A Haunting Actuarial Analysis – Part I
Careers rarely unfold the way you had originally anticipated. Take the following hypothetical:
After graduating from college, you begin a position as Actuarial Analyst for a major property-casualty insurance company. You work for a few years, passing actuarial exams regularly, achieving an ACAS designation (with the FCAS right around the corner!), and getting very positive performance reviews.
One day, the Chief Actuary calls you into her office and says, “We love the work you’ve been doing, and we think you’re ready for a new challenge. I’m appointing you the sole actuary of a brand new business unit, Halloween Monster Liability. Apparently, many monsters have significant assets to protect, so there is an emerging market for monster liability policies.” 
You smile knowingly, and cheerfully say “Good one!” But the Chief Actuary just frowns and gives you a quizzical look. You realize your mistake, and stammer, “Oh, uh… you’re serious!”
She nods. “Darn right I’m serious! This idea came right out of our new Innovation Lab, and it’s one of the top priorities of our CEO. We’re going after this market in a big way – we’re all in! And you’ll be the key: determining appropriate prices and risk relationships for the eight types of monsters we’ll be insuring, so this new venture will be profitable.”
She hands you a sheet of paper with the list of the eight monster classes. “There’s no good formal historical loss database available, of course – but plenty of anecdotal information and evidence. I’d suggest you start by ranking the riskiness of each monster class relative to the others.” She stands up and shakes your hand. “This is a great opportunity for both you and the company. Don’t let us down!”
Your head spinning, you leave and eventually find your way back to your office and plop down in your chair. You look at the sheet of paper listing the eight categories of monsters for which you must now begin the process of risk classification for ratemaking purposes:
- Dracula / Vampires
- Frankenstein’s Monster
- Ghosts
- The Grim Reaper
- The Mummy
- The Wolfman
- Witches / Wizards
- Zombies
First, as the Chief Actuary suggested, you decide to try to rank these according to relative riskiness. You pull out a pad of paper, and start jotting down ideas, starting with general context.
You know the following:
- The “risk” of each monster could manifest itself in numerous ways: injury or death to persons, emotional trauma, property damage – and then, of course, emerging from these could be business interruption, lost wages, etc.
- Insurance premiums must be sufficient to cover expected total loss (plus a risk load), and for each policy, total loss will be a function of frequency, severity, and the level of exposure.
- Each of these types of monsters has specific characteristics that should help you to evaluate the relative risk potential, in terms of frequency, severity, and exposure.
“Whew,” you mumble to yourself. “I’m gonna need some help with this.” You decide to survey your colleagues for their impressions of the relative riskiness of the eight monster classes.
And indeed, that’s what I have done: surveyed my colleagues on the CAS Office Staff. But before I present the overall results, you might want to take a few minutes to think about your own monster riskiness ranking. Go ahead – I’ll wait.
Part II will be coming out on Halloween so stay tuned!
Last month, 
Health or medical insurance. This is a “first-party” insurance coverage, in which the policyholder’s own insurer responds with coverage for injury to the insured, regardless of whether or not a “third party” is liable. In our Pokémon hypothetical, medical expenses associated with your broken ankle, the car driver’s broken wrist, and the pedestrian’s dog bite would likely each be covered by that person’s own medical insurance.
Auto insurance. Damage to the passing car, as well as any liability ascribed to the driver and/or owner of the passing car, would potentially be covered by an auto insurance policy.
covers the liability of the policyholder in two ways: coverage above the policy limits associated with the policyholder’s HO and auto policies, and “drop-down” or “gap” coverage for other types of liability not covered by HO and auto policies.
This may be obvious to many, but your first barrier to entering the actuarial field will be completing at least one actuarial exam. Just about every full-time actuarial opportunity is going to require a minimum of one exam passed, and you will be even more marketable with 2-3 under your belt.
Regardless of being a current student, new college graduate, or career changer, actuarial internship experience will be a valuable addition to your background. I recognize that most internships are offered to current college students. However, on several occasions, I have worked with career changers who have been able to secure internships, even 10+ years out of college. While many internship descriptions may list “must be a current college student,” this is not always the case; it is still worth putting in an internship application, if you have the time, as you never know when a company may have flexibility. Keep in mind that most actuarial internships will also require at least one actuarial exam passed.
Just about every actuarial job description that you review is going to include a combination of programming/computer skills. While Excel tends to be the number one utilized computer skill in the actuarial field, basic Excel skills are not really going to cut it anymore, if you want to be competitive. In addition to Excel, there tends to be quite a bit of demand for the following skills: Access, Visual Basic/VBA, SQL, SAS, C++, and R.
It is quite common for job seekers to write a cover letter template, switch out the company name and position title, and click “submit.” This is a missed opportunity to explain your specific interest in the company and role, and hiring teams may see this as a lack of effort and interest. Do some research, and explain why this company and position make sense for you, long term.
