actuaries...30 resume so pacific a pose, muser genevieve hayes ask gae 31ee / you do what? i disagr...

Living to

– the implications for absolutely everything

Actuaries T h e m ag a z i n e o f T h e ac T ua r i e s i n s T i T u T e JULY 2012 ISSUE 171

4 Paper

10 ReviewFuneral Insurance12 The actuarial pulse How did you join the actuarial profession?15 ReviewKicking goals with the Taylor Fry tipsters20 OpinionThe Emperor’s Wardrobe Manager26 OpinionGiving Actuaries their voice

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Head of Capital Modelling London/Bermuda • exceLLent package!!!

Leading global reinsurance company is a seeking ReMetrica specialist who will be responsible for heading up their group capital modelling team.

the team’s purpose is to build up and maintain economic capital modelling facilities across the group with key deliverables including developing and updating the internal economic capital model for regulatory purposes and to support the capital

reductions. You will have a strong background in general Insurance and will be able to

demonstrate your remetrica and capital modelling skills.

Senior Pricing Actuary austraLIa • $verY competItIve

A market leading reinsurance company is seeking a fully qualified actuary with extensive pricing experience for their actuarial marketing team.

excellent communication and very good problem solving skills are desired for this role. You are also client- focused, motivated, a strategic and lateral thinker, with a flexible team approach and good business sense.

General & Life ConsultancyLondon • competItIve

One of the fastest growing consultancies in London is seeking both nearly and qualified life and general actuarial consultants. You will be a fully qualified actuary or moving toward the professional fellowship in the uk (global equivalent award also welcomed).

You must have strong project management skills, and the ability to deliver technically along with the confidence to articulate and present your work. Strong client facing skills are essential as is the ability to network and build up a strong network for business development. For the general insurance practice, working knowledge remetrica and Igloo are essential.

Senior Manager: PricingsIngapore • $verY competItIve

A leading insurer in Singapore is looking for an experienced actuary to carry out pricing and experience analyses of general insurance and group & health products. You will also have statutory duties including the certification of loss reserves and dynamic solvency testing.

In addition you will have management supervision responsibilities for a team of analysts.

generalised Linear modelling pricing methodology or MAS statutory requirements for general insurance would be highly valued.

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July 2012 Actuaries 1

ContentsJULY 2012 ISSUE 171

4

10

16

Cover: © LAurin rinder / SHuTTerSToCK

EvEntS

2 Coming upEdItorIaL

3 Be proud to be an outlier ❙ Ben Ooi

PaPEr

4 Living to 120 – the implications for absolutely everything ❙ Melinda Howes / Barry Rafe

UndEr thE SPotLIght

9 Rade MusulinrEvIEw

10 Funeral Insurance – paying the ultimate premium ❙ Anthony Asher / Rod Berry / Brendan Counsell / Bruce Thomson

thE actUarIaL PULSE

12 How did you join the actuarial profession? ❙ Daniel Cooper

rEvIEw

15 Kicking goals with the Taylor Fry tipsters ❙ James Sullivan

actUarIES takIng thE LEad

18 Mentoring ❙ Andrew Brown

oPInIon

20 The Emperor’s Wardrobe Manager – making fun of the latest fads in financial services ❙ Phil Stott

InSIghtS

21 Insights Health Networking – What makes your job sexy? ❙ Nick Stolk

commEnt

22 From graduation to graduate ❙ Alissa Irgang

rEPort

24 General Insurance Practice Committee ❙ Mary Poon

rEPort

25 Investment Return Principles Information Note ❙ Glenn Langton

oPInIon

26 Giving Actuaries their voice ❙ Barry Rafe

LEttEr

27 Letter to the Editor ❙ Peter Carroll

SUrvEY

28 Equity Risk Premium Survey 2012: results and comments ❙ Anthony Asher

In thE margIn

30 Resume so pacific a pose, muser ❙ Genevieve Hayes

aSk gaE

31 I disagree / You do what? ❙ Gae Robinson

YoUng actUarIES Program

32 Out of the box opportunities ❙ Sophia Sophos

StUdEnt coLUmn

33 The digital world of risk ❙ Dustin Biernacki

rEvIEwS

34 Book / Podcast reviews ❙ Editorial Committee

StaYIng ahEad

36 How do I become capable? ❙ Sue Wetherbee

obItUarY

38 Robert (Bob) Geroge GladingcEo’S coLUmn

40 Give me your best ‘elevator pitch’ ❙ Melinda Howes

notIcE

COV Research Grants, Scholarships and Prizes

simonpalmer

Typewritten Text

Actuaries July 20122

contrIbUtIonSContributions should be sent to the Actuaries Institute, marked to the attention of Katrina McFadyen (Communications and Marketing Manager) at: [email protected] contributions must conform to our submission guidelines which are available from the Communications and Marketing Manager.

nExt EdItIon A172 - August 2012A173 - September 2012 Deadline for contributions: 1 August 2012

actUarIES EdItorIaL commIttEEEdItor Ben Ooi [email protected] and markEtIng managEr Katrina McFadyen aSSIStIng EdItorSDaniel Cooper Genevieve Hayes Ruth Lisha David Millar Solai Valliappan

magazInE dESIgn Kirk Palmer Design, Sydney [email protected]

PrIntIng Ligare, Sydney

Paper: Precision by Spicers PaperAustralian made, ECF, EMS

actUarIES InStItUtE ABN 69 000 423 656Level 7, 4 Martin Place Sydney NSW 2000 Australia T +61 (0) 2 9233 3466 F +61 (0) 2 9233 3446 E [email protected] www.actuaries.asn.auJoin us on Twitter®:http://twitter.com/#!/actuariesinst

PUbLIShEd bY thE actUarIES InStItUtE© The Institute of Actuaries of Australia ISSN 1035-6673

advErtISIng PoLIcYPlease refer to the Institute’s website for our advertising policy, and rates:www.actuaries.com.au or email [email protected]

disclaimer Opinions expressed in this publication do not necessarily represent those of either the Actuaries Institute (the ‘Institute’), its officers, employees or agents. The Institute accepts no responsibility for, nor liability for any action taken in respect of, such opinions. Visit http://www.actuaries.asn.au/TechnicalResources/ActuaryMagazine.aspx for full details of our disclaimer notice.

Actuaries

PEFC 21/31/04

Insightsoperational risk capital modelling Friday 27 July 2012, Melbourne

Leadership Forum – actuaries on boards Tuesday 31 July 2012, Sydney

retired actuaries group Sydney Thursday 2 August 2012

Insightsrisk of obsession with Peer risk Monday 6 August, Melbourne

Insights NetworkingEmployer and Student networking Evening Monday 6 August, Perth

InsightsProfit margins in regulated Insurance Schemes Tuesday 7 August 2012, Sydney

Young actuaries Program – the actuarial Entrepreneur – Firm Foundations Thursday 9 August 2012, Melbourne

Professionalism courseMonday 13 – Tuesday 14 August, Sydney

Fellowship and Presidential dinnerTuesday 14 August, Sydney

volunteers cocktail Party Wednesday 22 August, Sydney

retired actuaries group Sydney Thursday 4 September 2012

Interactive cPd Session with david c miller – national tour – 2012Monday 10 September, PerthTuesday 11 September – Wednesday 12 September, AdelaideThursday 13 September, MelbourneMonday 17 September, BrisbaneTuesday 18 September – Wednesday 19 September, SydneyThursday 20 September, Canberra

general Insurance Seminar 2012Monday 12 – Tuesday 13 November, Sydney

Erm Seminar 2012Wednesday 14 November, Sydney

actuaries Summit Monday 20 – Tuesday 21 May 2013, Sydney

July/aug

Sept/oct/nov

2013

Coming up

As an attendee at a recent workplace diversity event, it was encouraging to know that many Australian organisations are actively embracing employee diversity. It got me thinking about the diversity of the actuarial profession. I think the younger generation

is generally very diverse. But do diverse demographic profiles translate to diverse ideas and opinions?

As the saying goes, if you ask 10 actuaries for their opinion, you will probably get at least 10 different answers. In my view, the actuarial profession is not a hive-mind but more of a collection of professionals with common interests. Therefore it seems unusual that the Actuaries Institute appears to have a policy position on many matters in order to lead or participate in the public discussion. Assuming that Members read these policy statements, do the majority of Members honestly agree with every public policy? Are these policies we ‘ought’ to have forced upon us even if we cannot honestly reach consensus? Or are these policies so watered down and bland to maximise agreement?

Some argue that the Institute needs to have a position when asked, and that ‘no comment’ or ‘there’s no consensus on this’ is not acceptable. Issuing an Institute view for public relations’ sake seems to dampen debate and new ideas. Instead, I think that the Actuaries Institute should be encouraging individual Member opinions rather than Institute opinions. This will encourage debate within the profession as well as in the wider community.

Often those who speak out do so with a vested interest, or are generally old or jaded. Therefore it is important that the Institute encourages more Members from all backgrounds, to get engaged, speak up and speak out to get a balanced and healthy debate.

In nature, diversity and mutation is risky, but it is also a highly-valued strength. We as actuaries should continue to ‘think different’, debate, challenge and push the envelope. It is ok to stir trouble, after all, many effective and inspirational leaders are, or were, outliers.

Barry Rafe and Peter Carroll talk about their different points of view on this issue on pages 26-27 in this edition.

What do you think?

Editor


ben ooi

[email protected]

be proud to be an outlier

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Paper

this article is based on a presentation by melinda howes and barry rafe to the 2012 Financial Services Forum in melbourne and subsequently at the International actuarial association colloquium in hong kong.

Living to

–the implications for absolutely everything

The objective of this paper is to set the scene for a discussion on the forces for change that will affect the financial services (FS) industry over the foreseeable future. Whilst we concentrate primarily on issues around longevity and some of the social and political implications of people living longer, we also reflect on other social change such as the GFC.

Some could argue that the actuarial skill base is ill suited to managing transformational change. We disagree! The actuary is the only professional who understands capital, profit and risk in the FS industry. Whilst many actuaries work behind the scenes in FS businesses monitoring and reporting on the financial position, other actuaries are leading the way in transforming businesses. The actuary’s ability to develop scenarios and understand the relevant financial drivers, places the profession in a strong position to lead in driving change.

LongEvItY, good and badIn 2002 the United Nations prepared a report called World Population Ageing: 1950-20501.

The report states that:• “Populationageingisunprecedented,withoutparallelinhumanhistory—and

the twenty-first century will witness even more rapid ageing than did the century just past.

• Populationageingispervasive,aglobalphenomenonaffectingeveryman,womanand child–but countries are at very different stages of the process, and the pace of change differs greatly. Countries that started the process later will have less time to adjust.

• Populationageingisenduring:wewillnotreturntotheyoungpopulationsthatour ancestors knew.

• Populationageinghasprofoundimplicationsformanyfacetsofhumanlife.”

what don’t wE know?Actuaries have been modelling mortality for more than 100 years. We’re very good at predicting gradual increases in life expectancy. But we have a problem.

Mike Sherris and John Evans from UNSW say that longevity risk can be considered as being made up of2:• The‘known/knowns’–Ageneralimprovementtrendfromsocioeconomic

improvements ;• The‘known/unknowns’–Somevariationaroundthelongertermimprovement

trend; and• The‘unknown/unknowns’–Suddenchangesfromwars,pandemicsanddisease

management.

They go on to say:

“... the known/known risk is easily managed as it can be modelled and therefore appropriate allowances made in pricing, the known / unknown risk is more difficult as its modelling is uncertain, and the unknown /unknown risk is impossible to manage as it is not predictable, and therefore appropriate allowances for these possible changes is not feasible.”

The problem is discontinuities – normal modelling techniques cannot handle things like major medical breakthroughs, a cure for cancer or viruses.


melinda [email protected]

barry [email protected]

Living to

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The following chart shows the success rate UK actuaries have had in the past with predicting mortality improvements – as you can see actual life expectancies have always exceeded projections. .

Science fiction has become fact. We are staring down the barrel of LONG longevity, where we can cure major diseases, replace organs, and that’s before we even start to talk about nanotechnology – which we’re already seeing early applications of – or research into the ageing process. Futurist Ray Kurzweil3 thinks that if he can live long enough for this technology (biotech and nano tech) to kick in,– he’ll live forever!

LongEvItY and SomE ImPLIcatIonS For thE FInancIaL SErvIcES IndUStrY The ageing of the population and the expected significant increases in longevity have profound implications for the FS industry. Consider the following questions that will soon become real dilemmas:- How much of a person would need to be replaced before

they are counted as legally dead and can collect their life insurance?

- If you live beyond 120 as a brain in a vat, fully conscious and able to communicate and participate in life online and in virtual reality, are you still eligible for lifetime annuity payments?

Long longevity, as well as really rapid improvements in life expectancy over the next few years are major risk issues. This is our next black swan event. This is something to which Enterprise Risk Managers need to be paying very careful attention – what will be the implications for your organisation?

Longevity improvements will be a slow burn issue for many FS businesses, superannuation funds and insurers with actual realised financial liabilities emerging slowly over time.

- The implications are extreme for funds with guaranteed pensions – so public sector funds are very exposed to longevity risk.

- If you are planning to offer any sort of guaranteed retirement product this is crucial and you will need to have your actuaries doing some very good scenario testing to properly value the risks.

- The implications will arise faster for life companies and others who are underwriting annuity products right now.

There is a growing need for intelligently designed and secure retirement products to help retirees cope with the risk of living too long, and the volatility of investments over their long retirement period.

PotEntIaL ProdUct ISSUESIn addition to the dramatic increases in longevity, there will be other important changes to how

consumers and Governments think about the role of FS products and the role that the government has in providing a safety net to retirees.

Some of the human psychological issues and potential scenarios that FS businesses may be faced with, which will influence future product development, are: • Thereisanentitlementculture.Peoplehaveanexpectation

that because they have paid their taxes they are entitled to a government funded pension and health care in retirement. This is an important intergenerational equity issue. We have seen protests in the streets of Europe over plans to increase retirement ages to 55!

• Theconceptofretirementandafixedretirementage could simply disappear. Healthy people will be expected to work longer.

• Weareinaneraofausterity.Governmentswillcutbackon welfare for those who, the government deems, don’t deserve it.

• Morecontrolswillbeplacedontheinvestmentandconsumption of compulsory savings to make sure that people do not double dip.

• Peoplewillbeexpectedtotakemoreresponsibilityforfunding their retirement and seeking out products for a secure retirement.

• Theregulatorswillnotwantanydisastersontheirwatch. They will impose significant amounts of controls on governance structures. They will increase capital requirements for guarantees. They will impose layers of compliance requirements that will potentially remove creativity of business leaders and create a false sense of security.

• GiventheexperienceoftheGFC,peoplenowhavelittletrust of financial promises made by financial institutions, or government. Many financial promises by governments and corporations have already been broken and we now acknowledge that they could always have been broken.


Paper continued

Actual and projected life expectancy at birth, UK males

Source: Chris Shaw. ‘Fifty Years of United Kingdom National Population Projections:How Accurate Have They Been?’, Population Trends 128, Office for National Statistics, 2007

Life expectancy at birth82

80

78

76

74

72

70

681965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Observed 1971 1985 1996 1977 1989 2000 1981 1992 2004

• Peoplewillgenerallyunderestimatetheirlifeexpectancyand overestimate their chances of dying sooner - in effect, they will live longer than they expect.

• Peoplewithenoughfundswillbiastowardsselfmanagedinvestments and will attempt to deal retail financial institutions out of their plans.

• Peoplewillrelymoreonportabletechnologicalsolutions.There will be a low level of engagement with FS providers. There will be higher levels of engagement with providers of entertainment or intellectual content. Gaming / virtual reality will be used to help people make key financial decisions. There will be a robo planner app.

