I always tell many young people that Actuarial Science is a very challenging course. That doesn’t mean that it is an impossible course but the reality is that it is easy to become a Professor In Actuarial Science that becoming an Actuary. I am also an Actuarial Science Student and I have even attempted the Actuarial Professional exams ( SOA ) Papers and I realized that it is very easy to fail after doing all that is required. All in all, I am still dedicated and I am determined to do it because I believe my dream is still valid. On my regular visits to the Web, I came across this testimony by one Actuarial Science graduate and felt that it is good to share it, It can help somebody out there. Thanks
I remember the day I went to JAB’s offices to confirm my name from the selection list of the year 2009, the lady looked at me and said to me “Actuarial Science” your 1st Choice. My 1st choice? I wondered. Some guy who was just behind me heard and he went like” wow! You are lucky! Am just dying to do that course”? Well I didn’t want to embarrass myself by asking “What is Actuarial Science”? Only for the embarrassment to come later when I arrived home and my Dad Went “What’s actuarial science?”
To cut the long story short I didn’t even know the spelling of “Actuarial science” leave alone what it was until I joined campus and I was taking actuarial science. By the way am not still sure of the pronunciation but am an aspiring actuary.
The word Actuary also was like foreign to me, and even until now. Look at it this way, in the academic field of science we talk of scientist e.g. computer scientists, physicists, biologists and so on. Now look at Actuarial Science; Actuary? What’s that?!!!
I know may be you are now wondering who I am or what I am, well to kill your anxiety I am an Actuarial scientist and not an Actuary (of course the difference is the spelling). If this was a movie all the past story would be the introduction.
During the long holiday, 20011 I went Internship hunting (Job hunting) in the insurance companies in Kenya. I visited a company that was very prominent in years back (name withheld because that might be your current employer). Am not the kind that know how to communicate efficiently but sometimes when I talk some people listen. I was privileged to talk to the Underwriting manager of that company. That was the second time after almost three years The question ‘what is actuarial science?’ embarrassed me. I tried explaining how actuarial science is indispensable in the insurance industry and the manager told me that he had been in the industry for 23 years, and he had never heard of it. I just wanted to learn Insurance, I explained that to him and he offered me a position in the underwriting.
When I reported the following day, I was given a heap of files, like a hundred of them and told to enter the data in the computer. I am a simple person and always said I could do anything. I tried the data entry and 5p.m came and I left. As I lay on my bed that night, I remembered the doctor and the professor, I remembered the survival models in third year, I remembered financial mathematics; annuities and perpetuities. I decided that am not a data clerk and I will never be one. So when morning came, I left for Upper Hill. To look for a job that will have some actuarial science in it.
Every other place I went, they didn’t seem to even know actuarial science. So I decided to go the research way and become a data analyst. I enjoyed data manipulation, data cleaning, charting miracles, data interpretation; it looked like actuarial science. That’s why I always say, if You are an actuarial scientist who cannot run an SPSS Syntax, or a programmed add-in in Excel, then you are a data clerk. ( A different profession.)
I got fed up with data analysis and interpretation of performance indexes, I desperately wanted to go back to Insurance; this time not necessarily to do actuarial related work but just to be there and try to maneuver my way to either the risk or the actuarial department. I was hired on contract to do Underwriting, they posted me to the customer services. For 7 months I never used even a single word/ knowledge in actuarial science.
One thing I always say is that ‘Failure is never fatal; Success is not final, the secret is to keep on moving’ and so I did. 7 months experience in underwriting General class of business after which I moved to underwriting medical department. Medical underwriting is more involving than general business. It is more to pricing than just underwriting, more to figures than just feeling.
Seven months after medical underwriting, I still needed breathing space. So I thought trying to get some managerial position might provide that room I needed. In Kenyan Insurance companies, it is very hard for you to have the title manager before you have been in their industry for Seven years on average. That explains why I had to leave the country.
