the water of the San Francisco Bay. It seems like every week I hear of new successful startup companies that are founded here. Obviously, with several of the biggest, most innovative tech companies in the world being headquartered here, the influence is palpable in terms of how ideas get swarming. It was only a short while after moving to the Bay Area that I read in a magazine about need-to-knows of starting your own business, and this article gave several examples of entrepreneurs that were putting everything on the line to build their own enterprise. That got my head swirling a bit. What did these people have that I didn’t? Yes, I was a math nerd but working in the insurance industry started to open my eyes to the world of business and economics and I started to contemplate how things get built from the ground up.
I will admit one other guilty pleasure of mine that helped to water the seedling of my entrepreneurial spirit – ABC’s Shark Tank. Without going into too much detail, Shark Tank is a reality show built around venture capitalism. Different small businesses from around the country come to the Shark Tank to pitch their ideas to 5 ‘Sharks’ or investors. They give every detail about their business and how and why they think it will grow to convince the sharks to invest in their company. Some of the ideas are quite good, some are rather terrible. What fascinates me about this program are the sharks. These men and women have all built their own businesses from the ground up. All of them come from humble backgrounds having been born with nothing or almost nothing and have built multi-million dollar businesses in a variety of industries. I love to watch Shark Tank to see how these sharks’ minds work. The questions they ask and the advice they give is intriguing to me. Anyway, there’s my plug, the wife and I never miss an episode.
Actuaries as Entrepreneurs
Many of the qualities that make a successful entrepreneur apply to the actuarial field as well. In order to succeed, both must be adept at problem solving and must be incredibly persistent. Obviously, a business knowledge of corporate finance and economics is also key. Truly successful actuaries do not wait around until someone gives them something to do, they proactively look for ways to improve things and do their own research of the data available. Similarly, a business owner doesn’t have someone telling them what to do, he/she must be driven enough to run things on their own.
So how do we mix the two? How might an actuary start his or her own business? Building an insurance or pension company is a huge undertaking and requires much more than the expertise of an actuary. You need experts to build a network (medical or otherwise), you need legal experts to comply with state and federal regulation, as well as other general business professionals such as sales, marketing and finance. I have known a couple of actuaries in my career who have attempted to start their own insurance companies but there are more accessible ways an actuary can succeed as a business owner.
Consulting –Large consulting companies such as Mercer, Aon Hewitt, Ernst & Young, Deloitte, etc. employ hundreds of actuaries that provide analysis for their clients. Because ‘consulting’ is a rather broad term, these actuaries’ duties can have a considerable range. A few reasons a consulting firm would be hired for actuarial analysis are: provide analysis for an insurance company that does not employ their own actuaries, provide analysis for large employer groups that self-insure their employee benefits, act as a broker between an insurance carrier and a purchasing employer group, consulting actuaries are also hired by government entities to audit or validate the work done by an insurance company.
But consider this: suppose an actuary, as part of a large consulting firm, works with a particular client for several years and builds a solid relationship with them. Who does the client trust and rely on more, the actuary or the consulting firm? Many actuaries in this position realize they can break off from the mother ship and start their own consulting firm as they already have the trust and experience of a few key clients. As a smaller firm, they can easily charge a much lower rate for their services as well. This is the typical route for an actuary with an entrepreneurial itch. They gain experience and relationships in the consulting world and then take a leap by becoming their own boss.
ERM – a less common, though growing field for actuaries is Enterprise Risk Management, or ERM. I will discuss ERM in more detail in a later post, I’ll just say for now that this is an analytical field that is becoming more and more important for all types of businesses. ERM is the identifying and quantifying of risks (ALL kinds of risks) for a company. Risk Management is usually something that gets attention AFTER a major disaster. ERM started becoming more popular after the 2002 failures of Enron and Worldcom and then even more so after the housing and financial collapse in 2008. However, in addition to fixing something after it breaks, companies are trying to be proactive and seeking out the possible risks in advance. Actuaries are uniquely qualified to root out the business, regulatory, financial, operational and other risks that face a business. Some actuaries are providing consulting to large and small businesses around which risks they are most vulnerable to and how to avoid or mitigate them.