• Peoplearesocialanimalsandwillgenerallyidentifythemselvesasamemberofanumberof“tribes”e.g.socialgroups, cultural groups, age groups, work groups.

thE FInancIaL SErvIcES bUSInESS oF thE FUtUrEThis section looks at some potential models for future FS businesses by borrowing someone else’s brain.

StEvE JobS:

If the FS industry received a ‘Steve Jobs’ makeover, he would turn a luxury brand into a mainstream one while still hanging on to luxury profits. For example – in superannuation he would give everyone their own portable superannuation fund and make it the ‘cool, must have’ accessory (oh wait, that is already happening in Australia with the Self Managed Super Fund market!)

Jobs built things to help people achieve their dreams. He was the master of the message – the world’s greatest corporate storyteller, turning product launches into an art form. You can have the most innovative idea in the world, but it’s no good if

you cannot get people excited about it. Jobs would sell people the dream of being financially secure. A cool iPad app would make this real to people. Perhaps a real-time check on your financial health with prompts when you get off track – like a personal financial trainer. It would feed you video-based education when you need to make key decisions, or show you what other people had done in the same situation to make a good decision. It would give you a stern talking-to after a shopping spree or if you are planning to borrow too much to buy a property.

Therefore, a Steve Jobs makeover would likely mean the rise of the individual product/tailored solutions and automatically delivered financial advice i.e. the death of the mutual. New technology would provide access to a world of products driven by search engines and consumer preference guides. Individuals would be empowered to make their own informed decisions. The gateway will control the margin.

PIxar: Pixar is all about teamwork and collecting ideas from wide sources, fostering talent and continual change.

They build a team of ‘super talented’ staff. All facets of the business have full time employees (unlike most Hollywood production businesses for example). They develop strong distribution partnerships but whilst retaining their own brand. Their core capabilities are creativity and technology engineering.

In the FS industry they will be at the leading edge of product development. They will constantly update products and allow the ability for people to shift up to the next product.

There is a Pixar university. Staff will be continually trained with an ‘up or out’ culture. In effect if you do not make the grade and get the promotion, you need to consider leaving. As with Apple, the customer will have the relationship with the business rather than any individual in the business.

All advice and underlying products are produced in house and delivered through a high tech platform. They will create a fun culture.

7 July 2012 Actuaries

Toy Story – Pixar

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rIchard branSon:Branson’s business philosophy is built around taking risks, having fun, believing in what you are doing.

“Looking back on Virgin’s history, our ability to adapt quickly to changes has helped mitigate reverses. You must be quick to accept that something is not going well and either change tack or close the business. We run our companies lean and small; there is very little red tape and certainly no bureaucracy. We make and implement decisions quickly -- usually before our competitors in the market have held their fifth meeting on the same issue” – Branson

The Virgin brand is about building a lifetime relationship. Virgin starts businesses in ’clusters’ of related businesses to make them feel like a small, cosy operation. For example, their existing FS cluster sells pensions and investment plans. No more than 60 people in each cluster – so they can know each other’s name – a family company type atmosphere. Running a big business as if it were small – fostering an entrepreneurial attitude.

The Virgin makeover would likely see a FS hub that outsources key capabilities. In particular, the business would claim to buy in the trendiest latest products on the market and deliver these to the individual in stylish packages - designed for the young market, advice lite, low cost with trimmed back service.

kErrY PackEr:Kerry Packer’s business philosophy was to dominate. He was a consummate political operator and owned media so he could influence the message.

Packer would use the money in super funds to invest in media –TV and magazine assets – and casinos. He would spend time and money wooing key politicians to implement favourable public policy for the FS industry. Sport provides a

strong emotional attachment for people. There will be a lot of promotion of sport and sporting personalities. Tribes of customers will be built around their sporting interest.

Under a Packer approach an operator would buy a large super fund then set about accumulating others to make a mega-fund. It would be a for-profit model. They would then use the profits to do all of the above. They would wipe mutuals out, or consolidate them into the mega fund / purchase them under the offer of a better deal for their members. (Following on to the logical conclusion, this operator would sell the lot for a huge profit and walk away!)

thE actUarYLongevity, on the face of it should be the actuary’s ‘sweet spot’. The issue for the actuarial profession is that we are facing significant and unpredictable change for the FS industry. Actuaries are the only profession that really understand profit, capital and risk management of FS companies. An issue however is that many actuaries are involved in the detail of the business i.e. managing and monitoring the predictable aspects of the financial integrity of the FS businesses. We have statutory responsibilities depending on the various government rules. We therefore have the reputation with many as the back office people, mainly managing compliance and low order risk management.

Our claim is that the actuarial profession needs to be open and drive discussion on the impending changes in the pipeline. We need to position ourselves as the profession that saw the change coming and were able to build models and develop assumptions that stress tested various likely outcomes. The numbers will tell us what could happen but it is also important to be able to develop scenarios of likely social and financial outcomes that will affect society wide. With our deep business knowledge actuaries should be able to draw this vast amount of information together and deliver key strategic inputs to FS businesses.

We are not claiming that the actuaries should be the entrepreneurs; rather we are claiming that the actuaries need to be positioned as the able ally of other business professionals that develop innovative solutions for the future. There will always be innovators who will pick the change and take advantage of the disruption that is caused. We believe that the teams who use the actuary will have the advantage over those who do not.

This article is from a paper presented at the 2012 Financial Services Forum – http://www.actuaries.asn.au/Library/Events/FSF/2012/FSF2012PaperHowesRafe.pdf

1 http://www.un.org/esa/population/publications/worldageing19502050/

2 Sources: ABS Cat. no. 3302.0; ABS Cat. no. 310 – chart from “Longevity Management issues for Australia’s future Tax System, The Treasury”, Mike Sherris & John evans, unSw, Aug 2009.

3 http://www.fantastic-voyage.net/

Paper continued

Richard Branson

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title… COO Aon Benfield Analytics Asia Pacific organisation… Aon Benfield

Summarise yourself in one sentence… A guy who has been lucky enough to have lived in a fascinating era in history, found a great Australian wife, travelled the world, and had a most interesting career built on actuarial science

my interesting/quirky hobbies… History

my favourite energetic pursuit… Cycling

the sport I most like to watch… College Basketball, particularly when we were in the middle of ‘March Madness’ for the NCAA tournament

the last book I read (and when)… Bones of the Hills (about the life of Genghis Khan)

my favourite artist/film… Grateful Dead, American Beauty

the person I’d most like to cook for… Not something I am keen to do…

I’m most passionate about… Are actuaries allowed to be passionate? I thought we are supposed to be analytical

what gets my goat… Politicians, who keep telling us that 2 + 2 = 8. When I was a political lobbyist I had to try to reconcile actuarial science with political science, which was quite difficult

I’d like to be brave enough to… Quit working in an office and spend a year as a bartender on the beach

In my life I’m planning to change… I’ll be taking care of my spine after just having had a major spinal fusion operation

not many people know this but I… had very long hair in high school in 1972 and marched on Washington against the Vietnam War

Four words that sum me up… Better ask my co-workers at Aon about that,. I am not good at brevity

what I wanted to be when I grew up… An astronaut

why and how I became an actuary… I had no idea what an actuary was when I was in university. I wanted to be a diplomat and went to university to prepare for an International Studies graduate school. I ran out of money before graduate school, but fortunately I had a lot of math credits accumulated when I was trying to get my GPA up. I switched my major to math my senior year as the job prospects looked better. After working in a factory for six months after graduation, I saw an ad for ‘mathematicians’ and got an actuarial trainee position, even though I had to take a pay cut from my union factory wage. The rest is history…

where I studied to become an actuary and qualifications obtained… In the US - where I got an ACAS from the Casualty Actuarial Society. I passed nine exams and was one point from #10 and a FCAS, but since in the US you are qualified to practice with an ACAS I never bothered to finish the last exam. I will take it before I retire

my work history… I started in the Maryland State Government, then spent most of the next 25 years working in the Southern Farm Bureau system in the US, where I held a number of interesting positions, including political lobbyist. Then, because my wife is Australian, I moved to Sydney and took a job in reinsurance

what I find most interesting about my current role… I meet people from all over the global insurance industry

my role’s greatest challenges… Working all over Asia, in many different cultures

who has been the biggest influence on my career (and why)… My former CEO, Robert Jarratt, who I worked with for 17 years. He gave me a lot of responsibility, let me make (and learn from) mistakes, and taught me patience. He obviously had a great deal of patience as he had me as his COO for a long time

my proudest career achievement to date is… Getting a seat on the American Academy of Actuaries Casualty Practice Council from 2004-2006, where I was Vice Chairman

10 years from now… Alive, I hope. Anything else is fine

when I retire, my legacy will be… As a non-traditional actuary, working in all sorts of roles, such as media representative, political lobbyist, executive, author, and catastrophe expert

the most valuable skill an actuary can possess is… An ability to communicate; to transform gigabytes of data into sound bites of information

If I was President of the Institute, one thing I would improve is… Place more emphasis on communications and management training. All the technical skills in the world are of no value if you cannot apply them and communicate what you are doing to other people

at least once in their life, every actuary should… Go on TV and do a live interview

my best advice for younger actuaries… Be well rounded, as you never know what opportunities will materialise in the future

If I could travel back in time I would… Learn to speak languages other than English

If I win the lottery, I would… Put the money in a blind trust for 15 years and not touch it

rade [email protected] the spotlight

rade musulin

2004: Rade (right) acting as a spokesman on behalf of Florida Insurance Council in relation to Hurricane Frances

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Funeral Insurance– paying the ultimate premium

In this article we discuss the role of the actuary in the product design process and whether, as actuaries, we are providing well considered and broad ranging advice given the potential risks associated with these products.

review

There has been rapid growth in the funeral plan product market in recent years and it has become necessary to ask: Are actuaries covering the full range of risks in their product advice to companies under LPS320 and

professional standards? The direct (non-advised non-group) life insurance market

has grown quickly in recent years. A significant contributor to that growth is in the ‘funeral plan’ market. ‘Funeral plans’ in this context are life insurance policies for a modest sum insured, often purchased by an older demographic. Customers are often people who may not be financially savvy and may not have purchased life insurance previously.

The primary customer value proposition is that the policy will provide for all funeral and related expenses, so a surviving spouse, children or other estate beneficiaries are not left out of pocket from these costs. Another major drawcard is that there is no underwriting, removing a cumbersome and often poorly understood step in the sales process and leading to greater sales throughput. The lack of underwriting makes this product a ‘catch-all’ for applicants who are not able to qualify for a more standard term life product. This produces anti-selection risk, which is typically managed via a limited initial stand -down period of one or two years (where the policy pays out on accidental death only), plus a loading to the otherwise appropriate claims assumptions in pricing.

Mortality is typically well above the population level.Both stepped and level premium versions are available in the

market, with some life insurers providing a choice of premium type for the same product. The marketing orientation is towards stepped premiums. A common marketing strategy is to highlight the price. Advertising usually quotes the price of a stepped premium for a single life insured in the youngest rating age band (and sometimes female). One advertisement compares this weekly price to the price of a cup of coffee.

Some concerns have been expressed about funeral insurance, in relation to both value for money and whether those purchasing the cover sufficiently understand all key aspects of what they are buying. The NSW Fair Trading Minister, Anthony Roberts has advised consumers to research options carefully to ensure they get value for money, taking into account the facts (where applicable) that:• premiumsriseeachyearwithage;and• ifpremiumsarenotcontinuallymaintaineduptodatethenno

funeral benefit will be paid and policyholders would lose the benefit of past premiums paid.

The Australian Funeral Directors Association has expressed similar concerns, indirectly questioning whether yearly renewable stepped premium insurance contracts with no surrender value are right for this market. Sensitivity around these issues is potentially heightened by the perceived and actual vulnerability of older age consumers, both at point of sale and ongoing. The rate of increase in age related stepped premiums is likely to be higher than the rate of increase in incomes for most older consumers, resulting in decreased relative

affordability over time. Actuaries might look at the level of lapse rates for indications as to whether the product is really valued or not.

The point has been made that promotional material places little emphasis on the life insurance company issuing the product. This may limit the reputational risk of the actual insurer, but from an industry perspective, may bring the industry into some disrepute.

What does this mean for actuaries who play an important role in the design of these products and must also advise the company under LPS320 and professional standards? Based on typical disclosed premiums and a loading to population mortality, the loss ratios of this business are generally lower than other major types of life insurance. On the other hand:• mortalityistypicallywellabovethepopulation• theactualmortalityexperienceisyettomature,includinglonger

term effects of any initial anti-selection and selective withdrawal;• smallsumsinsuredcanresultinhighunitcostsandthereare

high costs of marketing to sell via this distribution channel;• thereisnothingwrongwithanopenandprofitablemarketin

itself, assuming there is genuine demand for the product and an appropriately informed consumer;

• withoutrewardforthebroadermarketcoverageandsalesinnovation that these products provide to the life insurance market, new ways to offset the underinsurance problem are more likely to go unrealised.

Actuaries should note the requirements of Section 6.3 of PS200, namely:

“TheMembermustsatisfyhimselforherselfthatthedocumentation and promotional material related to the product and prepared by the Entity is consistent with the terms and conditions of thepolicy.”

Therefore an important reminder for actuaries is to consider any risks around mis-selling. To mitigate any risks, the market best-practice is to have carefully scripted and recorded sales discussion and clear and concise product materials. This should be supported by a strong compliance function to ensure adherence to best practice. For any sales process, its effectiveness in communicating key aspects of the product in the context of the overall marketing and pricing strategy must be considered.

Clauses in legal documents and legal sign-offs have not always been effective in preventing companies from having to systemically compensate consumers. In the UK particularly, the life industry has paid billions in compensation for a variety of ‘mis-selling scandals’; consumer credit cover being currently in the news. A key hurdle to consider is whether policyholders have been made appropriately aware of the costs and benefits of the insurance. If not, the company may be vulnerable to a class action or a Fair Trading investigation. Given the level of attention by regulatory authorities and consumer bodies, actuaries must be particularly diligent in reviewing the total product operation rather than just concentrating on technical aspects.

anthony asher [email protected] •rod berry [email protected]

brendan counsell [email protected] •bruce thomson [email protected]


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12 Actuaries July 2012

nEw SUrvEY qUEStIonS wILL bE avaILabLE In aUgUSt 2012.what woULd YoU LIkE to know? IF YoU havE a qUEStIon YoU woULd LIkE to PUt to thE mEmbErShIP, EmaIL It to [email protected]

rESULtS: rEPort gEnEratEd on 12 JUnE 2012. 361 rESPonSES.

This month’s Actuarial Pulse asked readers to reflect on how they joined the actuarial profession. We were fortunate to receive responses reflecting a wide range of paths, along with the benefits and challenges that each bring. Whilst the formal education process has changed over time, the wit

and candour of actuaries does not appear to be age dependent.

qUEStIon 1: dEmograPhIcS?

Female (27%) Male (73%)

Age % No.

< 20 0.3% 1

20-29 30.3% 109

30-39 29.2% 105

40-49 23.3% 84

50-59 10.6% 38

60-69 5.0% 18

70+ 1.4% 5

Responses were skewed towards younger male fellows from traditional practice areas. This is quite similar to previous Pulse surveys and broadly representative of the readership.

The bias of some questions to the more recent configuration of

actuarial exams may have encouraged younger readers to participate.

Primary practice area % No.

General insurance 33.8% 120

Health insurance 4.8% 17

Life insurance 26.8% 95

Superannuation 12.1% 43

Wealth management 2.8% 10

Financial services 8.5% 30

Other 11.3% 40

Membership status % No.

Fellow 66.9% 240

Actuary 6.7% 24

Associate 12.0% 43

Student 14.5% 52

qUEStIon 2: what waS thE kEY rEaSon that LEd YoU to JoIn thE actUarIaL ProFESSIon?

Reason % No.

