166 australia - home | actuaries institute rmit university, making use of some real-life spanish...

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Australia

Actuarial Research GrantsAccident Compensation Seminar Report

Superannuation for Dummies

Corporate Governance – 2011 in Review

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ACTUARY AUSTRAL IA ■ December 2011

3

contentsMelbourne

Melbourne

Dockside, Sydney

Melbourne

Dockside, Sydney

16 Feb

17 July

21 Feb

30 Apr –1 May

14 Aug

YAP Event

Fellowship and Presidential Dinner


Financial Services Forum 2012


5 Actuarial Research Grants – Grant Recipient Profiles

RepoRT – Candice Sng

8 Mutual Distrust pResidenT’s ColUmn – Barry Rafe

9 Actuary Unearthed exposé – Tony Snoyman

10 A Rugby Nation – Not Feeling All Black – Actuarial Insights Into the Rugby World Cup

sURveY – Jonathan Nicholls / Luke Fields

13 A Portfolio Career – Tony Coleman in Profile inTeRview – Candice Sng

16 Accident Compensation Seminar 2011 RepoRT – Organising Committee

20 2011 Actuary Australia Index AnnUAl index of ARTiCles

24 In the Margin pUzzles – Genevieve Hayes

25 What Does It All Mean? moRe ThAn mAThs – Martin Mulcare

26 Superannuation for Dummies Review – Bill Butler

28 What’s New With the Professionalism Course? Review – Martin Mulcare

30 Financial Services Forum 2012 – Call for Speakers evenT noTiCe

32 To Teach is to Learn Twice – Ricky Leung inTeRview – Ruth Lisha

34 Corporate Governance – 2011 in Review Review – Anne Peters

36 Education Update edUCATion – Philip Latham

Congratulations – Scholarship noTiCe – Young Goh

37 Thank You... Volunteers RepoRT – Rebecca Moore

38 Work Experience as an Actuary sTUdenT ColUmn – Lucy Jing

39 A New Sensation Ceo’s ColUmn – Melinda Howes

40 Letters leTTeRs To The ediToR – Barry Rafe / Nicholas Yap /

Brent Walker / Andrew Patterson / Frank Ward

Throughout the 2011 Accident Compensation Seminar the Actuaries Institute supported Spinal Cord Injuries Australia (scia.org.au) by organising a charity raffle. Five different companies generously donated prizes.

• FirstprizewonbyMatthew Kayrooz,wasaone-hourjoyflight in a plane piloted by Lesley Traverso, donated by DW Simpson.

• SecondprizewonbyRachel Driessen,wasaKindlewith 3G connection donated by Finity.

• ThirdprizewonbyTy Birkett,wasafoodhamperdonatedbyErnst & Young.

• FourthprizewonbyGrant Hollymanandthenre-auctionedand purchased by Steve Curley,wasabottleof2004CabernetSauvignondonatedbyKPMG.

• FifthprizewonbyRosi WinnwasabottleofVeuveCliquotdonatedbySwissRe.

The raffle raised $3,302 for Spinal Cord Injuries Australia.

Diary Dates 2012

Charity Raffle


4 editorial

by the broad selection of actuaries who are embracing theInstituteback!ReadingMartinMulcare’sarticle in thisedition,I’d almost like to do the Professionalism Course again. Itsounds like it has reachedawholenew level and I feel I aminabetterplacetolistentoitnow(ratherthantreatingitasacelebration of finishing a very painful slog).

I want to add a special thank you toMartin Mulcare for hiswonderful ‘More than Maths’ articles. Martin will not becontinuingwith these articles in 2012, but I am surewewillhear more from him throughout the year through his role on the Leadership Committee.

Lastly, James and I wish you a Happy Christmas and awonderfulNewYear.Andgood luck toanyofyouwaitingonexam results!!! ▲

James Collier

[email protected]

Catherine Robertson-Hodder

[email protected]

T his is our last editorial for Actuary Australia. It has been an enjoyable two years and formepersonally(CR-H) an opportunity to step up and outside my

comfort zone. The Editorial Committee, regular contributors, proofreadersandinparticularKatrinaMcFadyenandSimonPalmer(ourdesigner)makeourjobasEditorsmuchsimpler.We also greatly appreciate the support of our regular and occasional advertisers!

We have just had our annual Editorial Committee ChristmasLunch and at least three committee members are embarking on changes and adventures early next year – so expect to see some postcards!

As this is the last edition of the year it is an opportunity to reflect onwhathasbeenhappening.Weare inaperiodof fluxwithaccounting standards, capital standards, FOFA and the global marketsallinflux.Standingstillisnotanoptionandisequallytrue for our profession.

It has been a year where we the Actuaries Institute haveembracedALLofourmembersandanewname.Iamexcited

ContributionsContributions should be sent to the Actuaries Institute, marked to the attention of Katrina McFadyen (Communications and Marketing Manager) at: [email protected] contributions must conform to our submission guidelines which are available from the Communications and Marketing Manager.

magazine Design Kirk Palmer Design, Sydney Email: [email protected]

next edition AA167 March 2012 AA168 April 2012 Deadline for contributions: 1 March 2012

Actuary Australia editorial CommitteeJames Collier Editor: [email protected] Robertson-Hodder Editor: [email protected] mcFadyen Communications and Marketing ManagerDaniel Cooper Assisting EditorGenevieve Hayes Assisting EditorRuth Lisha Assisting EditorDavid millar Assisting Editor

Actuaries Institute ABN69000423656

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Published by the Actuaries Institute© The Institute of Actuaries of Australia ISSN1035-6673

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Disclaimer Opinions expressed in this publication do not necessarily represent thoseofeitherTheActuaries Institute (the‘Institute’), itsofficers,employeesoragents. The Institute accepts no responsibility for, nor liability for any action taken inrespectof,suchopinions.Visit:http://www.actuaries.asn.au/TechnicalResources/ActuaryMagazine.aspx for full details of our disclaimer notice.

Actuary Australia

onwards and upwards


5report

Actuarial Research Grants

– grant recipient profiles

Funded by the Actuaries Institute, the Australian Actuarial ResearchGrantsProgramawardsannualresearchgrantstosupportleading-edgeresearchprojects,particularlyprojectsinareasofstrategicneedfortheprofession,whereresearchoutcomes are expected to fill gaps in the profession’s

intellectualandknowledgebaseand/orsignificantlyadvance its imageand reputation.