Sports Fans Need Insurance
The rest of this post is to discuss some non-traditional ways that I have considered entrepreneurship as an actuary. Passion and drive are key elements to starting your own company, which is why I often think of sports related products when I consider new ventures. I’m going to throw out a couple of ideas that have floated around my head for ways to fill a need or fix a problem in the world of sports. The purpose of these ideas is not to actually give you something to run with, but to get your brain going on other ideas that may be out there.
Black Out Insurance
I hesitate to write about this start up idea because I had the idea in 2010 and though the business may have been able to succeed for a few years back then, the FCC and the NFL very recently changed their regulation which would have completely dissolved my company and product.
I am a huge football fan. Although I prefer watching college football to the NFL game, I have a great respect for the talent and strategy that goes into the pro football game. I also can empathize with the NFL fan, many of whom can more easily be described as fanatics. When I lived in Green Bay, WI, it was eye opening to me to meet people of all ages and genders that knew every detail about the Packers’ roster and schedule. Packers fans are not more in number or more dedicated to their team than other pro sports, however, Green Bay is such a small town that there’s little else to talk about than the Big Green Machine.
The National Football League is a multi-billion dollar organization and although each team is really their own company generating profits or losses on their own, the NFL is the one making the rules about the gameplay, the recruiting, the staffing, even television regulation. In case you don’t know, TV regulation which the NFL has enforced can be a sore topic for many fans. The NFL had, until very recently, what was called the ‘blackout rule’ (in March 2015, the blackout rule was dissolved). The blackout rule decreed that if an NFL game was not sold out 72 hours prior to kickoff, then the game would not be aired on local television. The reasoning being that the NFL wanted their fans to physically go to the games. Obviously, the NFL and the local sports team make lots more money on a fan that attends the game than on those watching at home. They wanted to strong arm fans into putting up the dough to buy a seat.
Keep in mind, this regulation was only a problem for some markets. Fans of the New England Patriots, Green Bay Packers, Pittsburgh Steelers never had to worry. These teams always had large enough markets and good enough teams to sell out every game year after year. But I live in the East Bay of Northern California, where many of my friends and coworkers are Oakland Raiders fans. For Raiders fans, the blackout rule has been a thorn in their side. The team has been terrible for going on a decade now. These poor fans have had it hard enough trying to stay loyal to their pathetic team, yet, to kick them while they’re down the NFL won’t even let them watch their team on Sunday. From 1995 to 2010, the Raiders had 122 home games and 78 of those (64%) were blacked out.
What would ease the pain of the poor blacked out NFL fan? Black Out insurance, of course. The insurance is this: you pay us a small premium at the start of the season and we guarantee that you will watch your favorite team on Sunday. If your team sells out every game and you watch every game at home on your comfy couch, boom, we delivered. If your team has a blackout?? We overnight to you 2 tickets to the game at no extra cost. While others are bemoaning that they can’t watch the game, you are watching it live.
How much is the small premium mentioned earlier? In steps the actuary. Looking at historical patterns as well as attendance trends and forecasts for quality of the team that year, the actuary estimates the probability that each NFL team will have a blackout. Estimated cost would be the probability of a blackout times the price of the tickets. Obviously, the insurance would vary by team. Because a blackout is much more possible with the Raiders or Buccaneers the insurance premium would be higher. Black out insurance for the Packers or Seahawks would be almost nothing.