Wanted to make a difference 2.9% 10

Best option given TER / UAI / ATAR 4.9% 17

Future work / life balance 4.6% 16

Money and status 16% 56

Parents forced me 1.1% 4

Enjoyed maths at school 56.7% 198

Other 13.8% 48

the actuarial pulse

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How did you join the actuarial profession?


daniel [email protected]

The Actuarial Pulse is an anonymous, web-based survey of Institute members, run on a monthly basis, giving members an opportunity to express their opinions on a mixture of serious and not-so-serious issues.

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Unsurprisingly, the majority of us are actuaries today because of a longstanding enjoyment of maths. While only a modest proportion admittedto“Moneyandstatus”asbeingtheirprimarydrivermanycomments mentioned that the receipt of a scholarship heavily influenced their decision.

Noteworthywastheindividualwhosoughtouta“chancetomakedataspeak”.Thisisquiteanimpressiveinsighttohavepriortojoiningthe profession and perhaps a nice tagline for future careers fairs!

On the other hand one respondent was simply being practical given thatthe“leathertanningindustrywasheadedtoChina”.Whileanotherportrayedsomebitterness:“In1975,itseemedveryinterestingworkanditdidnotobviouslyservethepowersofdarkness”.

qUEStIon 3: haS JoInIng thE ProFESSIon mEt YoUr ExPEctatIonS?

Age group (yrs) 20-29 30-39 40-49 50-59 60-69 70+ Total

Greatly exceeded 6% 5% 11% 16% 11% 40% 9%them

Exceeded them 23% 24% 30% 37% 50% 40% 28%

Met my 47% 51% 52% 39% 33% 20% 47%expectations

Below my 16% 12% 6% 8% 6% 0% 11%expectations

I want my money 8% 8% 0% 0% 0% 0% 5%& my life back

Almost half of all respondents indicated that the profession has met their expectations. Of note, the distribution of responses changes by age. Does this suggest that with experience and time the value of the profession is enhanced? Were the expectations of new actuaries more than 20 years ago materially lower or different to recent times? Or is this a function of today’s youth taking for granted the opportunities they have?

There was a real diversity in views that came through the comments.• “Overtheyearstheworkhasbecomemorestatutoryandless

interesting. It is also not the key to fame and fortune that it oncewas.”

• “Theconstantfailureofexamsiswearingmedown.I’matthepeakof my youth and should be out socialising rather than stuck in my ownfourwalls.”

• “Youdon’tfeelthejob,youjustdoit.Victimseventuallybecomedehumanised to claims, and you just can’t help becoming cold in life overtime.That’sthegreatestdisappointmentwiththeprofession.”

Such feelings are not shared by all however:• “MuchbroaderthanIcouldhaveimagined.Openedupaworldof

possibilities.”• “IneverexpectedtobedoingtheworkthatI’vedoneortravellingto

the places I’ve been or meeting the (mostly!) great people I’ve met & workedwith.”

qUEStIon 4: havE YoU EvEr USEd thE controL cYcLE In a non-actUarIaL contExt?

Context % No.

In work outside of traditional 50.6% 127

Managing personal or familyaffairs / relationships 27.1% 68

To pursue romantic opportunities 6.4% 16

What’s the control cycle? 17.5% 44

Other 17.1% 43

The actuarial control cycle is a concept that draws strong views from the readership. Based on the frequency of use in non-traditional areas (only around 25% reported not using it outside of work) it is clearly a common strategy and not unique to actuaries, as many readers pointed out. • Istudiedphysics.Youguysareabitlatetothepartyreally.• Thecontrolcycleconceptisnotuniquetotheactuarialprofessionin

fact it is standard practice in large well run businesses.• Formethecontrolcycleisreallyaboutcontrolsandgettinga

second pair of eyes across key information – just general good professional practice.

qUEStIon 5: waS YoUr USE oF thE controL cYcLE In thIS caSE SUccESSFUL?

Yes (78%) No (22%)

The control cycle seems to be successful at helping actuaries through a range of work and life related issues. Except perhaps for the poor respondent who used it to learn to ride a bike, only to crash spectacularly!

Some other noteworthy success stories included:• 1. Identifiedweaknessesofcharacter 2. Did some modelling, calculations and scenario tests of different

builds/strategies 3. Implemented desired strategy 4. Monitoredandrefined”• “Yes,thecontrolcycletaughtmethatpursuinggirlsfromworkis

usually a bad idea. Especially when the girl sits on the other side of thepartitiontome.”

• “HAPPILYDIVORCED”

And since you are all surely wondering, of the 16 readers who have used the control cycle to pursue romantic opportunities, 10 reported a successful outcome.


qUEStIon 6: woULd YoU rEcommEnd thE actUarIaL ProFESSIon to othErS?

While the response options didn’t allow for the kind of nuanced responses in the comments, those who previously responded that their expectations had not been met were also the ones to respond negatively to this question.

Recommend % No.

Definitely, to anyone 4.7% 17

Yes, but only if I thought theindividual had the right skills 66.5% 238

Wouldn’t stop them if heart set on it 26.8% 96

Not even to my worst enemy 2.0% 7

Many comments concurred with the view that an individual should have the ‘right skills’ before joining the profession. Some attempts to clarify what such skills might be included:• “Ifeelbeinganactuaryisacalling.It’snotonlyhavingtheright

talents,butalsoenjoyingapplyingthosetalentsasaprofessional.”• “Notonlyneedtherightskills,butalsotherightpersonalitytype/

temperament.”• “…andtherightcharacter”

On the flip side there were some warnings sounded for those considering the actuarial profession:• “Therewardsarenotsufficienttomeettheeffort,andtherisk

of not making it too high vs the potential gains. I’d say to anyone who asked, if you want to do maths, do a maths phd and become a quant.IfyouwanttodobusinessdoaccountancyoranMBA.”

• “Unfortunatelymostpeoplewanttobedoctors,lawyersandactuaries for the money. A lot of people will make the mistake of choosing a career due to greed rather than pure interest.

qUEStIon 7: doES YoUr FamILY UndErStand what YoU do?

Yes (49.6%) No (50.4%)

Responses were split almost perfectly 50 / 50, a result seen across all genders, age groups and membership groups captured. There were some variations across practice area though, perhaps suggesting that Life Insurance and Financial Services are more difficult for us to explain to others.

This stereotypical difficulty in explaining what an actuary does to lay peoplewasreflectedbymany“Notreally”commentsandthefollowingreal life examples:• “Yes,aftertheygoogledwhatanactuaryis”• “Buttheyareallaccountants,soprobablynot.”• “Imadethemsitanexamonmyjob.Somememberspassedonthe

firstattempt”

Although perhaps we could all learn something from the nine year oldnephewofonerespondentwhoasked“Soyou’reamathslovingfortuneteller,right?”Theprouduncleassertedthatthiscouldbe“afuturesloganoftheprofessionIreckon...”

qUEStIon 8: whIch PartS oF YoUr actUarIaL StUdY Program bESt PrEParEd YoU For thE ProFESSIon?

Parts % No.

Part 1 subjects – Core technical knowledge 43.8% 152

Part 2 subjects – The Control Cycle 30.3% 105

Part 3 subjects – Specialist Exams 65.1% 226

None of them were useful at all 3.5% 12

Other study, separate to the actuarial program 14.7% 51

There was quite a mix in responses with Part 3 specialist exams gaining the highest proportion of responses. On the job and life experience were commonly mentioned as the greatest teachers. Thankfully very few of us have not found any of the above useful!

qUEStIon 9: gIvEn what YoU know now, what woULd bE YoUr IdEaL doUbLE dEgrEE In UnIvErSItY?

Double degree choice % No.

Finance 25.4% 89

Economics 9.4% 33

Statistics 14.2% 50

Mathematics 8.5% 30

Computer science 13.4% 47

None 6.3% 22

Other 22.8% 80

Responses were well spread across the options with most people indicating that finance was the best complement to an actuarial studies degree. A good number of respondents indicated that they would do law in order to gain a more diverse skill set.

Similarly“somesortofbusinessmanagementcourseorbehaviouralsciencecourse”mayachieveasimilargoal.Orperhapsadifferentapproachisbest:“Maybepsychology,becauselotsofattractivegirlstendtodopsychology.”

In keeping with the previous question the benefits of experience were commonly mentioned, in many cases above the benefits of a double degree. • “Don’twastetimeondoubledegree.You’lllearnsomuchmorewhile

working.• “Idon’tthinkitreallymatters–I’veforgottenmostofthestuffI

learntinmybachelordegree.”

Givensomanygoodoptionsitmayjusthavebeeneasiertopick“theonethatgivesthemostexemptions”.

Thank you to all who participated in this survey with a good blend of insight and humour. I hope that it is has lived up to your expectations!

the actuarial pulse continued

review

In-house custom-built software to build heavy duty predictive models: $30,000. ● Time cost of an actuary to build a model from ‘unpredictable’ data: $100,000.

● Building AFL and NRL tipping models to take the bookies to the cleaners: Priceless!

The Taylor Fry AFL and NRL tipping models have been predicting outcomes for footy matches for the past five years and have successfully beaten off, by considerable margins, any rival punter over this time. Whenwesay“anyrivalpunter,”we actually mean invitation-only members of Taylor Fry’s tipping competition ‘Beat the Geek,’ organised by Taylor Fry to dish out prizes and provoke interesting water-cooler conversations on a Monday morning.

As well as long term consistency, we have had some very good results in individual years and competitions. By way of example, check out the table

below. It shows the final results for the 2010 NRL Beat the Geek competition:

As can be seen, the Taylor Fry models all finished in the top ten and two finished on top! Obviously, there are times when the models could be better, and to be honest, the models don’t win every year… but they do consistently outperform. To put this into perspective, the 2010 NRL 'Taylor Fry Destroyer' finished 83rd out of 110,000 footytips.com.au entrants. WOW! We should also mention that the Taylor Fry tipping models:• sometimesgetpublishedintheSydney

Morning Herald or Australian Financial Review;

• arestudiedbystudentsoftheActuarialControl Cycle, aka Part II’s; and

• actasanexpertonthefootytips.com.auwebsite.

what’S thE SEcrEt?Maybe it is the superior modelling skill or the unique ability to capture and categorise data for prophetic use. Better still, the models exclude any human emotion. They tip based on hard, credible and tested facts, a talent so easily lost when tipping your favourite team or player.

What drives these models to success? Is it the win/loss record over the past few matches, home or away, or who won/lost last time the two teams met? Before we go further, a cautionary note: given that the models are about to spill the beans on that illusive ingredient to tip, we take no responsibility for any losses incurred by the reader. If your heart rate has suddenly jumped and you’re reaching for your wallet to punt, we respectfully refer you to Gamblers Anonymous http://www.gamblinghelp.nsw.gov.au/.

Now, let’s get down to the cold hard data. The table below shows, in order of importance, some of the most explanatory variables for tipping. We rank the variables in order to make it easier for the reader to increase their tipping


James Sullivan [email protected]

Kicking goals with the Taylor Fry tipsters

table 1no. tipper total tips1 Taylor Fry Destroyer 1252 Taylor Fry Dominator 1243 Valued Taylor Fry invitation-only member 1224 Valued Taylor Fry invitation-only member 1215 Valued Taylor Fry invitation-only member 1216 Taylor Fry Demoraliser 1207 The rest… < 120 tips

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review continued

rate. In fact, ranking variables in order based on their explanatory power is an important step in any data mining exercise and a talent possessed by few. Real world examples of why you would want to rank variables in order of explanatory power range from simplifying rating structures to targeting areas for data quality.

table 2Some key explanatory variablesPlayersCoachDifference in ladder positionHome and awayLast time the teams metWin/loss margin over past 5 matches

Now,youareprobablyaskingyourselfwhocaresifthe“differenceinladderposition”ismoreimportantthan“whowonorlostlasttimetheymet”?Howdoesthathelpmeintipping?Well,youareright, it doesn’t help. The table only shows the relative strength of each explanatory variable in predicting outcomes. What you really need to know is how these variables contribute to the outcome of a match. The Taylor Fry AFL and NRL tipping models actually tip winning or losing margin and not just win/loss result. That is, for each explanatory variable in the above table, plus a few others not shown for commercially sensitive reasons, we analyse the relationship between the explanatory variable and the winning/losing margin using Generalised Linear Models (GLMs) and other data mining algorithms.

This may all sound too complicated and exhausting for the purpose of tipping a footy game, but essentially, it is about putting a line through a bunch of points on a graph. To illustrate, the plot below shows the trend relationship between recent performance (past 5 matches) and current margin. This line can be interpreted as how an expected winning or losing margin changes as recent performance changes. For most readers, this shouldn’t be anything new: this is actuarial bread and butter. We spend our lives pricing insurance contracts and valuing liabilities, both of which depend on identifying and quantifying the effects of how explanatory variables change. – Figure 1

harnESS thE PowEr oF dIagnoStIcSFor those who enjoy this kind of stuff, feel free to question

where the model puts the fit. In response, there are a countless number of diagnostics that are painfully scrutinised every time we update the model, plus, the above plot is for 2011 data only and does not show the effect of any interactions. We will keep these interactions close to our chest.

These diagnostics ensure that we have the best fit for the data and the best predictive model possible. For example, the figure below shows the difference between the actual and expected average margin during the 2008 and 2009 seasons. Geelong was the best team over these two seasons, winning 39 out of 44 games.

While the models performed well and tipped Geelong for every match over this two year period, the figure shows that Geelong still performed far better than the models expected, by an average of 23 points per game. – Figure 2

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If you are still reading and we haven’t lost you among the finer actuarial detail, as mentioned, the Taylor Fry team painfully scrutinises diagnostic, diagnostic, diagnostic, diagnostic... you get the point. To give you a taste, the plots below show how the current 2012 model fits over past AFL seasons, separately shown for Carlton and Essendon. It is gratifying to see the expected win/loss margin tracking the actual win/loss margin closely, especially over such a long period of time. If the model is closely tracking the actual win/loss margin, we can be confident in the predictive power of the model. On the other hand, significant divergence would indicate that there is something missing from the model that needs explaining. Additionally, the plots also give us insight into trends over time: for instance, Carlton improved substantially from 2007 but have they plateaued since? And Essendon, have they bottomed and turned the corner for 2012? – Figure 3 and Figure 4 (previous page)

bEttIng StratEgYThis is all well and good, but do the models give us a licence to flog the bookies? The table below shows the financial outcome of betting head-to-head on all matches in 2010, 2011 and 2012 (to date) for both AFL and NRL. Also shown is the result of accumulating each head-to-head bet within each round, aka an ‘accumulator’. Despite the very good comparative performance of our models, it’s still pretty hard to beat the bookies’ margin of at least 6% on a consistent basis:

table 3betting strategy 2012 Ytd, 2011 & 2010 description aFL nrL total

Head-to-head ($1 per match) $ outlay $435.00 $475.00 $910.00 $ return $414.94 $489.73 $904.67 % return -5% 3% -1%Accumulating each head-to-head $ outlay $54.00 $63.00 $117.00bet within each round, aka, $ return $41.79 $224.28 $266.07“Accumulator”($1perround) %return -23% 256% 127%

(1) nrL accumulator wins are from rounds 6, 9 and 11 from the 2012 season and round 2 from the 2010 season.

(2) AfL accumulator wins are from rounds 6, 12, 18 and 19 from the 2011 season.

(3) Betting over a range of events and years minimises risk.

wraP It UPSo, for those pundits out there who have had the pleasure of trying to ‘Beat the Geek’: good luck, you need it. And for those who would like to join the club, there are great prizes to be won: iPads, vouchers, cold hard cash, champagne, footy tickets, the list goes on. Drop us an email and we’llwelcomeyoutothegame.Foreveryoneelse:“statisticsdon’tlie”.

want more, check out:http://www.taylorfry.com.au/newsletters/rugbyworldCupfinal.pdfhttp://www.taylorfry.com.au/newsletters/Taylorfry_worldCup2010.pdfhttp://www.taylorfry.com.au/newsletters/Taylorfry_worldCup2010_wrapup.pdf

In total, beat the geek has dished out, 22 cases of champagne and over $10,000 worth of prizes: iPads, iPods, nintendo wii, weekend getaways, magazine subscriptions, a couple of goats, carbon offsets and footy tickets!