The grants are also provided to support projects proposed by lessexperiencedresearcherswho, in theopinionof theResearchCouncilCommittee, could benefit from further support for their research. These include practitioners with expanding research interests. Papers oncompletedresearchprojectsareavailableontheInstitute’swebsite.


6 report

Qing Liu University of Melbourne: Data Mining for Income Protection Insurance

What attracted you to the PhD research program? My honours thesis at the University ofMelbourne,whichconsideredtheeffect of suicide exclusion periods on mortality rates, triggered my

initial interest in research. It was a great feeling to see how youcouldextendyourknowledgeandmodifyexistingmodelstocreateinnovativewaysforsolvingreal lifeproblems.Iwantedtocontinuediscoveringnewtruths.

I greatly appreciate the support from my joint supervisors DavidPittandXueyuanWu. I’d like to thankbothmysupervisors for theirguidancethroughoutmyworkoverthepastthreeyearsandIgreatlyappreciate their patiencewith regular andextensive communicationand help.

Describe your earlier research ThefirstprojectofmyPhDresearchwason“ABayesianApproachto Parameter Estimation for Kernel Density Estimation viaTransformations”published inAnnalsofActuarialScience,Volume5,Issue02,pp.181-193.Theprojectadvancedthemethodsusedfor bivariate claim density estimation using kernel smoothers and carefulselectionofbandwidthparametersusingGibbssampling.IhadthechancetodealwithrealautomobileinsurancedatafromaSpanishcompany.Theworkwasnotonlyausefulmethodologicaladvance, but also of real interest to the profession.

What’s the main goal of your project and the main research methods that have been used?My current project focuses on income protection insurance(IPI) and termination rates. We use data mining methods toincreaseunderstandingofratingfactorsthatdrivereturn-to-workprobabilitiesforinsuredlivesunderIPIpolicies.Thisprojectlooksinto the important issue of classification of income protection insurance.

Sincemy research project involvesworkingwith a large complexdataset, my research method is statistical programming withsoftware including SAS, R and Matlab. Of course, mathematicalmodellingisalwaysinevitable.

What is doing a PhD like? IhavetoadmitthatdoingaPhDsometimesmeansthatyouhavetospendweeksormonthsdiligentlyevaluatingalternativeapproachesand recommending ways forward based on intellectually solidevidence. Sometimes, those months of work may end in failure,but youwill learn from theexperience, refine your technique, andtry again.

How do you think practising actuaries can apply your work?IPI plays a significant role in maintaining the quality of life of

individualswhobecomeunabletoworkduetoanon-workrelatedinjuryorillness.Itachievesthisbyprovidingsuchinsuredliveswithaproportionoftheirusualsalarywhiletheyareunabletowork.It’svaluable to society and to our profession to understand the drivers of IPIprofitability tomaintain theviabilityandsuccessof this formof insurance.

Whilewehavesomeunderstandingofthelevelofclaimterminationrates, from existing industry tables and other industry level studies, thisprojectwillprovideanewoutlookonthesemeasures,formulatedusing modern statistical methods that have not previously been used to advance our understanding of this area in Australia.

(Qing’s research is part of her PhD thesis and will be published in 2012.)

Xueyuan Wu & Shuanming Li

The University of Melbourne: On the Recursive Evaluation of Aggregate Claims for a Large Family of Claim Number Distributions

What attracted you to the Institute research grant program? This program provided an excellent opportunity and support for us to undertake our research project, knowing that relevant externalresearch grants available for actuarial researchers are so few.Moreover,ourresearchfield,RiskTheory,isoneofthepriorityareasunder this Institute research grant program.

What prompted the research, and what you were you trying to find out? The evaluation of the compound distributions is one of the main objectivesinrisktheory.Theaimofourprojectistodevelopamatrixform recursive formula for computing the distribution and moments of the aggregate claims where the claims number distributionbelongs to a generalised (a, b, 1) family. This family of distributions includes not only all of the discrete phase-type distributions, butalsomanyotherusefulones,e.g. linearcombinationsofPoisson,binomial or negative binomial distributions.

What was your main method of research? Our project was heavily based on the probability theory andfunctionsofmatrices.Statisticalmethodswereappliedaswell.

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report

What were your key findings? Asakeyfindingofthisproject,weconstructedageneralised(a,b,1)family of distributions that is a broad class of counting distributions, whichemploymatricesasparametersandsatisfyamatrixversionofrecursivestructureofthe(a,b,1)family.Areal-lifeexamplewasconstructedaspartoftheproject,withtheassistanceofAssociateProfessorDavidPitt fromMacquarieUniversity andDr YanWangfromRMITUniversity,makinguseofsome real-lifeSpanishmotorinsurancedata.Poisson,mixedPoisson andmatrix-formPoissondistributions, where the latter two types of distributions are bothmembersofthegeneralised(a,b,1)family,werefittedtothedataandbasedontheAICandBICcriteriathemixedPoissonwasfoundto be the best fit.

How do you think practicing actuaries can apply your work?Our key findings provide more available distributions to model real-life count data, including numbers of claims for insurancecompanies. Some of the distributions defined in our research are newand a lot of existing useful distributions canbe includedas special cases. The unified framework covering these claimnumber distributions enable us to calculate the aggregate claims distributionsrecursivelyinanewway.

As illustrated in our paper published in Annals of Actuarial Science in 2011,theproposeddistributionscanbefittedtoreal-lifeinsurancedata.Itprovidespracticingactuarieswithmoretoolswhenneeded.

Were there any surprises in your findings? Yes. The number of distributions covered under the generalised (a, b,1)familyofdistributionsisbiggerthanwethought.

What’s your next area for research?One of our current research interests remains finding more useful discrete distributions and applying them to model insurance data.

http://www.actuaries.asn.au/Libraries/Research/GeneralizedAB1 Siaw.sflb.ashx

Julie Sims

Taylor Fry Consulting Actuaries: Risk Margin Monitoring

What attracted you to the Institute research grant program?The opportunity to give this topic of research a higher profile through it being selected as an area of interest totheInstitute,aswellasgivingmethe time and incentive to get the

researchdone,giventhatitwascompetingformytimewithwork,family and study.

What prompted the research and what were you trying to find out? Actuarieshavehadtoestimateariskmarginwhentheyarevaluing

outstanding claims liabilities since 2002. It’s a job that requires ablendofindustryknowledge,quantitativeestimationandqualitativejudgement. The Risk Margins Taskforce produced a paper in2008 describing a methodology for rating qualitative factors andcombiningthemwithquantitativefactors.