NBA Ticket Insurance for DNP-CD
Another sports gripe that is starting to trend is the benching of star players in the NBA. The NBA is the most competitive basketball league in the world. The NBA season is also very long, longer than any other major sport in the US with the season spanning 230 days from opening day to the end of the playoffs. These two things combine to take a toll on the bodies of the athletes involved. Injuries are becoming a major problem for the NBA and although medical technology is improving, many teams this season were missing their star players for at least part of the season. A trend that is starting to form lately is for NBA coaches to start sitting their star players in the middle of the season for no reason other than to give them rest. With the regular season being 82 games long, there are some games that a coach may feel are not as important, that is, maybe they feel they can win the game anyway without their stars.
This is becoming a sour spot for NBA fans. They spend lots of money well in advance of a basketball game and expect to come to the game and watch the best players play. It can be very disappointing to show up only to find out that Tim Duncan or LeBron James or Steph Curry won’t be playing that game.
Introducing DNP-CD insurance! Yes, I’m still working on the name, I know that isn’t extremely catching. DNP-CD is the acronym that is written in the box score for a player that Did Not Play by Coach’s Decision. This insurance is thrown on after you purchase your tickets to a regular season game. After you’ve chosen your seat and game, you are given the option of buying DNP-CD protection on any of the 10 starting players for those two teams. Suppose you are buying tickets for the one trip the Cleveland Cavaliers make to Sacramento to play the Kings. Your son is a huge LeBron James fan and you buy tickets to the game. What if the Cleveland Cavaliers are on a 5 game road trip on the west coast and just played the Lakers two nights ago and will be playing Golden State the next night? Cavs’ coach Dave Blatt may feel like his team could beat the Kings handily with or without LeBron so he decides to give him the night off. You just spent a great deal of money to go watch LeBron and now you’re screwed. With DNP-CD insurance, you pay a small premium on top of the ticket price and if LeBron does not play due to Coach Blatt’s benching, you get free tickets to the next game that LeBron is in town. You are guaranteed to see LeBron play live.
How much would this cost? How would an actuary price this? Well you’d have to take into account any probabilities and factors that affect a DNP-CD. In particular, how often does this coach rest his players? How often does this particular player get rested? What time of year do they typically rest? Against which teams? What kind of schedule surrounds the games where they are rested? There are times when DNP-CD insurance would be very cheap because there is little chance the star will be resting, such as at the end of the season, against rival teams or against teams fighting for playoff positioning. On the flip side, for games in the middle of the season, against bad teams while on a road trip, DNP-CD insurance for Tim Duncan and Dwyane Wade would be more costly.
So there are a couple of ideas to get your creative juices flowing. What are you passionate about, and how could you turn your expertise in that field into a business? Thanks for reading.
Medicare is a federally funded program of health insurance that is provided to all US citizens age 65 and older, regardless of income or medical history. The program was signed into law as an amendment to the Social Security Act in 1965. There are many reasons why the program began, a major one being that the over-65 population in the US was largely uninsured. Because the cost of healthcare for this demographic is so much higher than for the younger folk (and there was no law forbidding insurers from rating them at their true cost) many of the elderly simply could not afford health insurance. Since 1965, Medicare has expanded to also cover individuals with certain permanent disabilities but by and large the majority of the recipients are age 65 and older.
Medicare is funded much like Social Security in the US; the costs incurred today are paid for with tax dollars pulled from wage earners’ paychecks, 1.45% of income. Medicare has also become thoroughly entrenched with private insurance carriers. Private companies offer health insurance to Medicare beneficiaries as a supplement on top of the benefit they receive from the federal government. This is called Medicare Part C, or Medicare Advantage. Why would someone need supplemental coverage? Well, because the Medicare Part A and B benefits are pretty bare-bones. That is, they don’t cover everything you may need done from a physician and the benefits that are covered have substantial copays. A Medicare Advantage plan brings your deductible and copays much lower. Because Part A is funded by the government and covers the really expensive hospitalization treatments, Medicare Parts B through D can be purchased at a somewhat reasonable price. In 2010 only 14% of Medicare members received only Medicare benefits. That is, 86% of those receiving benefits had some kind of coverage on top of traditional Medicare.
