Non-Traditional
This is the second in a series of “This Actuarial Life” articles that will illustrate the day-to-day life of the actuary in different fields.
What does it take for an actuary to succeed in the world beyond insurance?
Future Fellows sat down with Frank Chang to find out. Formerly the chief actuary for Google, Dr. Chang is now chief actuary for another tech industry superstar, Uber, the transportation start-up revolutionizing ride-sharing in the U.S. and abroad. Learn how he translated his actuarial skill set to create unique risk solutions in these atypical roles.
What made you decide to become an actuary?
After graduate school [Chang holds a Ph.D. in Mathematics from the University of California, San Diego], I traded stocks and subscribed to Motley Fool Hidden Gems for ideas. In 2004, Hidden Gems recommended Montpelier Re and United Fire and Casualty Company, which led me to discover the actuarial profession. I spoke with several actuaries and concluded that, outside of exams, the career provides great work-life balance along with decent compensation. Also, the job involves a healthy mix of quantitative, technical, and business skills, which was something I was looking for.
Once you decided to become an actuary, how did your career progress?
Esurance gave me my first break after I passed two exams. I learned some personal auto insurance pricing, gained serious VBA and SQL skills, and passed most of my exams. After that, I had a brief stint at Applied Underwriters working in business intelligence. I returned to the actuarial profession at Fireman’s Fund, passed my final exam, and was exposed to a bevy of actuarial work, including reserving, reinsurance, commutations, commercial auto, general liability, excess lines, managing general agent/managing general underwriter fronting arrangements, and non-admitted lines. I feel fortunate as I would be hard-pressed to gain such broad experience in four years at any other company.
How did the Google opportunity arise?
Google approached me directly. It was the opportunity of a lifetime. While the job involved traditional actuarial work mixed with random off-the-wall stuff, the real sell was that I would be the first actuary at a legendary company full of talented people.
Initially, my work concerned Google’s corporate risk, their captive and warranties, and a credit card product for advertisers. The role evolved over time to include other quantitative risk projects such as insurance and liability research for self-driving cars, predictive modeling for fraud and vendor risk, demand modeling, and operational research. My general charge was to help the insurance team with risk and captive management and to help instill quantitative discipline in risk assessment across the organization. My day-to-day work was a mix between model-building and meeting with various Google teams, often to sell a more quantitative approach to risk.
What skills are most important for an actuary to succeed in an outside-the-box job like yours?
The same skill set that helps actuaries become good consultants helps actuaries succeed outside of insurance.
First, most companies outside of the insurance industry only have a vague idea of what actuaries do, so you need to be able to communicate and sell to different audiences. There is a huge opportunity for actuaries to apply their mindset and techniques to solve non-insurance problems.
Second, you need to be good at working with bad, thin, or no data, or you need to be clever in finding or purchasing appropriate data. The best analyst I’ve ever had bugged her network, picked up the phone, chased leads, went to legal libraries, and applied prudent Google searching to discover an injury dataset that helped us design a crash test sufficiency model for the self-driving car. You have to be willing to do that extra work.
Third, you need to be a creative problem-solver, particularly under tight time and budget constraints. You could be asked to create an internal risk model for credit cards with just R, select Moody’s data, and a scant six weeks before launch. Similar to some of the more challenging P&C commercial lines, the goal isn’t to be perfectly right, but to generate enough good analysis for the business to make decisions.
Finally, especially for those with letters, you need to clearly track and document every assumption and contingency you’ve made in constructing models.
What’s the best advice you were offered in your career?
Some good pieces of advice I’ve received from my colleagues are:
“Money isn’t everything; seek for opportunities which will help you grow, develop, and learn new things.” ~Vince Brown
“Actuaries should think of themselves as insurance people and not just actuaries.” ~Andrew Doll
Do you see more companies following the example of Google and Uber in bringing actuarial expertise in-house?
What else should aspiring actuaries know about these non-traditional jobs?
It is often hard for a company not in the business of selling insurance to justify having an in-house actuary. However, most companies do need broad risk professionals and, if they have a self-insurance program or own a captive, need a modicum of actuarial services. You must be willing to keep a broad perspective, work on the skills I mentioned earlier, and apply yourself to complex non-insurance problems.
You should also bear in mind that with these nontraditional jobs, exam support is not a given. You should either pass your exams quickly or be prepared to slow or pause your progress. Luckily at Google we were able to set up an informal study program, but that kind of support is not guaranteed once you step outside the box.
In return, though, you could have some amazing experiences in your career that you would otherwise not have access to.