I felt that itwouldbeuseful tohavefeedbackonhowthis typeofqualitativeratingwasperforming,fromapersonalpointofviewaswell as for actuaries generally. The “Aha!” moment came when Ilinked it up with another topic. Valuation reports usually containcomments on how actual payments compare with expectedamounts.Thisresearchlinksuptheriskmarginwiththedifferencebetweenactualandexpectedpayments.

What was your main method of research?Themainmethodwasapplyingsimulationmodelsthatwereusedtoestimate risk margins in previous valuations done by my company, extracting additional information from those models and comparing itwithactualpayments.Theresearchtookaboutsixweeksintotal,spread over about four months.

What were the key findings?Idescribedhowtocompareavaluerelatedtotheestimatedriskmarginwithactual experienceat each valuation.Over anumberofvaluations,thiswillprovideapartialcheckontheadequacyoftheriskmargin.Itwon’ttellyoudefinitivelywhethertheriskmarginis correct or not, but itmay raise questions that should promptfurther investigation.Themethod ismostusefulwhenapplied tostochastic methods of determining risk margins, but it can also be applied to short-tail lineswhether or not a stochastic techniquehas been used.

Were there any surprises in your findings? I was pleasantly surprised that the risk margin on one of theoutstandingclaimsvaluationsI’minvolvedwithagreedwellwiththehistorical data, but unpleasantly surprised by the risk margin on the correspondingpremiumliabilities–itwasclearlymoreriskythanwehad appreciated.

How do you think practicing actuaries can apply your work?The findings put another item in the toolkit of actuaries to apply in the monitoring step of the Actuarial Control Cycle.

I hope practicing actuaries try the small amount of additional calculation I suggest during risk margin estimation, and over time, getusefulfeedbackonthehistoricaladequacyoftheriskmargin.

What’s your next area for research?Rightnow, I’mworkingonmakingadvancedstochasticmodellingmethods easier to apply to triangle modelling, without requiringcomplicated programming or costly software, so they can beused by a greater number of actuaries in more valuations than today.

http://www.actuaries.asn.au/Libraries/Research/GIS10RiskMarginMonitoring.sflb.ashx▲

Candice [email protected]


m yrecentblogaskedifwecouldtrustmutual’sandamembercoinedtheterm‘mutualdistrust’acleverplay on words. My observations about mutualswere prompted by the current debate regarding

retirementsavingsandtheroleoftheactuary.APRAhaveissueda discussion paper promoting the idea that prudential standards apply to large defined contribution funds along the lines that apply to other financial services institutions. Given that actuaries have varioussignoff roleswith large insurers, itseemsreasonablethatweshouldhaveaviewoncapitalandotherprudentialstandardsfor large superannuation funds. An interesting observation is that theverylarge,mainlyindustryfunds,arethemutual’softhefuture.Ineffect,themembersownthem.Theadvertisingcampaignsevenpromote the idea thatallprofitsgo tomembers (amythas Iwilldiscuss later).

Mutuality is the actuary’s home ground. The original actuariesprovided financial control to the mutual life companies of the past. Traditional insurance products were designed whereby peoplewerechargedtoomuchandtheactuarywouldallocatetheprofitevery year. Individuals had the security of long term smoothing and the benefits of capital backing their policies.

These large mutual life offices have all but disappeared in Australia. So why did they disappear and was it a good thingthat they demutualised. Notwithstanding the fact that all of mysuperannuation money is in an industry fund I am not sure if I trust mutual’s!Ithinktherearesomequestionsthatarisethatpotentiallypointtoasystemicflawinthestructureofthemutual,inparticular.

Who are the boards of these mutual businesses accountable to? What is to stop them building businesses that are bloated? Did policyholders of the original mutual life company’s benefit fromtheir experience or did most suffer?

I think the issue of board governance is particularly important. AsIdiscussedinlastmonth’sAA article, the lot of a mutual fund director is potentially more complicated than a director of a publicly listed company. Apart from superannuation funds, there are still a number of large mutuals in the financial services sector. Most healthfundsandbuildingsocietiesaremutual.Thedifferencewiththese however is that their products are priced in a competitivemarket and membership of these organisations is voluntary. Many members of superannuation funds have no real choice as to where their money ends up. The superannuation productmay be considered as less complex than health insurance, but

in reality superannuation funds sell a promise and year-by-yearcomparisonsarenotalwayshelpfulincomparingfunds.

If we are to promote a role for the profession in the financialcontrol of the new mutual’s then we should promote goodgovernance including transparency, accountability and not be tempted to design complex products that smooth returns and allowmanagementtohideinefficiencies.

Backtothemythof‘allprofitstomembers’–thisstatementwouldbetrueof itwasnotforthefactthattherearemanysupplierstoso-calledmutualsuperannuationfundswhoareprovidingservicesand presumably making profits; more so if the service providers are ownedbythemutualorsharedirectors.

Good-bye from the President…ThisismylastcolumnasPresident.Nomorerants!!Beingelectedas president is a humbling experience and I should say that a year of meeting members has left me even more humbled. We are a strongprofessionwithalottocontribute.

Thepresidential duty I have enjoyed themost hasbeen hostingthegraduationdinnersfornewactuaries.Ithinktheseeventsbestsymbolise the future of the profession. These are a celebration because they recognise the hard work and dedication requiredtobecomepartoftheactuarial‘tribe’.Families,friendsandworkcolleaguescheerthenewactuariesontothestagewhentheygettheir certificates.

This year we admitted around 180 new actuaries, almost 50%women and over half originating from Asia. Our profession isstronger for this diversification. Our challenge is providing support to our disparate membership in fact, the Australian profession is potentiallythemostmulticulturalactuarialprofessionintheworld.

DavidGoodsallwillbeagoodpresidentandwilltakegoodcareofthe presidential medallion.

Before signing off, special recognition needs to go to Melinda Howesand thesecretariat.Melindastandsup for theprofessionand her team and is constantly challenging Council to be bold. WhilstPresidentscomeandgo, theCEOandthesecretariatarethe real heroes. ▲

Barry [email protected]

8

mutual distrust

president’s column


9actuary unearthed

Title…Executive Director

Organisation…GAAPS Actuarial Recruitment

My favourite energetic pursuit… Snow skiing

The sport I most like to watch... Rugby Union (is there any other rugby?)

