News Type: Future Focus Blog Posts

As the future of the property and casualty insurance industry, we know that you are interested in topics related to emerging risks. Take a moment to read this blog post, shared earlier this month with CAS members, and familiarize yourself with the exciting changes and risks that are facing the insurance industry. Knowledge of these emerging risks – many of which will be addressed while you are in the early stages of your actuarial career – will be valuable as you take part in networking events and interviews with industry professionals.

It’s an exciting time to be a property and casualty actuary.

More and more new technologies are emerging, creating an ever-changing landscape in the property and casualty insurance industry. A feature story in the latest issue of the Actuarial Review, “The Risks Around the Corner,” explains the effects that evolving technology has on the insurance industry and the future risks that actuaries will have to address. Written by Steven Sullivan, the piece details the risks formed by three technological innovations: cyberspace, autonomous vehicles, and drones.

1. Battle in Cyberspace

Cyber risks can affect all forms of technology and therefore may be one of the costliest risks that the insurance industry will need to address. Breaches in cyber security are risks that are already present in day-to-day life, and the risks continue to grow rapidly. Hackers take advantage of ever-evolving technology to constantly find new ways to access the private data of major companies and their customers. As a result, companies and cyber security teams have been forced into a reactive state in which they constantly change and improve their own security measures to answer these attacks. Similarly, actuaries and the insurance industry must tailor their own methods of quantifying risks brought on by changing technology.

2. Who’s Driving Miss Daisy?

They’re not on public roads yet, but it’s only a matter of time before autonomous vehicles hit the market. The insurance industry is already starting to assess how these vehicles will change the risks and exposures on the roadway. We have learned that the technology present in these vehicles will help reduce the amount of accidents caused by human error, though questions of liability still come into play.

3. Watch the Skies!

The widespread use of commercial drones is another risk that the insurance industry will face in the future. The Federal Aviation Administration (FAA) is currently working on implementing regulations for civilian and commercial drone usage, which will require insurance companies to provide policies for these aircrafts. This is new territory for insurance companies, as they must create policies that will properly provide coverage for the variety of exposures. Potentially overcrowded airspace and privacy violations are just a couple of the issues that the FAA will require insurance companies to address.

Blog post by Elizabeth Smith, CAS Manager of Publications, originally appeared on The CAS Roundtable.

4.  Your study approach from university can serve as a foundation, but it may need an overhaul…

Don’t get me wrong, university exams are tough, but actuarial exams will push your intellectual limits.  Why?  University exams are often bound by more constraints than actuarial exams.  First, there is only so much material that can be covered in a college semester.  Most of the time, an actuarial exam’s syllabus is so comprehensive that it cannot be feasibly covered in a one semester college course.  Second, university exams are often constrained to a one-to-two hour length.  Actuarial exams have no such constraints.  In fact, the average upper level exam is four hours in length.

If your study habits served you well for university exams, they’ll serve as an excellent foundation for your actuarial exam pursuits.  That being said, they’ll probably need some refining.  Since the breadth of material on an actuarial exam is much more extensive than that of a one semester college course, you’ll need to be constantly refreshing your mind, focusing on many different areas of the exam syllabus at the same time.  In addition, due to the exhausting length of these exams, you’ll need to find ways to increase your endurance, making sure you can handle being pummeled by questions relentlessly for hours.

3.  You should feel like you’ve “been there, done that” by exam day…

If you studied for Exam P using the ASM study manual, you should be familiar with its author Dr. Ostaszewski, who coined the “Been there, done that!” principle.  Come exam day, every problem that is thrown at you while you’re in the testing ring should be met with complete resolve.  You won’t scratch your head thinking about what approach to take to solve each problem or what formulas to use; you’ll just know.  With each subsequent question you encounter, you’ll confidently say to yourself, “Been there, done that!”

How do you get to this level of comfort?  Well, your exam preparations should be so extensive and exhaustive that you will have seen any and all types of problems that could possibly be thrown at you on exam day.  Not only that, but you will have practiced each and every one of those types of problems like clockwork.  Some might think the “Been there, done that!” principle is overkill.  Some might think it’s downright ridiculous.  But if you approach the actuarial exams with this mentality, you’ll pass on your first attempt, no matter how tough the exam is.

2.  You should be prepared for transitions…

During the course of your actuarial career, you will inevitably be subject to changes to the examination requirements of the CAS. Maybe a slew of new materials will be added to an exam’s syllabus.  Or maybe a completely new exam will be introduced. Honestly, the permutations are endless.

Finding ways to mitigate the stress caused by these transitions is key.  Remember that you are not in this boat alone.  The classmates or coworkers in your cohort will be experiencing these actuarial growing pains with you.  Find ease in discussing these changing requirements with your cohort and brainstorming ways to conquer them.

1.  Your friends and family probably won’t understand…

Unless your friends and family have sat for actuarial exams, they probably won’t understand the commitment and journey this process truly is.  You’re about to dedicate years of your life to studying and working simultaneously.  Oh, and you should try to have a personal life, too.  The journey is oftentimes daunting, but your friends and family most likely won’t see it that way.  To them, you’re smart and a good test taker.  They won’t be able to comprehend that despite your natural abilities, you’ll still need hundreds of hours of time to prepare for each and every exam.  They will especially find it tough to grasp that despite your most valiant efforts to prepare for each exam, sometimes you will still fail.  Can you blame your friends and family for thinking like this?  No, absolutely not.  Unless they’ve encountered these exams firsthand, they’ll never truly comprehend the sacrifice needed to become a credentialed actuary.