The benefits offered under Medicare are very complex, to get us started, I have created a chart which will give you a general idea of the benefits available under Medicare.
|Medicare Part A||100% Government Funded (payroll tax)||Inpatient Hospitalizations|
|Medicare Part B||Enrollee premiums, employer & Gov funding||Outpatient services, other medical care|
|Medicare Part C||Enrollee premiums or employer||Supplemental Coverage: this coverage is purchased through a private insurance carrier and provides coverage on top of parts A and B.|
|Medicare Part D||Enrollee premiums, employer & Gov funding||Prescription Drugs|
The Good of Medicare
Obviously, providing essential health benefits to those over 65 is a good idea from most people’s point of view. I’m not going to get into that as much as the actuarial standpoint. CMS (Centers for Medicare & Medicaid Services, governing body for Medicare and Medicaid) has many qualified actuaries working for them and I want to discuss a couple of intriguing pieces that make this insurance different than commercial insurance.
Less Anti-Selection: An oft-used word in the insurance industry and particularly in the actuarial and underwriting departments. Anti-is essentially the idea that when you buy insurance you know more about your own personal health history than the insurance company does so you will attempt to cater the benefits to maximize your own utility.
A quick example that is often discussed in dental insurance is orthodontics. Suppose you offer a dental insurance plan that covers orthodontia services and you have one competitor in the marketplace which does not offer ortho. Your plan is slightly more expensive because you know that, on average, a small % of the population actually receives ortho treatments. Now think from the point of view of the consumer. Two dental plans, one is slightly more expensive and offers ortho, the other is cheaper and does not offer ortho. Which one will you choose? Depends on if you need ortho, right? If you or your family needs ortho, you’re willing to pay a few extra bucks for the benefit. If you don’t need ortho, you’ll buy the cheaper plan. This is anti-selection. What ends up happening is that the plan offering ortho ends up being loaded down with a disproportionate number of ortho-needy members. As an actuary, this is a very tricky problem. How do you rate for this? You have to rate not using an assumption of the ‘average population’ that is purchasing insurance but of the average population that is purchasing YOUR plan, which depends on factors outside your control (i.e. benefits offered by the competition).
OK, sorry for the tangent, but what I’m trying to get at is anti-selection is a serious concern for private insurers, but, Medicare does not have this concern because EVERYONE is enrolling. They are the only game in town.
Risk Adjustment Factors: For private insurance companies offering Medicare Advantage, there is a significant risk taking on new patients at an advanced age. A risk so high that some insurers don’t want to bother playing. However, something that has mitigated the high cost risk of these patients is a Risk Adjustment Factor system. In 2007, CMS implemented a formula for reimbursement to the private insurers which includes an adjustment for the health history of the Medicare beneficiary. That is, if a particularly sick (costly) individual enrolled with United Health Care, for example, CMS would reimburse more to them than for a healthy individual. The Risk Adjustment Factor does not eliminate the cost risk for UHC (to eliminate it completely CMS would simply reimburse UHC at the end of the year for all incurred hospital costs), it simply helps mitigate the cost.
Problems with Medicare
First and foremost, in my mind, is the benefits are INCREDIBLY complex! Which is absurd when you think of who the beneficiaries are. It would make more sense to have a simple benefit structure when offering something for the elderly, but nothing can be simple when there are politics involved. Much like the tax code, any time a politician is adventurous enough to change something with Medicare, it becomes more complex. I’m not going to go into too much detail about the benefits (not extremely fascinating). They include a $147 deductible and the $304 nightly copay on hospitalization. Yes, $147 deductible. Why not $150? I don’t know, that makes too much sense.
Another major problem for Medicare is that, similar to Social Security, Medicare will be running into funding problems very shortly if no legislative action is taken. With the large influx of baby boomers leaving the workforce there are fewer people paying taxes to fund Medicare and more people receiving the benefits of Medicare.