The last book I read (and when)...As a recruiter, the telephone directory (daily)

My favourite artist/album... The Black Eyed Peas

My favourite film...Stepped into the movie house for the first time in over a year last week and thoroughly enjoyed In Time

My interesting/quirky hobbies...Searching in bushes for little round white objects, aka playing golf

What gets my goat… People not returning phone calls (occupational hazard, I suppose)

What I wanted to be when I grew up...Still working on that

Why I decided to become an actuary...There were less than 200 qualified actuaries in South Africa at the time, so it seemed like a good challenge

Where I studied to become an actuary...By correspondence to the UK from South Africa

Qualifications obtained... BSc (Hons), FIA, FIAA

My work history... Started in traditional life insurance, then managed a national employee benefits sales force, followed by fifteen odd years of superannuation consulting (not sure if the years were odd or the work?)

What’s most interesting about my role...Interacting with people in all stages of their actuarial careers, from graduates to senior executives, and helping them to progress to the next stage

My role’s greatest challenges...Time (and the economy)

Who has been the biggest influence on my career (and why)... My wife of 21 years, Shirley. She has stood by me and supported me through qualification, emigration, hibernation and any other complication

My proudest career achievement to date… Having been able to achieve a work / community / life balance

The most valuable characteristic an actuary can possess is… There is not one single skill that is more valuable than others; but I would rate the ability to listen, to communicate effectively and to think strategically as three of the most important

If I was President of the Institute, I would… Work to make attendance at the Biennial Convention and other actuarial forums affordable for all members, particularly for student members who can gain the most out of hearing about current actuarial thought from, and interacting with, senior members of the profession

My most important decision… To leave South Africa

I’m most passionate about… My family, my wife and two great sons (of course) and community. I am involved with a number of not-for-profit organisations and believe it is essential to give back to the community, not only monetarily, but with time and expertise

I’d like to be brave enough to… Do a double black mogul run

At least once in life, every actuary should...Spend time doing charity work

If I win the lottery, I would…Life is a lottery and I am fortunate to believe that I have already won it

To become an instant celebrity on YouTube, I would publish a video of myself doing….A double black mogul run (call the ambos)

My most embarrassing moment… Is, I am sure, yet to come!

If I could travel back in time I would…Convince Adam not to eat the apple from the Tree of Knowledge. Perhaps then we might have a world free of conflict

My best advice for my children…Go with your dreams, be a risk taker and enjoy every moment of life

Four words that sum me up... Passionate, humorous, introverted, philanthropic ▲

Tony [email protected]

Tony Snoyman


10

Interestingly, the2011editionof theRWCendedwith thesecondlowest average points per match (46.8), only beaten by the1991 Cup (37.4, or 42.0 if tries had been five points). All othertournamentshaveaveragedmorethan50pointspergame(averageover all matches).

Aswithprevioustournaments,themajorityofpenaltieswereinthefirst halfwhilemost of the trieswere scored in the secondhalf –suggestingthatasweakerteamstiredandmovedfurtherbehindonthe scoreboard they conceded tries more freely.

Aswiththenumberoftries,thescoremarginislargelydrivenbytheimportanceofthegame,withclosermatchesaseachtournamentprogresses out of the pool phase and through the finals section. It isinterestingtonotethatRWC2011hadthelowestaveragemarginfor matches later in the tournament, possibly explaining the spike in ambulancecall-outsformyocardial infarction intheearlyweeksofOctober this year.

TheseventheditionoftheRugbyWorldCup(RWC)hascomeandgone,andfor thoseofus inNewZealand,itwasamagicaltime.TheWorldCuphassincebeendescribedasthe‘bestever’bytheIRBChiefExecutive

Mike Miller1. Before the tournament began, many commentators and analysts weighed in their views about who would win, based on amixtureofhistoricaldata,discussionswithexpertsandpastplayers,andwetfingersheldaloft.Similarly,sincethetournamentconcluded,manyinterestedpartieshavetakentheopportunitytowaxlyricalaboutwhocouldhavewon,whoshouldhavewon,andwhoactuallywon.Aspartofthis,wethoughtitonlyappropriatethatsomeonerepresenttheactuariesinthisfrenzyofpost-matchanalysis.

Wesearchedforreasonstojustifywritingthisarticleanddecidedthatactuariesarealwaysabletoaddinsights,whateverthesubject.Italsogave us an opportunity towatch sport-based YouTube videos, andjumpupanddownatrugbymatches–CPDcomesinmanydifferentforms. Given rugby has so many numbers (rucks, metres gained, tries, points,etc),whatbetterplace tostart thananumerical investigationintohowthe2011editioncomparedtopreviousworldcups?

How different was the 2011 World Cup?Statistically,theworldcupwasverysimilartopreviousWorldCups.Inpoolplaywesawlotsoftries,severalmismatchesandallthefavouredteamsmakingtheknockoutstage.Thenasthetensionbuiltwesawfewer triesandclosercontests.The followinggraphshowshow theaverage number of tries reduces as the significance of the game increasesforeachoftheseventournamentsheldsofar:

02468

10

1987 1991 1995 1999 2003 2007 2011

Num

ber o

f trie

s

World Cup year

Average number of tries per game

Pool matches Knockout matches Final

0%

50%

100%

1987

1991

1995

1999

2003

2007

2011

1987

1991

1995

1999

2003

2007

2011

Tries Penal�es

Aver

age

perc

enta

ge in

eac

h ha

lf

Scoring play and World Cup year

Average tries and penal�es scored in each half of the match

Second Half

First Half

Rugby World Cup fans and supporters gather at the Auckland Waterfront for the RWC 2011 opening in Auckland, New Zealand on Friday, 9 September 2011.Photo: Shutterstock

A Rugby Nationnot feeling all black

review

Actuarial Insights into the Rugby World Cup


11review

▲Like2007,thetwofinalistsfirstmetinpoolplaywiththefavouredteam dominating in the pool game only to narrowly win therematch in the final.

The final was tight, as they often are: four out of the sevenfinals have been decided by a try or less, including two whichwent toextra time–1995and2003 (Note:due toNewZealandand Australian sensitivities neither will be mentioned again in this article).

Hindsight analysis – how good were the predictions? WereadanumberofboldpredictionsbeforetheRWC.TheactuariesatTaylorFrystatedthattheirmodel“simulateseverypossiblegame–including each pass, kick, tackle, scrum, lineout, try and conversion – andgivestheoddsforeachteamineachstage,aswellaspredictingthewinner of theWilliamWebbEllisCup.2” They predicted the All Blacksasfavouriteswitha25%chanceofwinning.