I have been in Technical Underwriting for the longest period in my career now. It’s something I chose to follow, not in the way that it’s normally done traditionally but with a new way. Approaching underwriting from actuarial science can be amazing. That is why I will never forget the complements I used to get while my last Medical underwriting job.
Traditionally (you can ask what we call old boy’s of the industry in Kenya) underwriting is more to feeling than just mere risk analysis. On the centrally, actuarial science is more to figures than feeling. Underwriting is about mitigating a risk which is expected. Actuarial science is looking for risks which are expected.
Most young graduates of Actuarial science get underwriting jobs in Kenyan market. This is because underwriting carries better part of the operations in every insurance company. In fact, most Kenyan Insurance companies don’t even have actuarial departments; they rely on consultants from south Africa and other places. This leaves the actuarial graduates (Many of those who don’t even have a single paper) with three options as far as jobs in the insurance industry is concerned. They can either join finance, Claims, Risk and/ or Underwriting. Unfortunately, it is also true that most risk departments in the companies are small; this is because underwriting deals with risk itself i.e. The underwriters are the risk acceptors. The fresh graduates are therefore left with only one option of becoming underwriters.
To an actuarial scientist; a drunkard of figures and data, trends and patterns, time series and relationships; all defined using mathematical models underwriting is like clerical work. For you to grow in underwriting you must pursue ACII papers. These papers are cheap; Dr. Onyango will say butter and bread. An example is the Insurance risk paper; a 2nd year can do that paper without doing any revisions. (Only an average bright 2nd year; not every Tom, Dick, Harry and perhaps Thuku to make it Kenyan). Many of fresh Actuarial graduates who start pursuing ACII give up on the Actuarial career and become chartered Insurers.
In underwriting rates are predetermined; there is no pricing apart from one plus one. Actuarial science asks the question why, underwriting answers the question how? I am not trying to say that the two are not correlated, but it might be true that they are not related. Notably, if you have Actuarial papers you can get more than enough Exemptions in ACII; more than 120 credits. This doesn’t necessarily show that Actuarial science is superior to ACII but an ACII can’t get exemptions in actuarial papers.
I am convinced beyond reasonable doubt that all future underwriters will be actuarial scientists even if not actuaries. (Well an actuarial scientist is an actuary who is not yet certified by any of the international bodies; a.k.a ‘self proclaimed actuaries’ like me and may be you). If underwriting today is to be ran by actuarial scientists, Underwriting will be moved from just feeling to figures. Feelings look at today and try to foresee the future; figures look at yesterday and foresee the future.
If you want to understand what I am saying, try talking to anyone in the Medical underwriting. This is the third year that many companies have reported losses in the health insurance business; yes including the leading companies. I believe this is as a result of feeling overriding figures. Underwriters just undercutting their competitors without figures and benefit structure patterns. This has been causing cancer in the performance of the medical insurance. It is among the departments that need the attention of Actuarial scientists. People who can model past claim patterns to determine the future claims costs. This sort of modeling has so many variables, ranging from age, family size, population growth, medical inflation cost, benefit structure, type of cover, among other determinants. In fact many companies have the traditional feeling that medical insurance risk can be controlled using effective case management. Unfortunately, there is real risk in medical insurance; the rule of GIGO practically applies there. (Bad Priced and benefit structured business in, Claims Out).
Many people have started doubting the future of actuarial science in Kenya. Me I think it can only be better. What I’d advise a person is that if you get an underwriting job use that opportunity to climb up the ladder. Try to apply some basic actuarial tips and the recommendations from your managers will take you places.
I would like to conclude this discussion by saying a phrase this “ Education is what remains after learning evaporates” In the Kenyan system of education, the first 8 acts like a grease to lubricate us, the second 4 gives the scope and erases everything in the mind leaving it blank. The Last 4 Replaces a Blank Mind with an Open one; the implication of this is that a graduate can fit anywhere!
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