“thank you tF. I might have a crack at that. Someone needs to be in last place from start to finish.”A client who appreciates having a go

“the comp is a great idea and given the various dynamics at play, the outcomes you’ve achieved certainly provide testament to the quality of your work.”.executive, a telecommunications company

“what a ripper of a newsletter! who said actuaries don’t have a sense of humour? certainly not me.”executive, an insurance company

“thanks for the world cup newsletter. It rocks compared to some other fluffy wc analytics I’ve read recently.”executive, a media company

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I remember early on in my actuarial career, I was very despondent. Having just failed my third consecutive exam, and without a single pass, I was contemplating whether I

should pursue another career. While standing at the lift well in the old National Mutual Building, one of the qualified actuaries asked me how I was going. When I shared mydilemma,sheresponded“Andrew,whatwas really helpful when I was struggling with exams was to remind myself that I was no better or worse than any of the other students – You are no better or worse than other students:justbackyourself.”

That expression of support and encouragement made an extraordinary difference to how I felt, and to the determination I took in continuing on with the exams. This was over twenty years ago (yes, I was oh so very young when I started studying), and I still remember that as if it was today. My bet is that at some stage in your career, whether at moments of great difficulty, in times of transition or the daily routine of working life, there have been people who have heavily influenced and shaped who you are today.

To explore this further, take a couple of minutes now to reflect back on the best manager, mentor, coach or role model you have ever had. What was it about that person that made the experience with them so meaningful? Which of their behaviours did you most admire? How did they support you, develop you or challenge you to grow? How did that make you feel?

what goES aroUnd comES aroUndHaving worked across quite a few disciplines and areas, my sense is that relative to many professions, actuaries are extraordinarily giving with their time and commitment to supporting the development of their people. When I have asked actuarial professionals why this may be so, the general consensus is that given the demanding nature of sitting the exams and qualifying, the gratitude that goes with qualifying and the rewards that are reaped, many people want to make a contribution to their colleagues. Many qualified actuaries say they couldn’t have qualified without other’s support, so they are simply giving back what they have received. In my May column, I touched on this with Joseph Campbell’s work and the hero’s journey. When the hero climbs the mountain and achieves their goal, they bring gifts and wisdom from the journey back into their communities.

So what kind of developmental relationships may be helpful for you, in whatever stage you are in of your career? What are the gifts of support and contribution you have to offer the profession?

thE mEntor rELatIonShIPOne of the best ways to develop your leadership capability is to find a mentor – choose someone who will stretch you, who has had different experiences, different challenges, perhaps different thinking preferences or strengths to you. Ask them to take you beyond a comfortable conversation; drink up every last

drop of their insight. One of the key challenges mentoring programs often face is that after the third or fourth conversation, the mentor and mentee run out of things to say or do and the relationship degenerates into polite coffee followedby“toobusytomeet”andfinallyboth parties conveniently ignoring that the relationship ever took place. The way to ensure this doesn’t happen is be clear on what you want to get out of the relationship and hold each other accountable to achieve that. Be respectfully frank if you think the relationship has run its course; this will save both you and the mentor valuable time.

Many people who excel at developmental relationships network widely; the biggest steps forward often come from the most unlikely places. Get a mentor from another industry or another company… seek the counsel of the wise elders in your profession; standing on the shoulders of a giant helps you to see a lot further. Developmental relationships can be found in many places – being part of Institute committees and learning from the shared wisdom of the group; offering to be a mentor for the Institute’s various mentoring initiatives.

conSIdEr bEIng a mEntorBecoming a mentor can also be a powerful development opportunity. I have found that I learn an enormous amount from people

actuaries taking the lead

“Successful people turn everyone who can help them into sometime mentors.” – John crosby

Mentoring

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I mentor. Their unique perspective on a situation and exploration of ways forward stretches my own view and challenges me in my own work. In an organisational setting, mentoring others can help you to get more connected in to what’s happening across the organisation and to provide a sense of contribution as well as an appreciation of what the young uns have to offer.

dEvELoPmEntaL rELatIonShIPSAnother fantastic way to learn and grow is through embracing the learning from difficult relationships. If you are anything like me in my more vulnerable moments, your first movement in these situations may be like a game of poison ball; running, ducking, anything to avoid the ball. Yet when I have run out of places to hide, or figured out that I was part of the problem, I have found I learn a lot more from people I disagree with and have a different perspective to, than people who are simply like me. And when you turn around a difficult relationship, very often those people can become your greatest career advocates.

Not only can you learn and grow through developmental relationships, you also have a tremendous opportunity to support others to develop and grow their leadership capability. Sometimes, just having faith in others can make a real difference to them, as it did with

my conversation at the lift. The term ‘Pygmalion effect’ is some times used to describe how having such a strong belief in another person’s capabilities, becomes a catalyst for the person to live up to those capabilities. It comes from the Greek myth about the sculptor, Pygmalion, who sculpted a statue of a woman of such beauty that he fell in love with her. Because of his devotion, the goddess of love shot an arrow into the statue which turned it into a real woman who Pygmalion then married.

What are your Pygmalion opportunities? It could be with your family members, people in your team, or the despondent figure at the lift well pondering their next career move. Embracing developmental relationships provides richness and growth beyond the boundaries of a model or spreadsheet; in many ways it is a calling for us to develop beyond what we can achieve by ourselves. I look forward to hearing other ways that people have profited through developmental relationships.

Next months column will focus on developing leadership through adverse situations.


andrew brown [email protected]

Embracing developmental relationships provides richness and growth beyond the boundaries of a model or spreadsheet. not only can you extend yourself professionally, you also have a tremendous opportunity to support others to develop and grow their leadership capability.

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Hans Christian Andersen wrote a tale called ‘The Emperor’s New Clothes’ which started like this:

“once upon a time there lived a vain Emperor whose only worry in life was to dress in elegant

clothes. he changed clothes almost every hour and loved to show them off to his people…”

We all know how the story continued – a couple of scoundrels took advantage of the Emperor’s vanity by selling him some very expensive invisible clothes. Although no-one could see these ‘clothes’, none of his advisers dared to admit as much, until a little child came out with the simple truth: “But he’s not wearing anything!”

It strikes me that this story applies very aptly to the industry where most actuaries work – the financial services industry. Our industry certainly is an ‘Emperor’ – fabulously wealthy, fabulously important – and surely no-one will doubt for a moment that he is also fabulously vain. And the bit about changing clothes every hour…

aboUt thIS coLUmnThis column is a light-hearted attempt to poke fun at some of the ‘fashionable clothes’ that our industry loves to dress itself up in. There is, of course, a serious side to this job – if someone doesn’t tell the Emperor that he is naked, he’s bound to make a fool of himself! Nevertheless, it seems to me that actuaries are ideally placed to expose the Emperor’s nakedness. Consider:1. We work in the industry, so we know what makes it tick;2. We understand (better than most) the theory of how financial

services ought to work; and3. We’re mathematically minded and love to come to grips with

complex mathematical problems – and most of the ‘new fashions’ involve some new-fangled and complex mathematics to bedazzle our vain Emperor and his courtiers.

So, that is what this column is about – part serious, part light-hearted, but hopefully fully thought-provoking. I have a few topics in mind that should keep us going for a few months, at least, but I am very much open to new suggestions. If you have any, please email them to me.

to Start thE baLL roLLIng …The last time our Emperor went public, he really made a fine spectacle! Not only did he embarrass himself, he also sent the whole western world into a spin that all but brought down his whole empire. I am referring, of course, to the Global Financial Crisis (GFC). And what was our Emperor wearing on that occasion? Some beautiful clothes made of complex invisible fabrics called 'securitisation' and 'diversification' and the like.

The advisers (who made millions out of the wardrobe change) were

verypersuasive:“Don’tworry!Youmaybelendingmoneytopeoplewho can’t afford it, but once you apply securitisation and diversification totheprocess,they’llallendupasAAA-ratedrisks.”Allthecourtiersnoddedsagelyandsaid,“Yes,Iseehowthatwillwork.”Butitdidn’t.

The pop diva P!nk (assuming she understood about financial services) might have expressed it like this:

guess I just lost a trillion, I don’t know where it went.Lent it to some poor buggers who can’t even pay their rent.gave ‘em a triple-a rating, used to be triple-g.the system’s gone into meltdown, they call it a gFc.

So, so what, I’m still a banker, I got my bailout, and now I’m all right,and guess what, I know there’s no dough, but I’ve got cashflow, and I’ll be all right thanks.

on a SErIoUS notEIt’s easy enough to be wise after the event, but don’t you think anybody who knew the first thing about economic modelling ought to have seen the GFC coming? Why did we allow it to happen? And what new fashions are out there, ready to beguile our vain Emperor next time he goes out in public? Have we really learnt anything from the GFC? I welcome your comments.

Next month, I will be talking about the latest in fashion accessories, coming out of Europe this time. It’s called ‘Solvency II’ and no fashionable Emperor should be seen in public without it.

Phil Stott [email protected]

the Emperor’s wardrobe manager –making fun of the latest fads in financial services…

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Is it overseas travel? Working with beautiful and important people? Or just estimating outstanding claims dressed in something a little bit sensual?This was the first question posed to

panellists and some of the answers they provided at the Health Practice Committee’s recent Insights Health Networking session. Attended by corporate actuaries, consultants, investment bankers and even the regulator, this evening event was an opportunity to hear about the work and opportunities that actuaries are finding in the health sector in Australia and overseas. After some initial drinks and mingling we heard some interesting views on this topic.

Bronwyn Hardy and Hadyn Bernau spoke about their involvement in Private Health Insurance from different perspectives – as actuaries for an insurer and the regulator respectively. Nicole Stransky spoke about her work with health savings accounts in Singapore whilst Kirsten Armstrong presented a consultant’s view from the wider health sector, noting that 90% of the Australian health sector isn’t funded by consumers through their health insurance.

The panellists' stories revealed a number of consistent themes. • Manyactuariesworkingin‘Health’don’t

spend a lot of time working with other actuaries.

• Theirrolesaren’toverlytechnical.• Thekeytotheirsuccessistheabilityto

communicate with often very intelligent but non-technical audiences.

I was particularly encouraged by the strong sense that each of the panellists felt that they were making a difference to their clients, whether their work was making a contribution to firm strategy, a decision making process, or to the wider population through government policy.

Given that the work sounds so satisfying what are the issues and opportunities for actuaries working in health?

In Private Health Insurance, there may well be a greater role for Appointed Actuaries (and their teams) as part of the regulator’s revision to the capital standards. Session attendees were treated to the ‘scoop’ that an industry

discussion paper is expected in the next couple of months. Panellists also expected that further M&A activity and the challenge of establishing whether ‘Broader Health Cover’ initiatives (such as out of hospital care) actually save money and will provide additional work for actuaries.

Outside of health insurance it is clear that the sheer size of the Health Sector (between 9-11% of Australia’s GDP) means that there are a great number of opportunities for actuaries to get involved with providers and policy makers. Key amongst those discussed were:• Assistingpolicymakersunderstandthe

impacts of ageing, not only on policy costing, but through advising on allocation optimisation and understanding equity issues between different generations;

• Evaluatinghealthinitiativesandassistingpolicy makers develop measures that capture quality and customer outcomes, as well as financial ones;

• Helpingprovidersandpolicymakersdealwith and make better use of vast data collections. In particular, Kirsten pointed out that upcoming Commonwealth roll-out of personal electronic health records will generate large amounts of longitudinal health data – data which hasn’t previously been available in Australia.

If we add to this list the rise of the middle class in Asia and their likely desire to spend more money on managing their health it is clear that the Health sector is a growth sector and one in which actuaries have the potential to make a real contribution.

If you are considering an actuarial career in Health or just want to learn a little more about the opportunities out there why not download the audio from the panel discussion. Or if you want to know more about how you could develop your skills in Health check out the Health Practice Committee section on the Institute website. We have just uploaded a CPD page which provides a number of useful links for further reading and education opportunities.

Many thanks must go to our panellists Bronwyn, Kirsten, Nicole and Haydn for their willingness to share their experiences and views with us, Ben Ooi for moderating, and for the health actuaries in the audience who added to the discussion.


Insights nick Stolk [email protected]

Insights health networkingwhat makes your job sexy?

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A ctUarIaL StUdIES to actUarIaL PractIcE The world is filled with people who view the glass as half-empty and

those that view the glass as half-full. And then there are the actuaries, who will not only measure the volume of liquid in the glass to confirm it is exactly half full, but will have this decision peer reviewed before informing the consumer of said-beverage that the volume of liquid has a 75% Probability of Sufficiency of meeting their thirst requirements. This is the world you enter when moving from university actuarial studies to the actuarial workforce.

When first asked to write this article about the exciting transition from actuarial studies to actuarial practice I experienced a rush of nostalgic memories. University days filled with late night caffeine-fuelled cramming before exams, frantic note-taking from lecture recordings and using all possible sources for study tips on exams. And yes I did pause to smile, but only for a moment as I had to ask my colleagues for exam tips before going to my lecture ahead of an all night cram session. How life has changed! As any actuarial graduate knows (or will soon learn) graduation is only the beginning of further study.

actUarIaL StUdIES… what?As a first year actuarial student in university I remember going to parties and being asked what I studied at uni. To this I would always reply that I did actuarial studies, which would bring on theinevitable:“whatisactuarialstudies?”Thishappened in all but one instance where I received theresponse:“Oh,Ilovethetheatre”,towhichIwas so embarrassed I just nodded and smiled. In any case, I certainly didn’t pretend to be starring in a one-woman play premiering the following week to which I promised all the party guests front-rows seats and told them to invite their friends.

So to answer the inevitable question of what is actuarial studies, in my first year of uni I would describe it as ‘statistics on steroids’. When this answer met with further confused and blank stares I decided that it was time to come up with a better answer. Hence, I used my natural powers of deduction coupled with the high-calibre research skills of a first-year uni student and promptly memorised the first one-sentence answer that showed up on Google. And for the remainder of my first year of uni I would inform peoplethatonedayasanactuaryIwould“usemathematical models to predict and manage futurefinancialrisk”.Thisanswerwouldimpresspeople… right up until the point where I was asked follow-up questions, and I would suddenly realise it was time for me to leave as I had to


comment

From graduation to graduate

“oh, I love the theatre”...


alissa Irgang [email protected]

rehearse for my upcoming one-woman play. It wasn’t until my later uni years that I started to understand what the actuarial field was all about. It’s amazing to look back at how your understanding of the actuarial field changes even between your first year and graduation.

cLoSEd book to oPEn bookUpon graduation my friends with non-actuarial degrees burnt their textbooks and exam notes. Whilst I may have been slightly tempted to burn my textbooks and calculator, the knowledge that they would be required for future study stayed my hand… well, that and the fear of the effects of inhaling smoke from my calculator’s alkaline batteries. So, putting pyromanic calculator fantasies aside I engaged in the joyous task of cataloguing and storing my textbooks, secure in the knowledge that whilst I maintained every record of every item learnt during university there was obviously no need to actively retain this knowledge in my mind.