Meanwhile,ForsythBarrhadalesssophisticatedmodelwhichusedfive factors todeterminethat theAllBlackshada43%chanceofwinning, which the newspapers promptly rounded up to 50% tomake it easier for readers to understand3.

However,thebestpredictioncamefromtheauthors’RWCmodel,whichhadjustonefactor(NZashostnation)andcorrectlypredictedwith100%probabilitythattheAllBlackswouldbeatFranceinthefinal, withWales and Australia being the losing semi-finalists.Weattribute the success of our model largely to actuarial analysis of past experience.

02468

10

1987 1991 1995 1999 2003 2007 2011

Num

ber o

f trie

sWorld Cup year

Average number of tries per game

Pool matches Knockout matches Final

0%

50%

100%

1987

1991

1995

1999

2003

2007

2011

1987

1991

1995

1999

2003

2007

2011

Tries Penal�es

Aver

age

perc

enta

ge in

eac

h ha

lf

Scoring play and World Cup year

Average tries and penal�es scored in each half of the match

Second Half

First Half

05

10152025303540

1987 1991 1995 1999 2003 2007 2011

Aver

age

mar

gin

(poi

nts)

World Cup Year

Average margin in each tournament

Average margin (pool matches) Average margin (all finals matches) Average Margin (final)

Argen�naAustralia

Can

Fiji

Fra

Georgia

IreItalyJap

NamibiaNZ

Romania

Russia

Samoa

SA

Tonga

USA WalesEngScot0%

5%

10%

15%

20%

25%

30%

0 50 100 150 200 250 300 350

Agric

ultu

re se

ctor

(as %

of G

DP)

Points at RWC2011

RWC2011 points vs size of Agriculture Industry

Trend lines

Below: Australia Rugby team supporters await their (ill-fated) team’s arrival for World Cup 2011 at Auckland International Airport, Auckland, New Zealand on Tuesday, 6 September 2011. Photo: Shutterstock


12

It must be noted that our model originally included one other factor, based on the relative size of each country’s agriculture industry(thus the concentration of farmers in the population, and therefore howgood the forwardpack shouldbe). This analysis yielded thefollowingscatterplot:

As you can see, apart from the obvious similarities to the Star Fleet logo andNike Swoosh, there is really no helpful trend herewhatsoever.

Impact of the result NewZealanderscannow finallycall themselves theRugbyUnionWorld Champions to go alongside that rugby league world title.Are there any other types of rugby out there that they can play and win?Thecountryhasexperiencedverystrongpositiveemotionsinthewakeofthefinal,asthegraphsbelowshow.Ithasbeenplacedalongside a demographic breakdown of the country to facilitatecomparison.

NewZealand’secstaticdelightisthoughtlikelytocontinuethroughthenationalelectionwhichisplannedfor26thNovember.ThisdatewassetinFebruarybyaPrimeMinisterwhohadmoreconfidenceinthenationalteamthantherestofthecountry.Hisconfidencehasbeenrichlyrewarded,andnoonehadabiggersmile,oraheartierhandshake, at the conclusion of the final.

A final test Finally,asport-relatedarticlecouldneverbecompletewithoutsomeformofquiz,sothatallthebuffsaroundcanshowofftheirmisspentyouth.Seehowyougoon these5RWCquestions, theanswersarebelow.

1. WhowerethetopthreetryscoringnationsatRWC2011?2. Twoteamshavemadeittothesemi-finalsinsixoutoftheseven

RWCtournaments.Whichteamsarethey?3. Whichnationhasmadethequarter-finalsfivetimes,butnever

progressed any further?4. TheAllBlackshavescoredthemostnumberoftriesatallRWC

tournamentsexceptforone.Whichtournamentweretheyout-scoredin,andbywhichteam?

5. Howmanypointshavebeenscored inallsevenWorldCups?(to the nearest thousand) ▲

Jonathan [email protected] is a Manager at PwC, based in Wellington. Although he’s a general insurance actuary who does both pricing and reserving, he thoroughly enjoyed doing extensive research and analysis for this article.

Luke [email protected] is a Senior Analyst at PwC, also based in Wellington. He enjoyed finally being able to explain to his bosses his excessive patronage of sport websites during work time.

1 Source:http://www.allblacks.com/news/17784/IRB-praises-New-Zealand’s-hosting-of-World-Cup. (He added the word ‘probably’, which was unable to be put in the body of this article due to space constraints)

2 Source: http://www.taylorfry.com.au/newsletters/RugbyWorldCupFinal.pdf 3 Source: http://www.stuff.co.nz/sport/rugby/rugby-world-cup/5578864/AllBlacks

-at-50-per-cent-bet-on-it

review

▲

New Zealand's Na�onal Mood

Depression

Relief & Ecsta�c Delight

New Zealand's Demographics

Foreigners of a French extrac�on,opposi�on poli�cians, or people whoplaced large sums of money assumingthe All Blacks would choke

Other New Zealanders

New Zealand's Na�onal Mood

Depression

Relief & Ecsta�c Delight

New Zealand's Demographics

Foreigners of a French extrac�on,opposi�on poli�cians, or people whoplaced large sums of money assumingthe All Blacks would choke

Other New Zealanders

Quiz Answers:1.NewZealand(40),Wales(29),Australia(28)2.NewZealand&France3. Ireland4.1991–theAllBlacksscored19triesbutwereoutdoneby

Scotland,whoscored205.15,000(14,523tobeprecise–sohalfamarkifyousaid

14,000)

05

10152025303540

1987 1991 1995 1999 2003 2007 2011

Aver

age

mar

gin

(poi

nts)

World Cup Year

Average margin in each tournament

Average margin (pool matches) Average margin (all finals matches) Average Margin (final)

Argen�naAustralia

Can

Fiji

Fra

Georgia

IreItalyJap

NamibiaNZ

Romania

Russia

Samoa

SA

Tonga

USA WalesEngScot0%

5%

10%

15%

20%

25%

30%

0 50 100 150 200 250 300 350

Agric

ultu

re se

ctor

(as %

of G

DP)

Points at RWC2011

RWC2011 points vs size of Agriculture Industry

Trend lines


13interview

A portfolio Career

– Tony Coleman –in profile

Former Institute President and Actuary of the Year Tony Coleman shares his insights gained over a long and illustrious actuarial career spanning climate change, risk management and beyond...