So, if your friends and family don’t understand, how will you cope?  You must cherish your actuarial friends.  They’re on the front line with you, fighting the good fight.  They’ve seen what you’ve seen.  They’ve felt what you’ve felt.  And, most importantly, they know that while the process can at times be formidable, it is a highly gratifying and worthwhile achievement.

The actuarial community, while expanding remarkably, remains a tight-knit network. It is vital that aspiring actuaries actively participate in events which encourage interaction amongst students and professionals, to plant and nurture the seeds that will develop into fruitful future professional relationships – and student conventions are a great place to start!

Each year, the Actuarial Students’ National Association (ASNA) hosts a three-day convention in January which inspires this essential dialogue between actuarial students, professionals, associations, and academics, featuring a plethora of networking and learning opportunities. The upcoming 2015 ASNA Convention: Insuring the Future, will be hosted in Montreal, QC, from Friday, January 2 – Sunday, January 4, 2015. Early bird registration is available for students interested in attending the convention. Here’s what you can expect and how you can prepare to get the most out of ASNA and other professional development events:

Actuarial Career Fair

• Why participate in ASNA: Meet representatives from 24 top actuarial employers at Canada’s largest actuarial career fair. Certain employers will be interviewing for internships and full time opportunities; others will be looking for students to invite to exclusive networking events on Sunday.
• Pro tip: Before any career fair, set objectives. Which employers are priorities for you? What do you want out of your conversations? Focus your research and your event time on these employers to leave a lasting and positive impression.

Professional Panel

• Why participate in ASNA: We’ve gathered the profession’s best and brightest to answer your burning questions, share career advice, discuss broad actuarial topics, and recount personal experiences.
• Pro tip:  Make the most out of the whole convention experience by saving specific questions for the career fair and seminars, and asking general questions at the Professional Panel to get responses from a spectrum of actuarial perspectives.

Seminars & CAS Luncheon

• Why participate in ASNA: With over 20 fascinating seminars to choose from, there is bound to be something for everyone, whether you are hunting for your first actuarial internship, or looking to gain technical knowledge to sharpen performance on your fourth. Make sure to attend the CAS-sponsored luncheon in the break for a rousing keynote address from CAS leadership!
• Pro tip: Ask questions. Make learning a conversation, and remember that networking isn’t ever confined to a career fair.

Case Competition

• Why participate in ASNA: Put your business skills to the test in front of fellow students and a panel of seasoned actuaries. Teams will compete to devise and present a solution to a case study that explores a current actuarial challenge. The best actuaries are the ones with strong communication and business acumen.
• Pro tip: All are encouraged to participate, regardless of level of actuarial experience. The background knowledge supplied will be sufficient to empower every student to be competitive.

Sunday Networking Events

• Why participate in ASNA: Unwind with the student and employer acquaintances you made during the convention to strengthen your new relationships.
• Pro tip: Leverage this more casual networking event to showcase your personable side. Employers hire candidates that they think they will enjoy working with – actuaries are people too!

To learn more about the 2015 ASNA Convention and for early bird registration, please visit www.anea-asna.ca/montreal-2015. We also post event updates and other great content on Facebook and Twitter.

We hope to see you in Montreal!

Isabel Ji is the current president of ANÉA-ASNA. She has previously conducted internships at Ernst & Young and Intact, and is currently interning at PricewaterhouseCoopers. Isabel will graduate in 2016 with a joint honours degree in actuarial science and economics from the University of Waterloo. In addition to her studies, Isabel has also held leadership positions with the University’s Actuarial Science Club and Mathematics Society.

Over the past decade, predictive modeling has become an important topic in the actuarial community. This informative Future Fellows newsletter article, published in 2012, provides a good overview of the subject and also puts forth a simple definition of predictive modeling: using past data to predict the probability of some future outcome. Initially utilized by personal lines carriers, predictive modeling is now being used by CAS members in many different lines of insurance. Working with insurance data poses several unique challenges and CAS members and their companies benefit greatly from employing more advanced statistical methods in their lines of work.

Knowing the importance of predictive modeling to CAS members and future members, Jed Frees, Glenn Meyers and I worked with the CAS to envision “Predictive Modeling Applications in Actuarial Science,” a two-part series published by Cambridge University Press and sponsored by the CAS and the Canadian Institute of Actuaries. Volume One, which explores the foundations of predictive modeling, is now available through Amazon and Cambridge University Press.

You may already be familiar with predictive modeling, and it remains a large part of where the actuarial practice is headed. This book series showcases CAS’s ongoing commitment to provide its members and future members with extensive opportunities for predictive modeling continuing education, enabling them to be leaders in the field. The book’s website also features many free resources for immediate practical use, including content preview, data (.txt or .csv format) and R code (.R format) for each chapter. These are valuable tools for anyone interested in actuarial science, even at the student level.

My question for Student Central members: have you been exposed to the topic of predictive modeling in your academic coursework?

Richard A. Derrig, Ph.D., is President of OPAL Consulting LLC and Visiting Professor of Risk, Insurance and Healthcare Management at the Fox School of Business at Temple University. He is also a member of CAS Academic Central. He serves as co-editor for “Predictive Modeling Applications in Actuarial Science,” along with Edward (Jed) Frees, University of Wisconsin – Madison and Glenn Meyers, retired from ISO Innovative Analytics. The set is part of the International Series on Actuarial Science from Cambridge University Press. Volume Two is expected to be published in the fall of 2015.

Proceeds from sales of the book will go to the Actuarial Foundation, a widely respected charitable organization that promotes actuarial scholarship, as well as its Canadian counterpart, the Actuarial Foundation of Canada.