But there is another issue at play here as well. Medical cost inflation is consistently higher than inflation of any other US product. Advances in technology have made it possible to prolong life and increase the quality of life for the elderly, however, at a significant cost. CMS does not increase their payments at the same rate that costs are rising. This creates a huge disconnect between the true cost of providing care for Medicare patients and the revenue hospitals receive for treating them. So put yourself in the shoes of a hospital administrator. There are plenty of for-profit hospitals but let’s suppose you run a non-profit hospital. Even if your main objective is not to produce a profit, you still need to collect enough income in order to pay your expenses, otherwise your hospital will go bankrupt. Anyway, you know that for every Medicare patient you treat you will not be reimbursed sufficiently for the cost of care in treating that person, what do you do? What are your choices? Do you try to take on less Medicare patients? Do you tell the government and insurance carriers that you will no longer accept Medicare patients?
This leads me to a third problem Medicare is currently facing: fewer and fewer physicians want to take on new Medicare patients. The steep regulation involved in administering and being paid by Medicare as well as the low reimbursement schedule leads many doctors to say, “No thanks”. A similar issue is that the larger hospitals that are still accepting Medicare patients have to offset the low reimbursement rate from Medicare with higher costs elsewhere. That is, what they charge to non-Medicare patients goes up to make up for the shortfall. The continual rise in medical costs has been leveraged by the low reimbursement of Medicare to hit those receiving commercial insurance with a double whammy. I discussed how incredibly high the US costs of healthcare are in this post last year in case you missed it.
Uncoincidentally enough, Medicaid began with the same amendments to the Social Security Act which started Medicare in 1965. Medicaid is a program which is jointly funded by the federal and state governments to provide essential healthcare to those of low income. The law signed in 1965 does not obligate each state to offer a Medicaid program, although all states currently do. Because the administration of the program is run on the state level, the scope and eligibility of Medicaid can and does vary widely from state to state. This became a point of controversy with the passing of the Affordable Care Act in 2012 because this law brought additional federal funding to states if they expanded Medicaid coverage to a certain federally-ruled level and many states chose not to.
In order to explain how Medicaid works today and who receives what, it is easiest to use a table, illustrating the different definitions of government assistance for medical care. Every citizen in the US fits into one of the four categories below. FPL stands for Federal Poverty Level which simply stands for how much annual income a family makes. In a nutshell, if you live in a household of four where your combined income is less than $24,200, you live below the FPL, however, the actual definition takes into account the size of your household. This link gives a more detailed explanation.link
Federal Poverty Level
|FPL equivalent for family of 4||Government Assistance Program||
What Government provides for you
|< $33,500||Medicaid||Full health coverage (medical, dental, vision, etc) coverage at no expense in either premiums or copayments.|
|< $48,500||Child Health Insurance Plan (CHIP)||
Full health coverage for your children.
|< $97,000||Health Insurance Premium Subsidy||
This was introduced in 2010 with the Affordable Care Act and allows people that are not eligible for Medicaid or CHIP to receive government assistance in paying for their own health coverage.
|>400% FPL||> $97,000||None||Nada|
A quick note that the table above represents the benefits for California citizens. Each state has the discretion to adjust their eligibility requirements as they see fit.
Solvency of Medicaid
Medicaid for most states is doing better, financially, than Medicare. Keep in mind that Medicaid is run on the state level. Each state receives federal funds to help run their Medicaid program if they meet certain, somewhat loose, guidelines. However, for the most part, each state has the discretion of administering the program how they like. Therefore, in order to meet their budgets and the needs of their own individuals, a state may expand or shrink their Medicaid benefits over time. And this is quite common. During the economic recession of 2008-2013, CA shrunk Medi-Cal (CA’s version of Medicaid) so that fewer individuals qualified for benefits and those that did qualify had leaner benefits. In 2013, benefits were expanded back to a level close to where they were pre-recession. Because any one state is (usually) less divided, politically, than the lawmakers on the federal level, adjusting the program to meet the budget and people’s needs is easier than it is for Medicare and Social Security on a federal level.