14

▲

interview

OneofTonyColeman’sheroesisthelateApplefounderSteve Jobs, who made a career and a life out ofleveraging his strengths and his interests. In Tony’srecent acceptance speech for the honorary degree

ofDoctorofBusinessfromMacquarieUniversity,hequotedJob’swordsthathadrungthemosttruetohimpersonally:

“You’ve got to find what you love…Your work is going to fill a large part of your life and the only way you are going to be truly satisfied is to do what you believe is great work. And the only way to produce great work is to love what you do. If you haven’t found it yet, keep looking – don’t settle”.

Tony has certainly not ‘settled’. He was awarded the rarelybestowed honorary qualification from Macquarie University inrecognitionofhisworkinriskmanagement,insuranceandclimatechange. The university also acknowledged his contribution toMacquarieUniversity’sFacultyofBusinessandEconomicsIndustryAdvisory Board.

Tonyhasachievedgreat things inhisprofessional life,working forcorporate advisory firm Lonergan Edwards & Associates, AMP,BUPA, IAG and PwC, but he’s also given back to the actuarialprofession in many different ways, as recognised by him beingnamedActuaryoftheYearin2004.

Among his career highlights, Tony counts his term as Chief RiskOfficer and Chief Actuary at insurer IAG – not only for the role itself but for workingwithMichael Hawker the thenCEO. This iswhereTony’s interest inclimatechangeandcarbonwassparked,includinginvolvementin“highprofile”publiccampaignsIAGranonthis issue.Thisoccurredat the time therewaspolitical interest inthe climate change issue from both PrimeMinister JohnHowardandOpposition LeaderKevinRudd, in particular, in anEmissions Trading Scheme.

“Looking back to 2007 now, with the ETS legislation passed,it took four years to get to this point and it’s very satisfyingto see us take steps towards a low carbon Australia. I also believe it will be extremely difficult for a future governmentto repeal the legislationasbusinesseswouldhavealreadyboughtstakes in it, to say nothing of the reversal of personal income tax cutsandpensionincreasesthatwouldbeinvolvedtore-balancethegovernment’sbudget.”

AnotherhighlightforTonyduringhiscareerwashisworkasPresidentof the Institute of Actuaries of Australia (Institute) during the time of the HIHcollapse,andhisfollowingroleasConvenoroftheInstitute’sHIHRoyalCommissionTaskforce:“Ihadthechancetoworkonensuringinsuranceindustryregulationwasstrengthenedwhileenhancingtherole of the actuarial profession in those structures. By contrast, in othermarketssuchastheUK,theactuarialprofessionhasnotfaredaswellinthecontextofregulatorychangethere,”recallsTony.

Tonyhashappymemoriesofhismorethan15yearsexperiencewithCoopers&Lybrand (nowPwC) incorporate finance–andproudlyrecalls being the first actuary to be employed by an accounting firm inAustralia.Takinga leapof faith inworking foranaccounting firmrather than the traditional route for an actuary at the time, Tony helped growthefirm’sactuarialpracticeandexpertisefromthegroundup.

WorkingforCoopers&Lybrandalsoopeneddoorstonewprojects,most memorably to the interesting work involved in the demutu-alisation of National Mutual – one of the earliest demutualisationsintheworld,andthenthesuccessfuldemutualisationoftheNRMA in1998.

In addition toworking for highprofile companies over the courseof his career, Tony is also active in the profession on a voluntary basis,includingworkingwiththeInternationalActuarialAssociationand International Accounting Standards Board on actuarial and

insurance regulations. In recent years, Tony has also been active in engaging the community, business andgovernmentonclimatechange,throughhisworkwiththeWorldWildlifeFundandAustralianBusinessRoundtableonClimateChange.

Tony encourages young actuaries to get involved in voluntary actuarial work, in particular with theInstitute, to advance their careers. “Voluntary workin the profession is enormously important. You never knowhowthiswillhelpyourcareer,butI’vefounditdoes,”saysTony. “It keepsyouat thecuttingedgeof your profession and understanding what’s goingon in it. You also meet people inside and outside the profession,andlearnfromthem.I’mcertainlyabetteractuary for it.”

Healsohasafewadditionaltipsforyoungactuarieslooking to build their careers learned the hardway,throughexperience. “One,always remember–yourprofessional reputation is vital, so protect it. Two,professionalismmeans you will sometimes need totellclientssomethingtheydon’twanttohear,”warns

Tony receiving his honorary doctorate


15

▲

interview

Tony.“Finally,ifyoucan,trytoworkinmulti-disciplinaryteams,withaccountants, lawyers,andotherprofessionals,as theycanwidenyour professional perspective.” He cites his time working withscientists in the climate change arena and the learning he gained from that experience.

From climate change to risk management and insurance, the diversityofareasTonyhasworkedingiveshimawiderperspectiveon the role of actuaries and the potential contribution the profession canmaketoless‘traditional’areas.TonycitestheworkofanotherActuary of the Year, John Walsh, for his contribution to the disability policydebate,includingthelaunchofaNationalDisabilityInsuranceScheme. “There’s still huge scope for actuarial insights into thehealth and disability sectors, as well as the emerging wellnessinsurance space,” says Tony.

Tony also argues that actuaries could make a more significant contribution to the environmental sustainability area. “Climatechangeisthefirstofmanyissueswe’llhavetofaceoverthenextfewdecades.Projectedpopulationgrowthoverthenext40years,combinedwithearth’scurrentpopulationwe’realreadyconsuming1.5timeswhatissustainableforsomeresources,meanswewillseemore limitations impacting businesses and economies.”

Aself-confessed‘portfoliocareer’actuarytoday,Tonyconfessesthisarrangement is preferable at a time when the pressures and timedemandsofa full-timeexecutive roledon’t suit. “Work lifebalance– it’s hard, but you need it! If youdon’t take quality time out, youbecome less effective at work,” saysTony. “I’ve certainly been guilty ofworking too hard and not spendingenoughtimewithfriendsandfamily,but I’ve always been a keen sailorand lucky enough to get qualitytimewithfamilyonholidaysaround theworld.”▲

Candice [email protected]

“Voluntary work in the profession is enormously important. You never

know how this will help your career... it keeps you at the cutting edge of your profession and understanding

what’s going on in it.”