This blissful period of wilful amnesia lasted until the first semester of Part III study. One difference for Part III students and working actuarial analysts is that we go from memorising all of our notes for closed-book exams to the glorious double-edged sword of Part III open-book exams. For my most recent exam I arrived with a trolley of exam notes. Lacking the upper body strength to physically carry all of the material I was left with the choices of bringing a trolley, employing my closest 17 friends as textbook Sherpas for the day, or carrying the books myself by becoming heavily over-exposed to gamma rays and hoping to find myself very angry. Naturally, I chose the most logical option, but upon finding out that university physics labs do not lend out unstable radioactive materials even when you use the word ‘please’ I quickly abandoned my plans to go Hulk-style and found myself a trolley. With my actuarial omnibus in tow I was convinced that my brilliant plan could not fail because no matter what the exam asked, the answer would surely lie somewhere in my 6,500 pages of notes. This plan may have worked, except that during the exam I was so consumed with writing (in what must have appeared as an obsession to keep Parker pens in business) that I barely had time to even glance at my notes.

coLLEagUES, tUtorS, mEntorS and ‘dad JokES’But studying aside, the actuarial working world is an exciting place for a new graduate. When I

had my first valuation report handed to me to read, I accepted it smug in the knowledge that my double degree with Honours, coupled with a whole 18 months of part-time office work had surely prepared me to master all in this report. Hadn’t it? Well maybe not quite, but any first-day jitters quickly disappeared when I realised that all of my colleagues understood exactly what I was going through and were only too eager to help by passing on their Excel tips and actuarial know-how. I found that the modelling and statistical skills I acquired from my university studies provided me with the essential tools to start my actuarial career. Embarking on an actuarial career is a thoroughly enjoyable and rewarding journey, filled with colleagues and mentors and tutors to help you along the way. I think the only truly scary aspect of starting actuarial work was discovering that somewhere along the way I had adopted a ‘dad-joke’ sense of humour. By my second week the double entendres of“How’slife”vs“How’sthingsingeneral”seemed hilarious and I would sometimes respondtolunchinviteswiththephrase“I’mactuariallyalittlebusy”.

ExcEL maStErY, caLcULator monogamY and PartY trIckSAs I look back on those first few days as a graduate, probably the most mind-blowing feature of starting work was watching the Excel mastery that surrounded me. I remember watching an analyst use Excel without ever touching the mouse. At the time I briefly felt tempted to shout ‘witchcraft!’, but not being in 17th century Salem I settled for complimenting the analyst as being a ‘human macro’ instead. Little did I know that it does not take long to develop this innate connection with Excel. In fact, I still recall the day that I was ‘Excel’ing at my work (another actuarial dad-joke) when computer problems deprived me of Excel for the day and I experienced phantom-limb syndrome at its loss! As I proceeded with other work I mournfully watched other analysts joyfully vlookup-ing and relishing their arrays. I was painfully reminded that only minutes earlier I too had been one of those lucky people and I questioned why bad Excel happens to good analysts. To give those of you still at uni an indication of the analyst-Excel relationship, I’ve added ‘Excel’ under ‘languages spoken’ in my CV. I know that mankind anxiously awaits the arrival of the first half-human half-computer cyborg, but if mankind really is looking for that missing link between computers and humans, one need

look no further than the actuary. But despite my torrid love affair with

Excel I haven’t forgotten the years invested in my long-term (and mostly monogamous) relationship with my calculator. Working means I have graduated from being the nerdy caffeine-addicted university student who used to count a graphics calculator as being an essential when packing her shoulder bag for the day and blossomed into the nerdy caffeine-addicted actuarial analyst… who carries a graphics-calculator around in her purse,justincase.“Justincaseofwhat?”Ican hear you ask. Well, I can think of several instances that would require immediate access to a graphics calculator. For example, if I were at a party and people began showing party tricks such as palm-reading or juggling I would sadly find myself without a party-talent unless I was able to whip out my trusty graphics calculator and show them my self-illustrating parabolic functions. Naturally, I blame my lack of party invites on not having a graphics calculator constantly on hand. Now, Iknowyou’regoingtosay“Alissa,whatifyoufind yourself at a party of actuaries? Won’t everyoneelseknowthattrick?”Obviouslyinthis instance such a trick would fail to impress and I would be forced to pull out my sad impersonation of a peg-legged pirate dancing the Nutbush as a back-up party trick.

actUarIaL carEEr PathwaY… I’m on mY waY But putting thoughts of calculators and Excel aside, embarking on an actuarial career has been a challenging but highly rewarding path. Having passed the graduate phase of my career I am looking forward to the next exciting phase of the actuarial career cycle. Becoming an actuary is a career decision where you have the opportunity to apply the skills you learnt during university while being surrounded by supportive, helpful and like-minded colleagues. Working as an actuarial analyst has enabled me to develop professionally and be in a position where people listen to and respect my professional opinion. Having started on the actuarial path I can’t imagine ever wanting to do anything else. So to all the young actuarial students at university reading this article, I hope you consider the actuarial path after graduating, because I guarantee it’s an exciting career unlike any other, and that’s not just a guarantee with a 75% Probability of Sufficiency.


report

The last 18 months has been a busy and dynamic period in the general insurance space. From floods to disability, the General Insurance Practice Committee

(GIPC) has been involved in the Institute’s responses to various government inquiries and industry submissions. This article aims to give readers a taste of recent goings-on within the GIPC.

So, who arE wE? SomE FactS and FIgUrES…For those who aren’t familiar with us:• TheGIPCaimstoassisttheInstitutein

increasing its profile in the general insurance space and advancing services to our members.

• Wehave13members,allpractisingingeneralinsurance.

• Memberscomefromfourconsultancies,seveninsurers/industry bodies and one broker.

• Thereare13areasofresponsibilitytakenby GIPC members, including accident compensation, professional standards, industry liaison and education.

• AnumberofworkingpartiesreporttotheGIPC,working on a range of research or industry matters ranging from LAGIC to CTP review, plus an Accident Compensation sub-committee.

• TheGIPChasreviewed/wasinvolvedinmorethan five Institute submissions during 2011.

The following table lists some of the items on our radar over the last 12-14 months.

L to R: Andy White, Daniel Smith, Kaise Stephan, David Koob, Tim Clark, John DeRavin, Peter Hardy, Jacqueline Reid, Peter McCarthy and Barry Rafe – GIPC Meeting (Sydney) April 2012

rEcEnt actIvItIES (LaSt 12-24 monthS):

aPra and LagIc

• SubmissionstoAPRA’sresponsepapersonLAGIC.• OrganisingmeetingsbetweenAPRAandAppointedActuaries.• InsuranceCapitalReviewseminar.

FLoodS and dISaStErS

• Submissionsto: > Queensland flood inquiry; > Natural Disasters Insurance Review (NDIR); and > Natural Disasters Relief and Recovery Arrangements.• GovernmentresponsestoNDIRrecommendations(e.g.standardisedflood

definitions).• Floodseminars.• RepresentingtheInstituteatvariouspublicinquiriesandgovernmentconsultations

on disasters.

cLImatE changE

• SubmissiontoGarnautreviewupdate.• RepresentingtheInstituteattheProductivityCommission’sconsultationinrespect

of their Inquiry into Regulatory and Policy Barriers to Effective Climate Change Adaptation.

natIonaL dISabILItY

Productivity Commission report into National Disability Insurance Scheme (NDIS) and National Insurance Injury Scheme (NIIS).

commUnIcatIon

• Launchofregularmonthlybulletinsandquarterlynewsletters.

ProFESSIonaL StandardS

• CompletionofnewPS315.• ReviewofPS305.

general Insurance Practice committee

gIPc committee membersPeter McCarthy (convenor) Andrew Smith Andy White Daniel Smith David Koob David Gifford Jacqueline Reid John DeRavin

Kaise Stephan Peter Hardy Robert Thomson Scott Collings Tim Clark Barry Rafe (Liaison Actuary) Mary Poon (Secretary)

mary Poon [email protected]

gipC secretary


report glenn Langton [email protected]

Over the last 30 years, superannuation has changed from an employer provided benefit, dominated by defined benefits, to a legislated right, dominated by defined contribution funds. A major feature of this change is that members now take on the investment risks associated with their superannuation.

At the same time, superannuation fund members have also been given the ability to choose which superannuation fund is to receive their superannuation contributions.

These changes have meant that there is significant competition between superannuation funds for members and that the past investment performance of superannuation funds has become a major factor in a member’s selection of their superannuation fund.

It is therefore imperative that the investment returns that are provided to the public by superannuation funds allow a fair basis for comparing the past investment performance of each superannuation fund.

The Cooper review and Stronger Super legislation include proposals relating to the disclosure of the investment returns achieved, and expected to be achieved, by superannuation funds.

There has also been significant public debate on this issue. Importantly, some of this debate has focussed on whether administration fees should be deducted when determining the net investment return and what taxes should be allowed for when determining after tax investment returns.

Further, it is expected that APRA will prepare some form of Investment ‘League’ table for superannuation funds which will set out past investment returns.

Given the importance of past superannuation fund investment returns it is vital that the Actuaries Institute has a clear statement of how these returns should be calculated when they are to be used to compare the past investment performance of superannuation funds. The Superannuation Projections and Disclosure Sub-Committee (previously the Benefit Projections Working Group) has developed an Information Note, ‘Investment Return Calculation Principles’, which puts forward the approach proposed by that Sub-Committee. This Information Note has been circulated to members of the Institute who have indicated an interest in this area. A copy of the Note can be found on the Institute’s web site at:http://www.actuaries.asn.au/Library/Standards/SuperannuationEmployeeBenefits/ 2012/SPC_EarningRatesCalculationPrinciples042012.pdf

After being modified to take into account feedback from members, the Institute plans to use the Information Note as the basis for discussions with the government and the regulators in this area. The Note will also form the basis for any comment that the Institute will make when this issue is discussed in the public arena. It is therefore important that any actuaries who have an interest in this matter review the Note and provide feedback.

Superannuation Projections and disclosure Sub-committeeBill Buttler, ConvenorJackie DownhamColin GrenfellGlenn LangtonRichard StarkeyRay Stevens

Investment return Principles Information noteUPcomIng actIvItIES

reviews of accident compensation schemesOur Accident Compensation sub-committee is keeping watch on the developments in various workers’ compensation and CTP schemes. As the NIIS (or other factors) continue to trigger scheme reviews by various governments, we hope to be able to make a meaningful contribution to the scheme design decisions. A working party has already started working on the NSW CTP scheme review. Other recent developments that we’ve been monitoring include the SA CTP green paper and reviews into workers’ compensation in NSW and Queensland. In 2012 at least four reviews / inquiries of accident compensation schemes in Australia have been launched.

research partiesWith the 2012 General Insurance Seminar (GIS) just around the corner, several working parties have been set up to conduct research and prepare papers and presentations. Topics range from management accounts to reinsurance optimisation. Cross-disciplinary working groups have also been set up in the ERM and risk appetite space.

national Injury Insurance SchemeWith the rollout of the NIIS, it is anticipated that there will be a number of areas where our knowledge of insurance schemes and skills can be of value.

aPra and LagIcAs the new prudential standards come into effect on 1 January next year, continued effort will go into the preparation of new professional standards and CPD for members to assist them in meeting the new requirements. LAGIC working parties are already looking into areas where actuaries may require additional guidance, such as property catastrophes and non-property probable maximum losses (PMLs). PS305 is in the process of being refreshed, to incorporate additional aspects actuaries should look at when writing Financial Condition Reports.

Thanks to all of the many Institute members (a list too long to publish here) who have contributed their time and effort to activities overseen by the GIPC. Thanks also to our various sub-committees and the members of GIPC in their service of the Institute and its membership.

There has been some debate over the last couple of months over the role of the Institute in building a public profile for actuaries and the actuarial profession. This brief article sets out the approach we are taking and some of the results and potential traps.

PUbLIc dEbatECouncil has developed the view that the Actuaries Institute needs to be part of the public debate in areas where we can make a valuable contribution. Over the past year we have been in the press discussing topics such as the various flood reviews, capital standards for insurance companies, post retirement issues and the governance of superannuation funds. The reason we have been active in these areas is that the public debate has often been dysfunctional or is lacking a key piece of insight. We do have specific public policy positions on many of these items but the public debate does not always need to be limited to areas where we have a specific policy. To illustrate, the Institute has assisted a number of actuaries to publish opinion pieces and has organised press interviews for actuaries who write papers for conferences. As an example, we organised around 10 press interviews for actuaries who wrote papers for the financial services forum. We see this not only as a service to members but also a good way of getting interesting topics aired in public and associated with the profession. We select topics that may be of broader public interest and provide coaching if necessary to actuaries who speak to the press.

mEdIaThere are of course traps in dealing with the media. In complex debates and in search of a good story the journalists do sometimes attempt to sensationalise a story. A lesson learned from some of these experiences is that it is sometimes better to keep quiet. The profession is small but we have a loud voice. What we as an Institute say in the media does carry a lot of weight and


opinion

Giving Actuariestheir voice

one reason we have been active in some areas of the public arena is that the debate has often been dysfunctional or lacking a key piece of insight.

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Letterbarry rafe [email protected]

carries a risk that statements may be misreported, misinterpreted or simply grabbed for some political advantage.

On specific policy issues we do have authorised Institute spokespeople. These are generally specialists in their particular fields and are media trained. On balance, I think it is important that the profession has a public voice but we always need to be mindful that there may be risks of unintended consequences.

Our preferred approach therefore is to publish opinion pieces where we have control of the message and we can target our audiences through the publications we use. To help us achieve our public policy objectives we have retained media consultants Honner Media. We rely on them to, amongst other things, organise media interviews and to position our messages in the press.

PUbLIc PoLIcYThe Institute has a process for agreeing public policy. The Public Policy Council Committee is tasked by Council to ensure the development of policy. The website sets out our detailed policy on three key areas namely retirement incomes, health financing and enterprise risk management. There are clearly many areas where the Institute can develop policy and we have set policy filters which narrow down what we should develop policy on., In particular we aim to position the profession as a source of valued advice and authoritative comment in areas where there is uncertainty of future financial outcomes. There also needs to be a public benefit.

Policy is generally developed through the relevant practice committee and then tested with the broader membership. There are often situations where our policy is in conflict with Government policy. In these cases, we communicate our views directly with the various arms of government and seek an understanding with them about how we will proceed. In some cases, such as the ongoing discussions regarding new capital standards for insurers, most of the debate has been directly with APRA rather than through the press. In other cases, however we do go public with our views for example over removal of barriers for innovation in some retirement products and the need for flood premium pooling mechanisms. The general rule here is that if we have a difference of opinion with the government over any policy issue we make sure they first hear it from us directly. We specifically do not want the government to be surprised by our public statements.

The actuarial profession does have an important contribution to make to public policy and it is often the case that we can be involved in the debate without taking sides. I encourage actuaries who have an ‘opinion piece’ in them to draft up something and send it in.

dEar EdItor,

I do not like the Institute developing policies, or indeed having any attitudes whatsoever, on matters of public controversy where individual actuaries can reasonably take different positions and disagree among

themselves. I believe it is wrong and dangerous. Wrong, because the resources of the Institute should

not advantage the interests or politics of some members to the detriment of others. Dangerous, because it puts the reputation of the profession itself at risk.

All of us are free as individuals to be as boisterous as we wish in public debate and in the media circus, and I often participate myself. It is healthy for us and for society. And Council has legitimate roles credentialing actuaries, resisting attacks on our independence, providing forums where practitioners can engage with policymakers, and encouraging the rigorous testing of ideas with evidence and reason.

But we do not need the Institute to filter what we say andtodescribeitas“givingactuariesavoice”–everyactuary has a voice already. Nor do we need Council to make public pronouncements, setting itself at odds with its members in matters of policy. It adds little of value and makes us look foolish: in the past influential actuaries have urged the Institute to lobby for tax shelters and other rent-seeking, and to defend deceptive sales practices and homophobia, views that are now widely discredited. That reflects on us all.

Those who work for the Institute or hold elective office, and who are eager to participate in public controversy, can do so in their own names like other actuaries. I believe it is illegitimate for any to advance themselves, their opinions or their business interests by publicly arrogating the authority of the whole actuarial profession.

Peter [email protected]

on balance… it is important that the profession has a public voice but we always need to be mindful that there may be risks of unintended consequences.


