Daniel Smith Donna Walker - Actuaries Institute · Actuaries in General Insurance - Past, Present...

Actuaries in G eneral Ins urance -P as t, P res ent and F uture

Daniel SmithDonna Walker

B efore c ommenc ing …

… we’d like to pay our res pects …

… we’d like to pay our res pects …

We’ve borrowed heavily from Monty P ython• Part I – The Miracle of Birth• Part II – Growth and Learning• Part III – Fighting Each Other• Part IV – Middle Age• Part V – Live Organ Transplants• Part VI – The Autumn Years• Part VII - Death

P art I – T he Mirac le of B irth• Mid-70’s to mid-80’s• There were a handful of actuaries who started to

make inroads in GI• In effect, the first fish in the sea

P art I – T he Mirac le of B irth (cont.)• It wasn’t easy•High rates of inflation helped•Needed to develop a new breed of actuaries – those trained in GI

•There were wide ranging practices

P art II – G rowth and L earning• Late 1980’s and 1990’s•Development of GI methods•Expansion of consultancies•Development of GI course and text book

P art II – G rowth and L earning (cont.)• GI Practice Note• Development of practices within accounting firms• Accident compensation schemes• Actuaries talked a different language

P art III – F ighting E ach Other• Late 1990’s and the naughties•Competition between actuaries in GI took hold•The start of the end of the extremely collegiate approach adopted in the forming years

•HIH

P art III – F ighting E ach Other (cont.)• Estimated numbers of

Fellows shows the rapid growth from the mid 90’s

0

100

200

300

400

1976

1980

1984

1988

1992

1996

2000

2004

2008

Year

# of

Fel

low

s

P art III – F ighting E ach Other (cont.)•Move from consultants to insurers•AA’s and EPR’s

P art IV – Middle Age• When = Now•Several actuaries have provided broad details of the actuaries within their company – thanks to those that did

•The resulting estimates are likely to provide a reasonable picture of the current market in GI

P art IV – Middle Age (cont.)•Estimate 350 Fellows and 400 non-Fellows

Fellows Non-Fellows

59%

38%

3%

Consultancies Insurers Accident Compensation

55%

44%

1%

P art IV – Middle Age (cont.)

57%

25%

7% 4% 6%

0%

10%

20%

30%

40%

50%

60%

70%

Reserving Pricing Capital Management Advisory/Non-Trad

P art IV – Middle Age (cont.)• Now a generation of “accounting” actuaries• Decision making or decision supporting?• Professional standards• The role of the IAAust• The new small “a” actuary• As GI actuaries have “grown up”, they’ve moved

into the steady jobs within insurers rather than the risky consultancy roles???

P art V – L ive Organ T rans plants• Significant development in technical modelling

– Statistical pricing– DFA– Price optimisation– Data mining– Stochastic reserving

P art V – L ive Organ T rans plants (c ont.)• Still not as widespread as it will be• Leading to a wider spread of actuarial skills

– with some true “propeller heads”• Are we getting too clever?

P art V I – T he Autumn Y ears•What will our “founding fathers” do over the next decade?

•The brand of actuary and the small ‘a’•Statutory overload?•Justification of the actuarial team

P art V I – T he Autumn Y ears (cont.)•A continuation of the technical and management actuary diversion

•Continued growth but at a much slower rate

•Accident compensation involvement is somewhat dependent on nationalisation

P art V II - Death• Are we nearing the end?• No, but success in the future will not look like

success in the past … sort of …• What will actuaries need to do?• What about the education system?• Compliance versus “value”

Death (cont.)•Death of the jack of all trades actuary• Increased regulator focus•Actuarial paradigm – what is ours?

Is there an afterlife?•Moving into non-actuarial areas but using GI skills

•Making more of the reserving role•Avoid salmon mousse!

Anyone up for a debate?