Citation on the occasion of the Presentation to the Chancellor, the Hon Michael Egan

by the Vice Chancellor, Professor Steven Schwartz of

Anthony Coleman for the award of the degree of Doctor of Business

T ony Coleman is one of Macquarie University’s mostillustrious actuarial graduates.

He has not only achieved great things in his professional lifebut he has constantly given back to the University as an active member of our convocation from more than 30 years.

His contributions to the Faculty of Business and EconomicsIndustry Advisory Board have helped generations of students after him. This spirit of generosity typifies all that Tony does.

Tony, who holds a Bachelors degree and an MBA fromMacquarie,wasanoutstandingstudent,winningtheAlanKnottscholar award. His career includes working for 15 years atPricewaterhouseCoopers, rising toSeniorCorporateAdvisoryPartner.

HethenmovedtoInsuranceAustraliaGroup,servingasChiefRiskOfficerforeightyears.DuringthistimeStandard&Poorsrecognisedthequalityofthecompany’sriskmanagementwithan‘excellent’rating–thehighestrankpossible.

Today, Tony is a director of a specialist valuation firm Lonergan EdwardsandAssociatesandisalsoactiveinseniorrolesintheInternational Actuarial Association. As the only Australian on the Insurance Working Group of the International Accounting Standards Board, he has also had a national voice in developing global financial reporting standards for the future of this industry.

HeisaformerpresidentoftheInstituteofActuariesofAustraliaandwasawardedtheInstitute’s‘ActuaryoftheYear’titlein2004.

In recent years Tony has also been active in promoting a betterunderstandingofglobalwarmingandclimatechangeingovernment and business, working extensively with eminentscientists,businessleadersandNGOs.HehasworkedwiththeWorld Wildlife Fund, the Australian Conservation Foundation andtheUnitedNationsEnvironmentalProgramandiscurrentlya Director of both the Antarctic Climate and Ecosystem Co-operativeResearchCentreandofLowCarbonAustralia.

Tony Coleman is an exemplary role for students of this University. His dedication to his field represents the finesttraditionofMacquariegraduates.

Chancellor, it is my great pleasure to present to you Mr Tony ColemantheawardofDoctorofBusinesshonoris causa.

27 September 2011


16 report

The Accident Compensation Seminar got off to a greatstartwiththeWelcomeDinneronSundayevening.Accompaniedbythesoothingsoundsofguitars,itwasagreatopportunityforcatchingupwithlonglostfriends

and colleagues.

Actuaries Institute President, Barry Rafe, welcomed delegatesthe follow morning and then handed over to Paul Driessen, the conference Convenor. The first plenary session ‘Changing times –IntroducingaNationalInjuryInsuranceScheme’gotunderwaywithaquickpollofwheredelegatesstoodontheproposalstointroduceboththeNIIS and themuch largerNational Disability Insurance Scheme(NDIS). Not surprisingly, a significant proportion of the responsesindicatedthatdelegateswereunsureandneededmoreinformation.

Andmoreinformationisjustwhattheygot!Startingwithanearnestvideo address to delegates from the Assistant Treasurer, Minister for Financial Services and Superannuation, the Hon Bill Shorten MP. Minister Shorten had made best efforts to attend the conference, butcircumstanceshadnotallowed it.However,keen toshowhissupport of the issues and of the event he gave a pre-recordedspeech which conveyed both his passion for reform in the areaof disability support and catastrophic injury, and the extent of hispoliticalwilltoseethisreformoccur.

Julie Evans Manager,Actuarial Services,WorksafeVictoria, thengave a considered and concise overview of the ProductivityCommissionrecommendationsforanNDISandNIIS.Thisgavealldelegates an excellent understanding of the proposals and a great base from which to consider the various perspectives on eachschemewhichwastofollow.

Matthew Kayrooz, NSW CTP Manager at Suncorp (but also aBoardmemberofTADDisabilityServicesNSWandamemberof

the Sydney Leadership team for Youngcare) then spoke about the needs of people affected with disability, gave his support for theNDISandNIIS asgoing in the rightdirection,butquestioned thesuitabilityofprivateunderwritingofsuchschemes.

Next wasNeil Singleton, Insurance Commissioner of the Motor Accident Insurance Commission (MAIC). MAIC have been looking at these issuesovermanyyearsandNeiladdressedpractical issuessuch as scheme design, funding and implementation.

David Nathan,CEOandDirectoratAvantInsurance,followedwithan engaging summary of the potential impact of the schemes on medical indemnity claims, the premium pool and hence the viability of medical indemnity providers (consolidation and diversification beingtwopossibleoutcomes).

Plenary1concludedwithaperspectivepresentedbyJohn Della Bosca,NationalCampaignDirector for theNDIS.Johnhasmanyyears of experience in politics, statutory insurance and human services portfolios, and in implementing significant reforms in this area. He spoke about investment in people (rather than welfare)andoftheonceinagenerationopportunitythatisnowbeforeus,tomakearealdifferencetothelivesofpeoplewithadisabilityandthepeoplethatcareforthem.However,healsospokeofthemanyobstaclestochangethatwouldfirstneedtobeovercome.

The discussion continued after morning tea in Plenary 2, withpresentations from Liz Cairns, Manager, ACC National SeriousInjury Service; Richard Madden, Professor of Health Statistics,University of Sydney; and David Bowen, Executive Director, LifetimeCareandSupportAuthorityofNSW.

Liz highlighted the importance of a financially sustainable scheme based on understanding the financial implications of decision-makinganddescribedthechangesmadeattheACCwhichmovein this direction.

Richard Madden showed strong support for an NDIS, butcommented that restrictive eligibility criteria in theNIISwill createan unnecessary legal and cost burden and will ultimately resultin twoclassesof injuredpersons.He is concerned that therearegapsbetweentheschemesandthatsupportneeds(ratherthanthenatureoftheinjury)shoulddetermineeligibility.

David Bowen discussed the importance of viewing catastrophicinjury schemes as lifelong relationships with participants and theneed to gain efficiency in treatment through scheme design.

After hearing from each speaker, delegates were again asked toindicatewheretheystoodonbothschemes.98%ofrespondentswere in favourof theNDIS (buthalfof theseharbouredconcernsabout implementation). The responses indicated less support for the NIIS – while the majority of respondents were for the idea(mosthavingconcernsabout implementation),6%ofrespondentsremained against the proposal.