Survey

Equity risk Premium Survey 2012: results and commentsShort surveys like ours may oversimplify the many sources of risk and return; but actuaries have something to offer in the determining the ErP as a whole, and industry needs a good estimate as a base for use in both valuation and asset allocation decisions.

What expected Equity Risk Premium (ERP) would you use for Australian equities (over government bonds of the same

term)? The Equity Premium Research group again polled the profession in March this year, and obtained the results shown in graphs 1 and 2 for February 2011 and March 2012.

We had 49 usable responses this year as against 45 in 2011, and the results are not far different. The bimodal distribution of 2011 has further polarised when looking forward twelve months, with 6 respondents expecting no equity premium at all in 2012.

Oneofthemwrote:“Myviewisbasedonoutlook for flattish global growth over coming decade. Positive growth drivers of the past thirty years including the debt super cycle, inflation containment, fall of communism/rise of capitalism and trade liberalisation are all losing momentum. Add to this headwinds due to ageing populations, bank re-regulation etc...”Anothersuggestionisthat“thereturnon shareholders’ funds currently being experienced in Australia is exceptionally high by historical standards, so it would be reasonable to assume some degree of mean reversionhere.”

There is however greater consensus for the longer term with over two thirds of the responses falling in the range 4 to 6%. The median for both 2011 and 2012 and both short and long term was 5%.

There are still two outlying respondents at 10% and 12% respectively. The 12% rate may apply to special circumstances being the valuation of unlisted assets. The 10% rate is used for valuation of risky liabilities and portfolio construction/asset valuation – and is based on the respondent’s own research as well as being the standard view of the employer. They would appear to be somewhat high particularly if used for longer term cash flows.

Adjustments for franking credits, international equities and emerging market equities were (as might be expected) similar to last year. Average adjustments were 90bp for franking credits and -20bp and +100bp for international and emerging markets respectively.

Table 1 (page 29) shows that the average expected ERP is a little lower than last year’s, particular for the one year horizon. Perhaps the negative returns of the last year have coloured our experience? Or is it that the future is going to be less profitable for equities?

Those using the ERP for valuation purposes as compared with investment purposes are using a (statistically) significantly higher rate. Those using their employers’ standard rate are also using a significantly higher rate, but the correlation between valuation purposes and the use of the employer’s rate is not as significant. It may well be that the survey is also not picking up 'frictional costs' that

provide a wedge between internal returns and those earned by shareholders. It does however appear that employers’ standard rates have remained high from before the GFC put a significant damper on expectations of the ERP.

We also asked for sources where respondents had obtained their information. Some of the sources our respondents shared were:• “Toomuchrisk,notenoughreward”The

Economist March 17 (which suggests an ERP of 4%).

• “TheannualDimson, Marsh and Staunton survey (110 years of equity, bond and cash real returns) published by Credit Suisse is absolutelyessential”(findinganaverageofabout 4%,although higher for Australia).

• Fama,E.F.andFrench,K.R.,2002,TheEquity Premium, Journal of Finance 57, 637-659 (which suggests 4.3% was appropriate in 2000).

• Barclays Equity Gilt Study (which last year was expecting a 3% ERP over the next decade).

• Damodaran,A.(2012)Equity Risk Premiums (ERP): Determinants, Estimation and Implications – The 2012 Edition. http://pages.stern.nyu.edu/~adamodar/. This has been updated annually for the past five years and at over 100 pages, provides a thorough coverage. His view of the current ERP in the USA has recently increased to a range 4% to 6% – not least because of low risk free rates.

• Othersourcesincludedtheinvestment

course notes, Shiller data, (Shane) Oliver’s Insights, Benjamin Graham and 'wild guessing'!

Damodaran makes the point that survey results are not reliable, not least because they frequently place too much reliance on recent history – a factor that may be influencing actuaries in their more conservative outlook this year.

Apologies to those who did the survey immediately as the survey initially only accepted whole numbers. We’ll attempt to move to basis points for everything next year to avoid a repeat!

Other respondents made the points that short surveys like ours oversimplify the many sources of risk and return; and how the ERP should be considered in the context of asset price volatility – relative to liabilities. Other replies confirmed the view of the Equity Risk Premium research group that actuaries have something to offer in the determination of the ERP as a whole, and that the investment management industry needs a good estimate as a base for use in both valuation and asset allocation decisions.

The Research Group would welcome additional volunteers. Could I suggest that the following areas merit consideration for further research:• Whetherandhowtoincludequestionson

the risk premia and volatility of different asset classes and equity sectors in future surveys.

• Howtoentirelydispelthenotionthatmarkets, always and everywhere, accurately reflect best estimates of future risk adjusted returns.

• Exploringsomemorepromisingalternatives to classic CAPM, particularly those where the risk premium is related by the correlation of assets with consumption. These are more consistent with actuarial thinking in being more realistic in their assumptions and more conscious of investors’ objectives. The first few pages of the following link are relatively easy reading and give the gist: http://www.princeton.edu/bcf/newsevents/events/lectures-in-finance/CampbellLecture2.pdf. However, the paper – and the models – get complex later!

• Identifyingtherespectiverolesofinvestment management firms and of the profession and other educational and research institutions in the evaluation of risk premia and volatilities. Education and research are – to some extent at any rate – public goods that are not adequately provided by private firms operating in a competitive market.

• Theextent,andtheeconomicandsocial consequences, of over- and underinvestment as a consequence of failure to correctly identify the long term risk premium associated with different investments. I believe that this is particularly important in the face of peak oil: arguably a major component of the current slowdown in global growth, and clearly a major risk to economic stability and world peace!

If the last point particularly does not provoke some response, nothing will.

anthony asher [email protected]


Equity risk Premium Survey 2012: results and comments

tabLE 1: ExPEctEd ErP bY USE and SoUrcE oF oPInIon

One year Ten years Count

Valuation of unlisted assets 5.3 5.5 13

Valuation of risky liabilities 5.4 5.2 13

Portfolio construction/asset allocation 4.3 4.5 31

Other uses 4.2 4.4 10

Standard view of my employer 5.6 5.2 15

Own research 3.8 4.2 36

Books or articles 4.4 4.8 24

TOTAL 4.4 4.6 49

2011 total 4.9 4.7 45


II F I

I F I F II F I H I F I

I F I H A H I F II F I H A D A H I F I

I F I H A H I F II F I H I F I

I F I F II F I

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bob

This month we are going to briefly touch down in Australia to visit the beach-side suburb of Glenelg in Adelaide. As well as being the oldest European settlement on mainland South Australia and a popular tourist destination, Glenelg is notable for being one of a number of

locations worldwide with a palindromic place name. Other locations that share this distinction include: Anahanahana, Madagascar; Zirak Kariz, Afghanistan; Ekalaka Lake, USA; Allagalla, Sri Lanka; and Madoko Dam, Zimbabwe, among others, not to mention Glenelg, Scotland; Glenelg, Maryland (USA); Glenelg, Nova Scotia (Canada) and Glenelg, Ontario (Canada).

Palindromes have also appeared in the titles of several songs and albums. For example, the album Aoxomoxoa by The Grateful Dead, or the song A Man, A Plan, A Canal, Panama by The Fall of Troy. The song SOS by ABBA is also notable, in that both the song’s title and the recording group’s name are palindromes. However, Weird Al Yankovic took palindromic songs one step further with his (nonsensical) song Bob, which consists entirely of rhyming, palindromic lyrics. One of the palindromes from this song forms the basis of the following puzzle.

Starting with any of the outer I’s and moving between adjacent letters either horizontally or vertically, in how many different ways can you read the words IF I HAD A HI FI?

genevieve hayes [email protected]

“Ihavediscoveredatrulymarvellousproofofthis,whichthismarginistoonarrowtocontain”–Fermat.

In the margin

resume so pacific a pose, muser.

LoSt In tranSLatIon (aa169 SoLUtIon)Readers were presented with a word search containing the original English language titles of twenty movies and asked to find these titles and match them to foreign language versions of the title (translated back into English).

Solution: Here are the locations of the twenty titles in the word search grid:

The twenty pairs of titles are: Advert Brings Death/Single White Female; An Expert in Fun / Ferris Bueller’s Day Off; Captain Supermarket / Army of Darkness; Club of Five / The Breakfast Club; Criminals on Vacation / In Bruges; He’s a Ghost! / The Sixth Sense; Knight of the Night / The Dark Knight; Love in the Skies / Top Gun; Mum, I Missed the Plane / Home Alone; Please, Do Not Touch the Old Women / The Producers; Power and Greed / Wall Street; Rita Hayworth – Key to Escape / The Shawshank Redemption; Six Naked Pigs / The Full Monty; Skyscraper Attack / Die Hard; Slightly Pregnant / Knocked Up; The Cop in Drag / Big Momma’s House; The Eighth Passenger of the Nostromo / Alien; The Gun Died Laughing / The Naked Gun; Urban Neurotic / Annie Hall; Zany Son-in-Law, Zippy Grandkids, Sour Father-in-Law / Little Fockers.

10 correct answers were submitted. The winner of this month’s prize, selected randomly from among the correct entries, was vivian dang, who will receive a $50 book voucher.

+ + B + T + + + + + + F + + + + + + T F N + I S + O + + + + + E + + + + + + H U O + G + R + P + + + + R + + + + + E G L I + M + + E + G + + + R + + + + L T I L T N O + + + K A U + + I + + + A E + N M P U M + + + + C N N + S + + M E A + K O M G M + + + + + O N + B + E R + L + K N E D A + + + + + + F I U F T + + I + R T D E S + + + + + + H E E S + + + E + A Y E K H R + + + + O S T L H + + + N + D + R A O + E + + M E I L L T A + + + + + + K N U + + C E G H A + E + T L + + + + + N + S + + A U W W + + R + + I L + + + + A + E + L R E D + + + S + + + L + + + + H + + O B L + + O P U D E K C O N K + + S + N N G + + + + R + A D I E H A R D + W E I N + + + + + + P Y + + + + + + + + A S I X T H S E N S E O + + + + + + + + H S + + + + A R M Y O F D A R K N E S S S + + + B U L C T S A F K A E R B + + +

For your chance to win a $50 book voucher, email your solution (with working) to: [email protected]


whEn actUarIES dISagrEE I’m a few years out of uni – just qualified – and I’m currently debating one of the senior actuaries at work about how we interpret some of our analysis (it’s not a technical question as such, and it’s a fairly significant issue for our work). Is it unprofessional for me to disagree with him? how far can I push it?

What a sad world it would be if actuaries – whatever their relative seniority – didn’t feel free to challenge each other’s views. So, no, it’s not unprofessional to disagree. But you need to make sure you go about your disagreeing in a professional fashion: • Challengepolitely,andbecarefultodistinguishbetweencriticising

the specific opinion (which is OK) and questioning the person’s competence generally (not OK).

• Ifthetwoofyoucan’tresolveyourdifferencesatisfactorily,getviews from other(s) in your company, or from someone outside; I suggest doing this together with the other actuary, as you don’t want to appear to be ’ganging up’ on them.

• Ifthesituationstartstobecomeheatedorpersonal,thenitmaybein your best interests to pull away.

• Don’tforget…youmayturnouttobewrong!(IthoughtIwaswrongonce, but it turned out I was wrong).

Actuaries can have differences of opinion in the public arena too. External Peer Review, for example, is a potential minefield for our profession’s reputation. You’ve got insurers required to seek – and pay for – two opinions. From the start some companies would be wondering why they need the second opinion (MORE fees for actuaries?). Throw a serious actuarial disagreement into that mix, and it could chip great chunks of credibility from the actuarial brand.

But most EPR actuaries do a good job of focusing on the important and being constructive about the way they suggest changes. While it can be a bit painful along the way (on both sides), the process provides an added layer of security for the insurer and leads to gradual improvements in the valuation process – as intended.

There’s room in the world for actuaries to disagree – if we do it nicely.

how do I SaY thIS, mUm?I work in general insurance, doing workers’ compensation reserving. I am having trouble explaining to my mother what I do. can you help?

Look I don’t know your Mum… she could be a hedge fund manager, social worker, retired zookeeper, astronaut. With this uncertainty I’ve crafted a few different explanations for you to try. In fact, I’ve tried to make one for everyone:• Insurersneedtohavemoneyinthebankattheirbalancedateto

pay for claims that have happened in the past and haven’t been fully paid yet. In some cases they haven’t even heard about the claim yet. I work out how much money they need.

• YouknowhowIjoinedthecircusandhowI’vebeentrainingreally

hard in the big top every day, and sometimes well into the night? And I’m getting really good at the trapeze and they’re going to let me start working with the lions soon? And you and Dad are so proud? Well, Mum… I lied. I’m an actuary, just like you two.

• Granny–whereverthereisuncertaintyoffuturefinancialoutcomes,I am sought after for my valued advice and authoritative comment. I make sense of the future. (Thanks to the Institute website for this one)

• Iworkinanofficeinatallbuilding.There’saphotoofyouand Daddy on my desk. I have a cool twirly chair and I spend most of the day working on a computer – sometimes I do numbers, sometimes words.

• Mum,actuariesevaluateriskandopportunity.Theyapplymathematical, statistical, economic and financial analyses in a wide range of practical business problems. I personally advise insurance companies on the level of financial reserves held to meet claims. (Website again)

• Ingredients=people+lotsofbrainfood(chips,biscuits,coffee,occasional fruit) + white paper. Utensils: computers, phones, whiteboards, meeting rooms, printers. End products = emails + recycled paper.

• Iworkin,like,thecoolestoffice–kindalikeGoogle,exceptweare,like, brainier. There’s this, like, other actuary there who is, like, so cute, and today she, like, smiled at me, I’m pretty sure, OMG!

gae robinson [email protected]

Gae answers serious and not-so-serious questions about life in the office, career, study and coping as an actuary in the real world

ask gae!

I disagree / You do what?

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The most recent Young Actuaries Program Event hosted by Mercer in Melbourne aimed to give insight into the ‘Out of the Box’ opportunities

for young actuaries. The presenters, Melinda Howes, CEO of the Actuaries Institute, and Mercer’s senior partner David Knox engaged a large and eager crowd.

Who better to provide perspective beyond the safety net of tradition than Melinda, whose passion to see the profession spread wider afield is most evident. Melinda began by asking the audience the reasons they decided to become an actuary. No surprise that money

was one of the attractions! A few other reasons included the desire to problem solve, the need to improve our world and for the love of maths.

A small introduction of Melinda’s own actuarial career path illustrated that it is often a situation, such as a redundancy, which causes one to veer off the well worn path. This makes for a great opportunity to take some time to reassess what it is that interests you and pursue a suitably matched role. If however, the explorer in you finds yourself strolling down a less trodden path, you may be pleasantly surprised by the adoration of your skills. It seems that those who have worked with actuaries have been impressed by

them but unfortunately those who haven’t are unsure of what it is we would be useful for (note to young actuaries: we need to change this perception). The non-traditional actuarial paths travelled by several include wealth management, investment banking and investment management. Although so many roles have yet to be discovered, actuaries may be intrigued by risk management, banking, energy markets, mining and data analytics.

Later in Melinda’s career, a shifting paradigm saw her targeting the most interesting work she could find. This was a particularly inspiring approach as it removes the blinkers set to view only the inside of the actuarial box. As a result, Melinda explained that she was eager to test her skills on various types of other work without the pressure of climbing the corporate ladder. In contrast to

our conservative profile, we were encouraged to venture out of the safety net and apply for those jobs we are more than capable of doing, whether we believe it or not.

Although superannuation is a traditional actuarial area and within the dimensions of our comfort zone, it is very much evolving and it is up to us to seize the opportunity and move with it. In light of the topic, David set out to convince the audience that defined benefit (DB), and superannuation in general, is not dead! Contrary to our belief, there is much work to be done in the defined benefit superannuation space. The largest liabilities of all governments in Australia are defined benefit and these are sure to be around for many years to come. However the defined contribution (DC) space is growing faster than imaginable with Australia as the world leader. As a result there are opportunities galore for actuaries to provide protection against longevity, volatility and inflation. Specifically regarding public policy issues, David believes that actuaries can lead the debate as we are equipped with all the necessary tools. This could be a task fit for the super(hero) actuarial force.

