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Key Characteristics of the Actuarial Leader . Richard Fein, Ph D, FCAS, MAAA rfein@rifconsulting.com CAGNY Meeting June 2010 RIF Consulting, LLC. The Actuary as Leader. Agenda Goals Characteristics of Teams of Professionals Guiding Principles Expectations of Stakeholders

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key characteristics of the actuarial leader
Key Characteristics of the Actuarial Leader
  • Richard Fein, Ph D, FCAS, MAAA rfein@rifconsulting.com CAGNY Meeting June 2010
  • RIF Consulting, LLC
the actuary as leader
The Actuary as Leader
  • Agenda
    • Goals
    • Characteristics of Teams of Professionals
    • Guiding Principles
    • Expectations of Stakeholders
    • Characteristics of Leaders of Pros – Chief Actuary
    • The Rubber Meets the Road
    • Conclusion
characteristics of professional teams
Characteristics of Professional Teams
  • Working with Professionals
  • Many discussions and characterizations are available
  • Good site: Bob Kizlik reference on my site
    • Self motivated to learn profession
    • Takes on responsibilities and obligations
    • Cannot dictate/coerce professionalism
    • Work “with” as opposed to “manage”
characteristics of professional teams4
Characteristics of Professional Teams
  • Identified need/service
  • Defined body of knowledge which supports decision making
  • Highly Educated/Broad Areas
  • Protracted preparation process
  • High level of public trust
  • Strong service motivation
  • Authority to practice from the client
  • Accountability by the practitioner
guiding principles
Guiding Principles
  • CAS Credentialing
  • CAS Statements of Principles/Exposure Draft of Foundational Statements
  • Regulatory/Financial/Jurisdictional Requirements
  • ASOP’s
  • Codes of Professional/Ethical Conduct
    • Precept 3 : 3-1, 3-2, 3-3
    • Precept 8 : 8-1
  • Personal Beliefs - Individual, Family, Community
stakeholders
Stakeholders
  • Board of Directors, Owners/Shareholders
  • Auditors, Regulators, Others
  • CEO, CFO, Chief Underwriter, Executive Management Team
  • Actuarial management staff, Actuarial team
  • Family, Friends, Community
  • Yourself
expectations
Expectations
  • Expectations of Stakeholders
    • Honesty & Integrity
    • Professionalism
    • Knowledge - Business & Technical
    • Credible Understandable Analysis of Alternatives
    • Acknowledgement/Communication of Risks
    • No surprises
key characteristics of chief actuary
Key Characteristics of Chief Actuary
  • Clear line of sight to CEO/Audit Committee/Board
  • Acceptance of and support for Authority over Actuarial Matters - Who sells vs. Who books.
  • Credibility among Executive Management
  • Experienced, qualified and communicative team with open 2-way communication at all levels - training and rotations? 2 edged sword.
  • Assures team’s high level of active knowledge of firm’s businesses and operations
key characteristics chief actuary
Key Characteristics Chief Actuary
  • Identifies and shares risks and uncertainties of estimates with Executive Management
  • Has clear understanding of assumptions and bases for conclusions drawn by support team and across operating areas in which teams operate - Consistency matters
  • Formalizes communications with key stakeholders: Senior Executive Management, Claims, Underwriting, Pricing, Reinsurance, Finance
  • Clear, well-documented presentation to management of support for methods, estimates and relevant changes
key characteristics chief actuary10
Key Characteristics Chief Actuary
  • Assures stable and responsive methodologies, updated and supplemented by objective tests and special studies
  • Vision/Proactive
  • Anticipates future areas requiring additional analyses/data
  • Assures a sound, high quality, relevant database to support methods - Who owns/secures?
  • Assures clear professional and managerial direction to all staff
  • Assures continuing education and training
the rubber meets the road
The Rubber Meets the Road
  • Example - Sample Quotes
    • “You need to be a team player”
    • “We can’t afford to price it that high”
    • “Forget the tail, it gets washed out by competition”
    • “This is an important client/quarter/year/result/etc.”
    • “Ignore that aberration - it won’t happen again”
the rubber meets the road12
The Rubber Meets the Road
  • “Just take 3 year averages and use them - can’t go wrong as it’s a time tested and utilized methodology”
  • “There goes the bonus!”
  • “My supervisor insists on looking at all my assumptions - rude and unprofessional.”
  • “Guess what, my supervisor doesn’t look at any of my assumptions, unless the overall result is unexpected - no worries for me.”
  • “The Auditor is challenging our results - YIKES, you did what???”
the rubber meets the road13
The Rubber Meets the Road
  • Words have power:
    • “We can’t afford another hit to income this quarter/year” “This kills our earnings”
      • Leader
      • Team Members
    • “Just use the “tail” factors we developed in 19XX. Used the last year. We always use them. “
      • Leader
      • Team Members
conclusion
Conclusion
  • Environment - Professional, Business, Personal
  • Broad Spectrum of Stakeholders
  • Broad Expectations - At Times Conflicting
  • Miscommunication is high risk
  • Theoretical vs. Actual
  • Had to pick one: Personal Accountability
key characteristics of the actuarial leader15
Key Characteristics of the Actuarial Leader
  • Richard Fein, Ph D, FCAS, MAAA rfein@rifconsulting.com CAGNY Meeting June 2010
  • RIF Consulting, LLC