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Actuarial education 2.0: Training for a brave new world

Curriculum improvements deliver more analytics-savvy, solution-oriented actuaries.

If property and casualty insurers were to draw up a generic “Help Wanted” ad to recruit actuaries for general insurance (GI) business, it might go something like this: 

Immediate openings for GI actuaries. Required: Strong hands-on skills and training, including the ability to apply not only basic regression and time series methods, but also advanced predictive analytics and statistical modeling techniques to complex data sets. Candidates must demonstrate strong computer and software skills, balanced understanding of short- and long-term insurance risks and creative problem-solving. Strong business sense a plus.

That’s quite an eyeful — and decades ago, it may have been much shorter.

As employer expectations and job descriptions for insurance actuaries change, the programs that provide actuarial training and education must also change.Evolving risks and global competition pose a constant threat to insurance companies, so the organizations providing actuarial training must constantly work to strengthen their programs’ quality, breadth and rigor as evolving risks and global competition continue to pose a mounting threat to carriers.

Those organizations’ goals? To create real-world-ready actuaries with career skills that are immediately valuable to the companies that employ them.

Curriculum updates like those adopted by the Society of Actuaries (SOA) – which are set to take hold in July 2018 -- are designed to do exactly that, says the SOA’s Stuart Klugman, FSA, CERA, Ph.D., senior staff fellow, education.

“Actuaries will have the strong analytics capabilities that employers want,” he said. “They will be better prepared to deal with Big Data, and they’ll bring a more balanced multidiscipline skillset to the table.”

When looking for actuarial programs, candidates will want to look at two key areas:

  1. A predictive analytics component with e-learning support that emphasizes hands-on learning. With such an approach, candidates can apply sophisticated computer packages and generalized linear models, decision trees, clustering techniques and principal components analysis to real-life data sets. Case studies can be used to deliver hands-on experience with various modeling techniques and processes. Predictive analytics work will culminate in a “proctored project,” where students must show they can use these tools to solve the complex, multifaceted problems they’ll face in the workplace. As a prerequisite, candidates may also be required to pass an applied statistics exam to show their grasp of basic risk modeling tools.
  2. A greater emphasis on short-term insurance provides candidates with a more balanced, multidisciplinary skill set that better reflects the growing role of short-term insurance in global markets. As an example, SOA’s ASA curriculum will be updated to include material on pricing and reserving for short-term insurance in the replacement for Exam C. Other changes include adding accounting to the existing corporate finance Validation by Education Experience (VEE), placing less emphasis on derivatives with more emphasis on other investments, and replacing the existing applied statistics VEE with a mathematical statistics VEE requirement.

Curriculum that focus on these areas can deliver a range of benefits to employers and actuarial candidates, including:

  • Producing more seasoned, versatile actuaries with deeper, broader expertise who can work across multiple lines. “Candidates get a stronger understanding of both short-term and long-term insurance through their associateship training,” Klugman notes, “so they won’t have to wait until their fellowship studies to get that expertise. Employers will be getting actuaries who just know more early on in their careers.”
  • Offer exposure to multiple disciplines to give associates more job options. “They won’t have to get locked into one practice area or type of product,” explains Klugman. “They will have more flexibility in choosing a career path.”
  • Create candidates whosehands-on applied training better equips them to tackle emerging risks in the property-casualty insurance field. These candidates will then be immediate assets to the companies that hire them.
  • They conform to the syllabus work of the International Actuarial Association (IAA). This is an important consideration for employers with an international presence.

While it will take time to assess the ultimate impact of pending curriculum improvements in the marketplace, employers who were given an early glimpse of the SOA’s changes like what they see, Klugman adds.

“There’s a lot of enthusiasm among our members about the updates. The feedback has been really positive.”

 

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