Final note: OK, on first glance, this month’s post may not appear to have a great deal of actuarial science when compared to previous posts, however, keep in mind that many different factors influence the risk of an insurance coverage. In order for an actuary to appropriately assess and price a risk, he/she must understand the many economic factors at play, including: who is covered, who is purchasing the product, who is being marketed, solvency of the purchaser, options at the disposal of whomever is purchasing and using the coverage, and several others. Part of being an actuary is being curious about how and why everything works the way it does in order to predict how it will behave in the future.
Thanks for reading!
Happy New Year! Most of you continued living your lives without noticing that Actuarially Sound was no longer growing with new posts every month, like it was in early 2014. There may have been a very small number of you (my mother included) that were enjoying and looking forward to the monthly blog posts and to you I apologize. Like many blogs, I had a roaring start and then fizzled out after a few months. I blame this mostly on my commute, or lack thereof. You see, in April of 2014 I moved. Previously I was commuting 45 min or more every day via train and could sit and write and put thoughts together. Moving to a new house and new work schedule it was difficult to find time for the blog without the forced train commute.
Anyway, enough excuses, on to the next chapter of actuarial principles. As I explained in my first introductory post, the purpose of this blog is less to explain deep mathematical or actuarial concepts to other actuaries, but more to explain insurance, risk, and statistical concepts to the everyday person wanting to learn more.
History of Actuaries
Full disclosure: most of this short section comes from this Wikipedia article. Before writing this post I knew very little about the history of actuaries. Though I spent 7 years and hundreds of hours studying for actuarial exams, not a single question or book or study manual had anything to do with the history of the profession. Also want to thank my brother, Joe the history buff, for the idea of writing this post.
Insurance itself has been around for centuries, or at least some form of it. There has always existed the idea of pooling resources and communities helping those who unexpectedly lose property, employment or loved ones.
Not until the 17th century did a math nerd step in. A Londoner, John Graunt, is generally believed to be the first to realize a pattern in life longevity. Obviously, no one can predict when any single person will die. However, in 1662 Graunt published a book, Natural and Political Observations Made upon the Bills of Mortality, explaining that if evaluating a cohort (large group of people with similar characteristics), a pattern emerges and there is a certain amount of predictability for the group as a whole. Simple example: if you take one 60-year-old, it is near impossible to predict whether or not this person will still be living 12 months from now. However, take 1000 60-year-olds and you can predict with some fair certainty that, on average, 10 of them will pass away in the next 12 months.
By studying the life longevity of many, many people a life table (aka mortality table) was born. See a modern example here. A life table gives the probabilities we were just discussing but for all ages, not just 60-year-olds. With this information, life insurance and pensions became just a matter of applying the math. Nearly a century later James Dodson developed the idea of paying a set level premium to receive an insurance benefit. He founded the Society for Equitable Assurances on Lives and Survivorship based on this concept. The company still exists today, now known as Equitable Life. Through the centuries many other insurance companies attempted to do business using other non-mathematical methods but all of them eventually either adopted Equitable Life’s formulas or failed.
With the rise of computing and technology, the role of actuary has become more and more complex. It has also become more valuable and in-demand. Though the first actuaries began working in life insurance and creating and applying life tables, the term ‘actuary’ later was used for anyone that uses mathematical modeling to come up with premiums. Actuaries today work in life insurance and pensions as well as in health, property and casualty (P&C) and many other types of insurance. Additionally, as the actuarial credentials gain more merit within the finance industry, actuaries are increasingly sought for positions outside of the traditional insurance or pension role. The rigorous training received through actuarial exams makes them qualified to fill positions doing technical and managerial work in investment firms, banking, risk management departments and other general business areas.