One of the most common reasons that candidates do not move forward after an initial phone interview is that they did not appear to be knowledgeable about the company and position they are interviewing for. Make sure to thoroughly review the company’s website days before your interview, and print out a copy of the job description to have handy for your interviews. Take the time to draw parallels between your background (academics, work experience, technical skills, etc.), and the role you are applying to. It may also be helpful to write out a list that answers “Why am I interested in this specific company and role?” and also “Why am I a good fit?” Make sure to know the lines of business that the company works with.
Adam Noreen is an Actuarial Recruiter at DW Simpson. He has been assisting entry-level candidates and career changers for approximately three years, in securing their first actuarial and analytics positions. Contact Adam at 
Suddenly, you see something, just ahead and to the left, on the periphery of your screen sensor. You instinctively shift your direction slightly, and slowly close in on the object. You switch to virtual camera mode — and there it is, standing over six-feet tall: a bi-pedal feline. Right in front of the window of a well-landscaped brick ranch home, just standing there like he owns the place. Not believing your luck, you blink and then refocus. Your eyes were not deceiving you. It is indeed one of the rarest (and strongest) of the Pokémon: Mewtwo. You simply must have it! But before you attempt the capture, you’d like to get much closer…
You throw open the unlocked gate and step into the yard, breaking your ankle on a loose cobblestone. Undaunted, you limp purposefully toward the Mewtwo, trampling several expensive flowers and small ornamental shrubs. You fling your Pokéball, and score a direct hit – the Mewtwo is yours! In your ecstasy, you raise your arms in triumph, accidentally letting go of your phone, which flies into and shatters a window on the home.
Chase Yetter, a rising senior at Lebanon Valley College double majoring in actuarial science and mathematics, was this year’s recipient of the $10,000 CAS Trust Scholarship. “When I was a student in high school, I knew I wanted to pursue a career that would challenge me, and I wanted it to involve both mathematics and business,” said Yetter. Chase is excited about a pursuing a career in the property and casualty industry, and has already been able to attend multiple industry events including the Spring 2015 and Fall 2015 Casualty Actuaries of the Mid-Atlantic Region (CAMAR) meetings, as well as the 2015 CAS Annual Meeting as part of the student program. “I hope to quickly become a Fellow of the Casualty Actuarial Society (FCAS) and a Chartered Property Casualty Underwriter (CPCU)… I also hope to become one of the first to earn the predictive analytics credential that arises from the partnership between the CAS and The Institutes.”
Chloe Marshinski, a senior at the University of Illinois at Urbana-Champaign majoring in actuarial science and statistics, was awarded a $5,000 CAS Trust Scholarship. “Knowing my work is contributing to a field that helps our society function and grow gives me motivation and purpose in my work. I am specifically interested in the property-casualty industry because it encompasses so many different types of risk and is constantly faced with new challenges,” said Marshinski. She held an internship this past summer with CNA, where she completed two pricing reviews consisting of pulling and organizing data and making loss ratio selections, comprehensive pricing analysis of the umbrella book of business, and presented findings and recommendations on future business strategies to underwriting. Before that Marshinski interned with a State Farm agent, researching products, communicating with customers about their product interests, and calculating auto insurance quotes for online leads. Her internships taught her that “while the data and the numbers are important during an analysis, it’s being able to communicate your findings and recommendations to others that makes the analysis worthwhile.”
Sarah Rumon is an actuarial science major and rising junior at University of St. Thomas. She was awarded a $5,000 CAS Trust Scholarship. Rumon is the founding member and president of Gamma Iota Sigma Beta Pi Chapter at University of St. Thomas and was International Student Representative for Gamma Iota Sigma at the annual Gamma Iota Sigma Conference last year. Rumon has also taken part in the Travelers Insurance Actuarial Summer Student program as well as their Actuarial and Analytics Leadership Development Programs, where she summarized and presented aggregate review results to loss analytics department, and gained an understanding of public sector products. “During the course of my education and professional experiences thus far, I have come to realize that being an actuary is so much more than passing tough exams and being skilled with using Excel. To me, a successful actuary has three distinct sets of skills: analytical skills, business acumen and knowledge, and soft skills such as leadership, communication, time management, and more,” said Rumon.
Two years since its inception, the CAS Student Central Program now reaches more than 4,000 student members from over 400 universities worldwide! The growth of the program can be attributed to the wide range of benefits and resources made available to support you on your actuarial career path. We’ve highlighted a few of the key resources below, and we invite you to share your recommendations on additional materials or benefits that you’d like to see made available to Student Central members in the future!
The CAS exam process provides aspiring property and casualty actuaries with a solid foundation in insurance and actuarial topics. But how can university students, candidates, and credentialed actuaries stay informed and up-to-date on the latest industry trends?
We thank Syed Danish Ali, for sharing this post with members of CAS Student Central. A version of this post was originally on the University of London’s student blog.