On the global front, the balance of defined benefit and defined contribution varies from country to country, leaving a window of opportunity for Australia to both learn from some and offer assistance to others. There appears to be a global trend in de-risking, from DB to DC and from the institution to the individual. This creates further scope for pooling, asset-liability risk and modelling tools at the trustee and member level. It was noted that although Australia finds itself ahead of the pack in this industry, we still have a long way to go in terms of developing post-retirement products for an ageing population.

We are in the business of risk and uncertainty and we have studied or are currently studying to be equipped with some of the best gadgets in the game. As for the motivational aspect, we were provided with some key advice tips:

1. Promote yourself2. Be willing to apply for roles outside the

well-worn path3. Take a risk!

Young Actuaries of the future, it’s up to us to determine the dimensions of this box.

Sophia Sophos [email protected] actuaries Program

out of the box opportunities

It seems that those who have worked with actuaries have been impressed by them but unfortunately those who haven’t are unsure of what it is we would be useful for.

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dustin biernacki [email protected] university of Melbourne

Theworld of cyber attacks is becoming increasingly familiar to financial institutions and likewise to those in the actuarial profession. It’s apparent

that pricing this type of risk is not performed to the same degree of self-assurance as the more mainstream insurance lines.

Rampant growth of the digital world only adds to the complexity and dimensions to any risk factors worth considering. Constant changes in software, platforms and other interfaces mean that much of the risk is shaped by the way which the security of these interfaces is designed and updated on a regular basis.

So, if I were a CEO, what sort of digital dangers would I be concerned that my company was facing these days? I believe there are a great number of these risks to be considered, but I’ve attempted to distil them into five categories:1 data destruction, deliberately or carelessly

causing important information to be lost.2 theft/extortion, stealing any amount

of funds. This could also include stealing services such as impostor wireless networks or presenting as a major firm with the intention of unlawful gain.

3 Third party losses due to errors/omissions made by the providing company, which presents itself with liability issues.

4 Physical cyber terrorism, involving a terrorist entering the building and gaining access to the control room.

5 vulnerability to printing errors when programs are crashed. If error messages print successfully when hackers stretch the limits of an application, it could provide an insight as to any weakness of the application. These weaknesses can be used for exploitation.

Mobile phones add yet another aspect to this issue. According to the 2011 Georgia Tech Cyber Security Summit (GTCSS), there are over four billion mobile handsets in use around the world. Usage levels of mobile browsers are set to exceed desktops by 2014. Due to higher level of underdevelopment in mobile software systems, they have become a suitable target for a variety of hackers with various skills. Previously limited to computers, and arguably targeted towards Windows / Internet Explorer - smartphones are now at the top of this list.

Potential for ‘spreadability’ is also monumental when you consider how vast the

mobile network is and how many methods of communication the latest smartphone actually has. There is SMS, MMS, internet browsers, email, Facebook, Skype, contact lists, voicemail and more. That’s more than enough platforms to choose from as far as an attack is concerned.

One major disadvantage of these devices is that the software/operating system is not updated regularly by the user. This gives the attackers an upper hand, as they know exactly what can go wrong on older operating systems. Another concern raised by the GTCSS is the rapid growth in mobile applications.

Just like in the insurance world, development teams are under pressure to come up with products quickly. This is good for overall satisfaction of users, but may not be as optimal when it comes to security. Time constraints in which the development occurs will limit how rigorously the data is validated.

This isn’t just limited to phones either, with systems, processes and storage within companies often lagging behind the product development itself. This creates pockets of vulnerability that can be exploited.

When considering exploitation, we should not omit the controversy surrounding Rupert Murdoch and the celebrity phone hacking scandal. The question is not so much what the purpose was of such activity, rather how did it happen so easily and how easily could this extend to corporate espionage?

Several years ago mobile phones were far more primitive than they were now. Allegedly, the method of hacking used for these devices was SQL injection, a rather superficial but deadly form of attack if used properly. With ease of access to confidential information on the subject of celebrities including the royal family, one may realise why it may have been so tempting.

There is a third world war, and it is a cold war in the digital era. Managing risk has a new test in this age and we will have many challenges and interesting times ahead of us. This type of risk must be brought to the fore and be understood in far greater detail. The protection of your personal information is at stake.

Student column

the digital world of risk

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The Australian Moment. How we were made for these times by George Megalogenis. Published by Penguin Group (2012)

about the author – George Megalogenis is a senior journalist with The Australian and is one of the country’s most well known political commentators and analysts having spent 11 years in Canberra’s press gallery.

He is a regular panelist on ABC TV’s The Insiders as well as running his own blog – Meganomics. The Australian Moment is his fourth published book about the politics and economics of Australia.

about the book – The Australian Moment is a ‘with the benefit of hindsight’ account of Australia’s political and economic landscape over the last 40 years. It takes the reader through the events that led to Australia being in its current enviable economic position relative to the rest of the world following the GFC. Megalogenis asserts that arriving at this position wasn’t by accident or just good luck. It was a result of a long series of reforms that started in the 1970’s under Labor’s Whitlam Government that moved Australia from a fortress of protectionism to today’s open economy sufficiently resilient to weather the worst of the GFC.

It is really only with the benefit of hindsight that these observations become clear and Megalogenis goes to painstaking lengths to call on what seems like endless sources (including his own memory) and data to enlighten the reader. Those who were in Australia in the 1970’s through to the 1990’s will recall the recessions, the high interest rates, double digit wage inflation and unemployment rates. Remember the oil crises, bottom of the harbour schemes, Skase, Bondie, the birth of the One Nation Party, the beginning of one day cricket – it’s all there.

Megalogenis points out that as a nation we also learnt from our mistakes along the way and he considers our late 1980’s early 1990’s (the beginning of deregulation) as a dry run for the GFC. All that Australia went through in the subsequent recovery period, the rest of the world can look forward to now.

“the entry of foreign banks fooled the local banks into engaging in a competition for market share, not quality customers. The four largest banks wrote off a total of more than $17 billion in bad loans between 1989 and 1993.”

“Deregulation taught the Reserve Bank and others in the official family that while the market should be encouraged, it could never be trusted.”

It is important for prospective readers to know that this book isn’t just a dry chronicle of events. Megalogenis offers thoughtful social commentary about the national mood of each period, the changing demography of the work force, the impact of immigration and for those who like the human drama – the character of our nation’s politicians.

Megalogenis interviewed five of the six prime ministers who governed through the period of reform – Fraser, Hawke, Keating, Howard and Rudd asking each to reflect on the positive contributions of one another. Their comments and ‘competing versions’ of events are dispersed throughout the book, but amusingly the author summarises their relationships in the introduction:

“Hawke praises Howard so he can take a chip at Keating; Fraser and Keating share mutual admiration, so together they diminish Hawke and Howard by comparison; Howard applauds Hawke so he can reduce Keating.”

Megalogenis also has his own strong views on the strength of the politicians who led during this period – singling out Bob Hawke as the most influential. While Hawke, as ACTU president in the mid 1970’s was responsible for double digit pay claims and the flow on impacts to the economy, he led as prime minister when the reforms were being delivered and stayed in office long enough to ensure they were in place.

When it comes to Kevin Rudd and the current generation of politicians, his words are not as kind. He believes they have little experience and are too young to remember how hard reform was and about Rudd he says:

“He was a willing servant of the media. Rudd told his colleagues that if they didn’t feed the media, the media would eat the government. But it consumed him anyway...”

He does however credit the Rudd government for taking the advice given to it to “deploy the fiscal buffer it had inherited from the Howard government.” Taking advice was out of character for Rudd.

Megalogenisconcludesbyasking“Areweindangerofbecomingagreatcountry?”Hemakesalmostaheartfeltpleathatratherthanrevert back to our self deprecating ways, that we recognise what has just happened – that it wasn’t a mistake, that we use it and continue to grow.

By no means is this a light read demanding a fairly decent level of concentration for every one of the 368 pages. But with each containing an interesting fact or comment, I had no choice but to take my time through the chapters. You do not need to be an avid follower of politics or the economy to enjoy this book, but it certainly makes it an easier read being familiar with the story and the characters. Ask me to rate this book and I would give it a 9/10. I really did find it fascinating.

ruth Lisha [email protected] general insurance actuary who usually tries to escape the dryness of the finance world at home by reading trashy novels and watching trashy TV.

reviews

a good read...


what the editorial committee read or listened to recently


Podcast: The Skeptics Guide to the Universe - New England Skeptical SocietyA weekly podcast in panel format that discusses pseudosciences (homoeopathy, naturopath, acupuncture etc), paranormal, conspiracy theories and the like from a scientific skeptical viewpoint. The panel also discusses recent scientific developments in easy-to-understand ways, bringing in other scientists and skeptics to provide plenty of information to the listeners. Whilst predominately

an educational podcast, the panel provides a general light-hearted easy-listening approach to skeptical science, keeping a balance between taking the issues seriously, without taking themselves too seriously.

david millar [email protected] sportsman, who particularly likes turning anything into a game or a competition. Invests plenty of his disposable income into good food and wine.

Beauty Queens by Libba BrayA plane-load of teen beauty queens crashes on a deserted island, leaving them to fend for themselves. What starts off as Lord of the Flies for girls, soon morphs into a surrealist adventure, complete with a Bollywood dance number, a James Bond-movie inspired villain and a boat full of reality TV show pirates. One of the funniest books I’ve read in a long time.

genevieve hayes [email protected] day, I work in workers’ compensation pricing; by night, I’m working on my first novel and am a fan of horror and crime movies.

The Grapes of Wrath by John SteinbeckI love to read a novel that makes you feel something. Although I read this book over a year ago it still makes me feel compassion and sympathy for the plight of poor migrants the world over. I am always inspired by the resolute way in which Ma Joad confronts her reality, one step at a time. But perhaps the most poignant theme for me is that which closes the novel. When in the most dire of need, despite their own extreme suffering, it is likely to be the poor who will help you, not the wealthy.

daniel cooper [email protected] work experience is with accident compensation and disability support schemes. I spend the rest of my time enjoying sports, reading and being with my family and friends.

holding the man by Timothy ConigraveIt’s an extremely touching, poignant and funny memoir as well as a heart warming love story set in Sydney in the 1980s and 1990s. It’s one of those rare books that I just couldn’t put down. I saw the play a while ago, and its ranks among one of the best.

ben ooi [email protected] Health Insurance background; enjoys eating, wine, playing Call of Duty and walking my Spoodle.

The Fry Chronicles: An Autobiography by Stephen FryFry’s second autobiography detailing his life from ages 18 to 30 – his time at Cambridge and how he met Emma Thompson, Hugh Laurie and Rowan Atkinson, and the early stages of his acting career. His command of language is nothing short of amazing, I recommend this be read accompanied with both a dictionary and thesaurus. Think of it as a 400 page episode of QI!

Solai valliappan [email protected] work in general insurance – retailers’ worst nightmare given I mainly shop online.


Earlier this month, the pilot version of the Institute’s Actuarial Capability Framework was released together with the Capability Assessment Tool, Report and Development Planner. Members are encouraged to

login to the members section of the website, review the Framework and use the Capability Assessment Tool.

These tools and templates, like a GPS for a driver, are intended to guide members’CPD planning and undertaking. The Capability Framework has been built to provide a Learning Support Framework for the enhancement and maintenance of your capabilities and Professional Standards (as seen in the diagram opposite).

thIngS to rEmEmbEr whEn USIng thE aSSESSmEnt tooLThe Framework is deliberately aspirational and focuses on what actuaries who have had considerable experience should be able to do. This means that your experience will vary from that of other Members depending upon your general level of experience within the profession and whether you use the Tool to assess your skills gaps in your current role, or to assess where your skills gaps lie for a role you have in mind for the future.

If you use the tool to assess your skills gaps in your current role and a particular function is not relevant, you can skip through to the next function simply by clicking 'next'.

Staying ahead

how do I become capable?

caPabILItY FramEwork FUnctIonS and dEFInItIonS

Actuarial contributions to business strategy encompass understanding the context and need for reassessment, followed by the generation and assessment of ideas, strategy and modelling, through to the explanation, promotion and selling of the strategy to ensure implementation.

Demonstration of leadership in driving some or all of self, others, business or thinking at a high strategic level.

Employment of a holistic approach utilising technical knowledge, skills and judgment to enable valued advice and authoritative comment to be provided to stakeholders.

Provision of reasoned, relevant and justifiable projected cash flows through the application of professional judgement in analysis, communication, reporting, monitoring and advising clients.

Application of a broad, proactive approach to the development and improvement of a client’s risk culture ensuring the strong engagement of the Board and senior management through systematic development, implementation and promotion of policies, processes and support at all levels for the defined risk framework.

Adoption of professional approaches and practices required to provide Prescribed Actuarial Advice, while maintaining currency of own capability and contributing to the development of the Profession.

Demonstration of product management, development and pricing which incorporates and balances stakeholders needs, commercial realities, the external market, sales and marketing consistency, financial objectives and risk management.

Provision of documented, demonstrated advice on management and development of investment portfolios, including consideration of investment objectives, market knowledge, asset liability modelling, Strategic Asset Allocation and communication with stakeholders.


All functions are pre-populated with 'not at all' responses so that, by clicking 'next', you will effectively eliminate that function from your skills gaps analysis report. However if you answer the skills questions at least, your assessment report will highlight for you those areas where you have skills above present requirements. This may highlight a pathway to potential future roles which do utilise your present capabilities.

If you use the tool to assess your skills gaps for a potential future role, then you should make your best guess as to the importance of particular functions and capabilities for that role even if you're not entirely sure, so that you get a more meaningful analysis of where your personal future development needs may lie.

The results of your skills gaps analysis are confidential to you. The Institute collects data from completed assessments to assist it in broadly identifying CPD needs among the Membership to plan events etc, but on an aggregated, de-identified basis only.

StEPS to bEcomIng a caPabLE PErFormEr• Capabilityassessmentisundertakenandanycapability

gaps are identified.• Developmentprioritiesaredefinedanddevelopmentactions

are planned and sourced.• Developmentapplicationembedscapabilityandenables

broadened performance.• Capabilityreassessmentdemonstratesachievementovertime

and identifies new development priorities.

how wILL I know whIch dEvELoPmEnt actIvItIES wILL SUIt mY nEEdS?The Institute’s education program and all upcoming events will be mapped to the Capability Framework. Members will be able to easily recognise events and courses that will deliver development opportunities relative to each capability function by looking out for the icons on the previous page.

Each flyer, brochure, web page or program will include the icons for the capability functions addressed by that particular activity (as seen above).

Over Semester 2 and into 2013, all Part III courses will also be mapped against the Capability Framework to enable the course content and assessments to deliver performance indicative learning opportunities for students.

The Capability Framework and associated tools and templates are intended to provide a scaffold for the professional development of Members. The climbing of that scaffold is open to all Members and is provided as a support for the continued growth of capable performers and the Profession.

Sue wetherbee SCpd [email protected]

Institute of Actuaries of Australia

ABN 69 000 423 656

Level 7, 4 Martin Place, Sydney NSW Australia 2000

t +61 (0) 2 9233 3466 f +61 (0) 2 9233 3446

e [email protected] w www.actuaries.asn.au

Profit Margins in Regulated Insurance Markets

Presented by: Profit Margins Working Party

Tuesday 7 August 2012

12.00 - 2.00pm

Actuaries Institute

Level 7 4 Martin Place Sydney 2000

Actuaries regularly provide professional services to private sector insurers on premium rating. In addition to the

expected cost of claims, investment return, expenses, reinsurance and any relevant levies, it is necessary to

consider the expected profit margin. The appropriate allowance for profit has been a contentious issue within

regulated insurance schemes for decades, both in Australia and globally.