With the recent economic recession in the US, college grads and undergrads are focusing their pursuits more heavily on stable employment. With Actuary consistently being named in the top 5 jobs in America, the market is seeing a large influx of new graduates hoping to enter the actuarial field. In fact, the number of candidates sitting for exam P (usually the first actuarial exam) has risen from 13,416 in 2007 to 14,419 in 2010 to 17,033 in 2014. Whereas 5-10 years ago most new entry level actuaries graduated with degrees in Math or Statistics, more and more colleges are offering degrees in Actuarial Science through their statistics or business schools. It is not uncommon for undergrads to pass 2-3 actuarial exams and be well on their way to becoming credentialed before finishing a bachelor’s degree. All of this means that the profession is attracting more and more talented graduates and increasing the competition for entry level positions.
This is probably as good a place as any to briefly describe the various actuarial societies that are prominent in the US.
Society of Actuaries (SOA): 24,000 members worldwide though most reside and work in the US or Canada. The SOA’s mission is to educate actuaries and future actuaries, to conduct research through statistical analysis in various actuarial fields and to govern the profession. Traditionally, actuaries that work in the fields of Pensions, Life Insurance, Investments and Health Insurance are members of and attain credentials through the SOA. The SOA has recently also introduced education and exams to provide a Chartered Enterprise Risk Analyst (CERA) credential as well as a fellowship track through General Insurance which covers Property and Casualty risk principles.
Casualty Actuarial Society (CAS): Approximately 6,000-7,000 members in the US. The CAS has a very similar mission to that of the SOA, including education, research and maintaining professional standards. The largest difference is their area of study. CAS focuses their attention and study on property and casualty risks. Actuaries that work for P&C companies are credentialed by the CAS. As you can see, there are large similarities between the SOA and CAS, in fact, the first 4-5 actuarial exams are accepted by both societies.
American Academy of Actuaries (AAA): The AAA also contributes to the professional standards and research of the actuarial field. How the AAA differs from the SOA and CAS is that it does not provide education for actuaries in the way of formal exams. The AAA’s resources are mostly devoted to research and maintaining professional standards. In order to sign official Actuarial Certificates and Actuarial Opinions for government documents, most government entities require the signing actuary be a member of the AAA. AAA membership is obtained by becoming a member of the SOA or CAS and through completing various continuing education requirements (attending actuarial conferences, pursuing formal or informal education, etc).
Actuaries in Pop Culture
Lastly and least importantly, how does the rest of the world view the role of actuaries? Much of history is deciphered through art, so 100 years from now, when future civilizations look through this generation’s old movies and books what will they see in the actuarial profession? Below are a couple of examples. You can see more here.
From Batman Comic Books: Actuary is an evil employee of the Penguin, more of a glorified bookkeeper but still holds some actuarial traits (genius mathematician, boring).
Ben Stiller in the movie Along Came Polly: though never specifically called an actuary, Reuben Feffer works for an insurance company and is generally known as a math nerd that analyzes risks in all perspectives. In true Hollywood fashion, the main take away from the story is to throw out all logic and reason and follow your heart.
Stranger Than Fiction (one of my favorite movies, BTW): Very brief reference to actuaries. Harold Crick works as an IRS auditor and while Professor Hilbert is trying to help him with a personal problem he asks the following:
“Engaged to an auditor. She left me for an actuary.”
Ed Norton in Fight Club : Similar to Along Came Polly, the main character is not specifically mentioned as an actuary but generally presumed to be so with his line of work being assessing risk for an insurance company. Of course he finds his true self by breaking out of his boring job and fighting strangers in an underground club.
Thanks for reading. I’d love to hear from you if you have any comments. Hit the blue button in the top right corner of this article to subscribe so you are alerted when new posts are, well, posted. Also, check out the Schedule page for a rough idea of what we’ll be talking about in 2015.