In order to assess what is an appropriate profit margin, it is necessary to consider the measure of capital

required to support the business, and the required rate of return on that capital. Both the methodology and

the assumptions involved have been the topic of debate for decades, and the issue may appear to remain as

unresolved as ever. Recent actions by both actuaries and regulators have again sparked controversy by

advocating one side of the debate.

This working party will summarise and assess the input that the field of economics makes to the question of

profit margins, including the measure of capital that supports the business and the required rate of return on

that capital. It will propose a framework that actuaries can use that incorporates this input along with other

relevant considerations, in order to advise on the appropriate rate of return and profit margin within a

regulated insurance market.

The purpose of this Insights session is to outline progress made by the working party and to engage in discussion

with interested members of the profession on this issue.

Presenters

Geoff Atkins

Andrew Doughman

Stewart McCarthy

Siddharth Parameswaran

Darren Robb

Rick Shaw

David Whittle

Places are limited so registration is essential. A light lunch will be provided.

The presentation will begin at 12.30pm.

REGISTRATION

If you wish to join this session via dial-in please [email protected] for further details.

Register online or via email [email protected] by 31 July 2012.

Find out more about Actuaries Institute events at www.actuaries.asn.au

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obituary

robert (bob) george glading14 december 1932 - 18 may 2012

Bob was the Institute President in 1994 and Actuary of the Year in 1997. He was also a very active member of the Institute and amongst other roles, was Convenor of the

Professional Standards Committee and a member of the Education Council Committee. Bob was honoured with Life Membership of the Institute in 2007.Amongst other roles, he has been Deputy Commissioner, Life Insurance of the Insurance and Superannuation Commission (ISC) – now APRA.

In 2000, Bob was awarded an AM for his service to the insurance industry and the actuarial profession, particularly in the development of legislation and support for the application of new techniques in actuarial practice.

Many members and some staff in the Institute HQ have had the pleasure of working with Bob. Gracious and learned, he was a great pleasure to work with, we are certain he will be sorely missed by his numerous friends and colleagues.


here, three colleagues and friends– mike barker, rod atfield and tom karp – pay tribute to bob and talk about their individual memories of their time spent with him.

Bob moved to Australia in the mid 1960s to take up a position of Actuary at Northern Life. In 1968 he accepted a position of Actuary at P & C Life just

after it was acquired by US-based Aetna Life and Casualty. This position only lasted a couple of months, as Northern Life offered Bob the opportunity to return to his old company as Chief Executive. I had just arrived in Australia from the UK as Assistant Actuary at P & C Life and although Bob’s time at P & C was brief, he left a lasting impact on the organisation.

In the 1970’s, a rift developed between the large life offices, represented by the Life Offices Association, and the smaller and newer companies, who formed their own representative body. Bob was heavily involved, and chaired the new organisation. Whilst clearly not part of the old establishment, he had the respect of his actuarial contemporaries at the larger companies, and the two organisations managed to co-exist for some years without declaring war on each other.

Bob’s background of leadership amongst the smaller life companies, and the sense of fairness that he had exhibited, were important to his appointment to the ISC as Deputy Commissioner, Life Insurance.

As regulator, Bob had some challenging moments, such as the 1987 stock market crash, which could easily have developed into a crisis of confidence in the industry without Bob’s steady hand, and the collapse of Occidental Life. Overall he took a very progressive stance, innovating in such areas as monitoring of derivative positions, which was a world-leading initiative. Most important was his leadership in the major revision of the Life Insurance Act, which placed the Australian industry on a sound footing for many years ahead, and for which he will certainly be remembered.

Following his retirement from the ISC in early 1998, Bob continued his service to the life insurance industry in a consulting capacity by providing education to regulators in a number of emerging countries. At the same time he served on the Boards of Gerling Global Reinsurance and Citicorp Life, which later became Metlife Insurance. He chaired MetLife for six years until he fell ill in May 2011 just before his planned retirement, he is very fondly

remembered by Metlife’s management and staff.

Bob will be remembered by all who worked with him for his dedication to maintaining standards and integrity in the life insurance industry, and for his service to the profession.

mike [email protected]

I have been privileged to have known and worked with Bob Glading for many years. He was always very amiable with a ready and warm smile. We worked together on many

committees, he was a valuable contributor as a Council Member in my Presidential year, and we were together for a number of years on the Macquarie University Actuarial Foundation where his keen interest in educational matters was clearly evident. His only lament was that so few people studied Latin as, in his view, without such a background, no one could fully appreciate languages.

Bob’s term as Deputy Commissioner, Life Insurance of the Insurance and Superannuation Commission was a very significant one. He was approachable and helpful whilst always maintaining an objective and professional attitude that was appropriate to his position. His greatest achievement was the introduction of the Margin on Services accounting for life insurance that resulted in legislation and him being awarded the AM, an award that was well deserved.

Bob was indeed an 'ornament to his profession' and the profession has been deeply enriched by his presence and his contributions.

rod [email protected]

I joined the ISC) in March 1989 as Assistant Commissioner, Life Insurance, becoming the deputy to Bob, who was then Deputy Commissioner, Life Insurance..Bob was a delight to work for because he

himself was a hard worker who made sure he was across the issues, but he was also open-minded and ready to listen to other views before he decided which action he would take. With his substantial life insurance industry experience he was a pragmatic regulator, but not 'captured by industry' as he well knew of the industry’s not so good practices and at times self-serving approach. While his office was in Canberra, where all his small team of staff were, he spent about 50% of his time in Sydney or Melbourne keeping in close touch with senior people in the life insurance

companies and the actuarial and auditing professions, so that he was well attuned to the latest industry issues and practices.

When he joined the ISC in late 1987 Bob was well aware that the life industry practice of selling investment account contracts with strong guarantees was not sustainable and highlighted a major weakness in the life insurance regulatory regime. Relatively quickly he moved to have qualified industry professionals help him develop reserving requirements for such products which were introduced via ISC Circular 273, while he pursued his other objective of reforming the whole life insurance regime.

I was fortunate enough to work closely with Bob on a number of major regulatory issues, including;• Circular273reserves;• thereviewiftheLifeInsuranceAct1945

leading to the new Life Insurance Act 1995, including the establishing of the Life Insurance Actuarial Standards Board (which Bob was a member of from 1995 to about 2000);

• ISCrequirementstodiscloseearlytermination values for life insurance products which led to major changes towards more consumer-friendly life products;

• thecollapseoftheOccidentalandRegallife insurance companies which resulted in the first, lengthy and complicated judicial management under the Life Insurance Act, and which helped shape much of the new Life Insurance Act 1995; and

• thedemutualisationofthemajorlifeinsurance mutuals, partly due to the new Life Insurance Act 1995.

I became Commissioner of the ISC in late 1997, in the lead up to the formation of the Australian Prudential Regulation Authority (APRA), and Bob’s boss as he had to retire in early 1998. This did not faze him in the slightest.

Bob was always good to be with because he had an infectious enthusiasm for his work, the actuarial profession and life in general. He had little ego, but knew his own mind. He was humorous with an impish style and he liked his food and red wine!

A rare individual who I and many others will sadly miss.

tom [email protected]


W hat’s in a name? Recently my team changed its name. For as many years as I can remember this team has been called ‘The Secretariat’. I think this is probably a hangover from days gone by when

we arranged meetings, showed up at those meetings and took minutes, plus did a bit of admin. Times have moved on and we are now a dynamic and highly skilled team of 24, providing strategic, educational, public policy, marketing, professional practice, events, logistical and administrative support to a broad and diverse group of professionals. The word secretariat doesn’t even begin to describe what we do. (Plus it sounds boring and old-fashioned. Would you want to work in a Secretariat?) So I recently asked some of my best thinkers to come up with a new name for us to call ourselves internally. Which they have – HQ! I reproduce here parts of the email they sent back to me with their recommendation.

in communications primarily aimed externally (such as the website and annual Review), we considered it would be appropriate to refer to either institute, institute staff or, in the case of the website, “our people”.

that leaves us with the fun bit. For internal purposes, we favoured ‘hQ’ – we thought it was contemporary, short and simple, vibrant and alert. it indicated, like ‘hub and spoke’ – that we act as the central command point/nerve centre for things going in and things going out.

I am much more excited to be working for Actuaries HQ nerve centre than working for the Secretariat! I expect that this will similarly motivate the rest of the HQ team.

Names, and how we describe things, are important. They can add a lot of energy to a concept, even a simple one like describing the team you work in.

So how do you describe yourself, and your profession? Does your description add energy to, or sap energy from the listener?

You, ouR membeRs, aRe bRilliant maRketeRs!In the immortal words of the Foo Fighters “I have another confession to make” – you should be used to this by now in this column. I thought actuaries were, how can I put it... somewhat dissatisfactory at marketing.

When we started the branding project last year, I said to myself that it’s no use asking actuaries what they think about brands and taglines. We’re analytical and many of us don’t have a marketing bone in our

bodies. What value could we possibly add to this exercise?Well, I can tell you that now I’m eating my words. When we asked for

feedback on tagline ideas from you, the members, then tested them in a range of forums with actuaries and other business leaders, the one that came out on top was one that an actuary suggested. Jon Buckeridge from Melbourne came up with the tagline ‘Calculated Advice’ – which I think is brilliant.

Just to get off the topic for a moment, after all the things I have learned in the last two and a half years in this job, I think I need to set up the 12 step AUA program (Actuaries Underestimators Anonymous). The program will take people who previously thought actuaries only had narrow technical skills, and put them through an intensive program, starting with the admission “Hi, my name’s Melinda and I underestimate actuaries”. At the end of this program, once they are on the wagon, they will be singing our praises and employing us in large numbers. Please let me know of any colleagues or bosses who are in dire need of the 12 steps. I think I’ll start with the CFOs.

the elevatoR pitchSo now that I’m converted to the power of the actuarial marketing mind, there’s something that I’ve been thinking about for a while because I struggle with it.

Here’s the scenario. You happen to catch an elevator with someone who is running a major business. She asks you what you do. Here’s your chance to pitch the actuarial profession, and at the same time to perhaps sew up a lucrative consulting contract with her business.

You have at most 30 seconds. What do you say? The best we’ve had to date has been something like:

“i’m an actuary. i measure and manage risk and uncertainty”

Not exactly inspiring stuff – I can feel myself falling asleep as I listen.So what would you say? How, in just 30 seconds, can you sum up the weird, wonderful, unique, rarified and arcane world and work of an actuary? Here’s my effort (but I put in a disclaimer up front that I’m rubbish at this).

“i’m an actuary. i advise businesses on how to optimise their risks to get the most advantage out of uncertain future events.”

I’m sure you can do better! Let’s see who can come up with the best elevator pitch for the profession. Written or video entries are welcome.

Email your elevator pitch to [email protected] with the subject line ‘Elevator Pitch’ by 15 August. Login to the members website and have a look at our Elevator Pitch video.

The winner will receive the undying admiration of their peers – and possibly a modest vinous or chocolatey gift.

ceo’s column melinda howes [email protected]

Give me your best ‘elevator pitch’

1 Foo Fighters – Best of You http://www.youtube.com/watch?v=h_L4Rixya64&feature=related HQ

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All CV’s are treated in the strictest confidence and are not sent to prospective employers without prior permission. Please remember there is no charge to candidates.

Australian Office: Contact Tony Snoyman. Level 34, 50 Bridge Street, SydneyUK Head Office: Contact Geraldine Kaye. 22 Bevis Marks, London , EC3A 7JB

Call: +61 2 8216 0771 or email: [email protected] or call +44 (0)20 7397 6200 or email: [email protected]

For the most up to date Australian and global opportunities, register today

We welcome any questions you have regarding this role or on any other actuary jobs. At GAAPS, we tailor our research to your needs and would be delighted to have a conversation about the future of your career.

Head of Capital Modelling London/Bermuda • exceLLent package!!!

Leading global reinsurance company is a seeking ReMetrica specialist who will be responsible for heading up their group capital modelling team.

the team’s purpose is to build up and maintain economic capital modelling facilities across the group with key deliverables including developing and updating the internal economic capital model for regulatory purposes and to support the capital

reductions. You will have a strong background in general Insurance and will be able to

demonstrate your remetrica and capital modelling skills.

Senior Pricing Actuary austraLIa • $verY competItIve

A market leading reinsurance company is seeking a fully qualified actuary with extensive pricing experience for their actuarial marketing team.

excellent communication and very good problem solving skills are desired for this role. You are also client- focused, motivated, a strategic and lateral thinker, with a flexible team approach and good business sense.

General & Life ConsultancyLondon • competItIve

One of the fastest growing consultancies in London is seeking both nearly and qualified life and general actuarial consultants. You will be a fully qualified actuary or moving toward the professional fellowship in the uk (global equivalent award also welcomed).

You must have strong project management skills, and the ability to deliver technically along with the confidence to articulate and present your work. Strong client facing skills are essential as is the ability to network and build up a strong network for business development. For the general insurance practice, working knowledge remetrica and Igloo are essential.

Senior Manager: PricingsIngapore • $verY competItIve

A leading insurer in Singapore is looking for an experienced actuary to carry out pricing and experience analyses of general insurance and group & health products. You will also have statutory duties including the certification of loss reserves and dynamic solvency testing.

In addition you will have management supervision responsibilities for a team of analysts.

generalised Linear modelling pricing methodology or MAS statutory requirements for general insurance would be highly valued.

0895 Gaaps Australia ad July 2012.indd 1 03/07/2012 12:25

AustrAliAn ActuAriAl reseArch GrAnts – cAll for ApplicAtionsThe Research Council Committee (RCC) is pleased to announce the 2012-13 call for grant applications. The grants support leading-edge research projects in areas of strategic need for the actuarial profession, where outcomes from the research are expected to fill gaps in the profession’s intellectual and knowledge base and/or significantly advance its image and reputation proposed by less experienced researchers who, in the opinion of RCC, could benefit from further support for their research at this time. These could include practitioners with expanding research interests.

AustrAliAn ActuAriAl phD scholArships – cAll for submissionsApplications are now being accepted for the A H Pollard PhD Scholarship. The scholarship is intended to provide assistance to a member of the Actuaries Institute who is studying for a PhD degree at a recognised university, in an actuarial or related field.

h m JAckson AnD A m pArker memoriAl prizes – cAll for nominAtionsThe Actuaries Institute offers a number of prizes recognising achievements in actuarial research. The prizes are sponsored by the respective trust funds and are generously supplemented from the Melville Prize Fund established by the late Mr Tig Melville.

the h m JAckson memoriAl prize is awarded for the best paper published by, or presented to, a body other than the Actuaries Institute. This can be a paper published in an overseas journal, a paper presented to an international or foreign conference, or a paper published in or presented to an Australian non-actuarial journal/conference. (In the case of published work, “paper” can be taken as including a broadly similar item, such as a book or book chapter.)

the A m pArker memoriAl prize is awarded for the best paper published by the Actuaries Institute in the Australian Actuarial Journal or presented to a conference that was run by or on behalf of the Actuaries Institute. The conference concerned can be any conference, seminar, Insights session or similar event, either profession-wide or specific to a particular practice area. Members are encouraged to give careful consideration to papers they have encountered that may measure up well against the selection criteria, and to nominate any they believe conform to the requirements. Self-nomination is allowed and encouraged.

Deadline for lodging all applications, submissions and nominations is 21 september 2012.

Complete applications / nomination forms should be sent to:Jennifer BurnsSecretaryResearch Council CommitteeE: [email protected]

The successful applicants will be announced in early 2013. Recipients of all the above awards are determined by the Research Council Committee.

Further information on the Institute’s research program is available at http://www.actuaries.asn.au/educationandprofessional/research.aspx

research Grants, phD scholarships and prizes 2012

actuaries...30 resume so pacific a pose, muser genevieve hayes ask gae 31ee / you do what? i disagr...

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