The plenary session concluded with an engaging panel sessionfacilitated by Andrew Matthews.Andrewandthesevenpanellistsare to be congratulated for the thoughtful, open and candid dialogue

2011

CHANGING TIMES – CONTINUING NEEDS

ACCIDENTCoMPENSATIoN SEMINAR20 – 22 November 2011 • Sofitel briSbaNe


17

▲

report

Barry Rafe greeting delegates Seminar entertainment Plenary One Panel – John Della Bosca presenting

Barry Rafe

Liz Cairns

Andrew Daniel, Alan Greefield, Lew Watts

Anna Dayton, Daniel Cooper, David Bowen

Delegates

Matthew Kayrooz

Richard Madden

Neil Singleton

David Bowen

Alex Gould, Andrew Smith, Raewin Davis

David Gifford

Fiona Clay, Rosie Winn

David Nathan

Paul Driessen

John Della Bosca

Julie Evans

Andrew Nicholls

Hardik Dalal, Felix Tang, Bevan Damm

Mary Poon, Susan Ley, Vivian Tse


18 report▲

Ben Edwards, Gae Robinson, Peter Hardy, Ben Knight

Michelle Reynolds, Meg Brighton

Lesley Traverso, Sam Maitra, Claire Street

Grant Hollyman, Estelle Pearson, Paul Jamieson

Melinda Howes, Elaine Collins, Rachel and Paul Driessen

Michael Fitzharris, Mimi Shepherd

Andrew Matthews, Jamie Reid

Tom McDonald, Laurel Kong, Neil Singleton

Steve Curley, Andrew Smith, Andrew McInerney

Alex Collie

Ian Cameron, David Butler, David Bowen, Lorraine Mackin, Sue Freeman

Organising Committee

Ernst & Young Presentation – Barry Rafe, Peter McCarthy

PWC Presentation – Barry Rafe, Andrew Smith


19

▲

report

thattheycreated,evenwhenthereweredifferencesinopinion.Thiswasdefinitelyahighlightoftheconference!

Throughoutthe40concurrentsessionstherewasfurthercoverageofNIISandNDIS,talksonclaimstrendsandemergingissues,claimsmanagement strategies, scheme governance and monitoring, scheme design factors, and outcome measurement and injurymanagement. There were also some interesting and informativeupdates from each CTP andWorkers’ Compensation scheme inrelation to recent issues and performance.

One particular highlight was the presentation by Len Boehm of WorkSafe Victoria, entitled ‘Never Entirely Outsource Your Brain’which isa reminder tousall thatnomatterhowgood the ‘blackbox’,weshouldneversacrificecommonsenseinmakingdecisions.The presentation from Liz Cairns and Swee Chang in relation to ACC New Zealand and its success in implementing its NationalSeriousInjuryServicewasalsoveryinterestingandprovidedsomefoodforthoughtinrelationtothedevelopmentofanNIIS.

TheGalaDinner onMonday nightwas held at Victoria ParkGolfClub – another great opportunity to mingle. The ‘entertainment’was fantasticwith amimeartist anda lady in abubble, followedlater by a classical music feature act, the raffle for the Spinal Cord InjuryAssociationwasthendrawnandthenightendedwithseveraldelegates strutting their moves on the dance floor.

The final Plenary featured four speakers who presented somechallenging findings relevant to high cost claims in accident compensation schemes (typically claimants with very seriousinjuries,orthosewithpoorrecoveryfromlessseriousinjuriesduetochronic pain). Dr David Butler,aDirectoroftheNeuroOrthopaedicInstitute and senior lecturer at University of SA, challenged our perceptionsofpain inaveryentertaining lecture,whichdescribedhowtheexperienceofpainiscontrolledbythebrain,ratherthanthebody,andisthereforemodifiable.Thisprovocativetalkshowedhowcurrently available therapy often fails to challenge negative beliefs andprovidetheeducationandre-learningthatisnecessarytogainbetter control over chronic pain.

Professor Ian Cameron, Chair of Rehabilitation Medicine andHeadoftheRehabilitationStudiesUnitattheUniversityofSydney,providedearlyfindingsfromaninterviewstudyofpeopleclaimingforlesssevereinjuriessustainedinmotoraccidentsinNSW.Interviewswereconductedanaverageofeightweeksaftertheaccident,andthe high proportion of people reporting ongoing difficulties withdailyactivities,inabilitytoreturntoworkandhighlevelsofpainandpsychologicaldistresswassurprisingtomany.Thisimportantstudywill conduct further follow-ups to check their progress up to twoyearspost-accident, and the resultswill bebenchmarkedagainstother schemes to provide a unique comparative profile of motoraccidentinjuries.

Finally, David Bowen teamed with Lorraine Mackin, Executive Director in Ernst and Young’s Performance Improvement Practiceto report on a study of end-to-end rehabilitationmanagement forthose most seriously injured. Serious deficiencies were identifiedin current systems which negatively impact on client outcomesand often fail to help people reach their potential. Suggestions for

improvement included improved governance and data collection, integrated vocational support and use of mobile multidisciplinary rehabilitation teams as strategies to improve the effectiveness of the large investment made by compensation schemes in this area.

Despite coming at the end of an exhausting two days, this finalsessiongeneratednumerousquestionsandprovidedastimulatingclose to an excellent Seminar.

All in all, the 2011 Accident Compensation Seminar was a greatsuccess. The Organising Committee (Paul Driessen – Chair,NathanClarke,BevanDamm,SueFreeman,DavidGifford,AndrewMcInerney,AndrewSmithandEmmaSimonson)wouldliketothankallthosewhoattendedandparticipatedintheSeminar.Checkoutthe papers, presentations and audio materials at the conference websitehttp://www.actuaries.asn.au/acs2011.aspx.

Eventsliketheseareonlypossiblewiththesupportofoursponsors,thankyoutoErnst&Young,PwC,TaylorFry,Finity,DWSimpson,KPMG,SwissRe,andAcumenResourcesfortheirsupportofthisgreat event. ▲

Paul Driessen – [email protected] Ailwood – [email protected] Freeman – [email protected] Gifford – [email protected] Smith – [email protected]

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Feature Articles 157 March 5,6,7 Grameen Bank and Microfinance Ling Josh Report

157 March 8 A Chat with the Prasident Lisha Ruth Prsidents Column

157 March 19,20,21 Unique to New Zealand - ACC’s Coverage of Non-work Personal Injuries Desantis Jean Report

157 March 24,25 The Falling Apple Walker Brent Comment

158 April 5,6,7 Nature’s Risk Framework Walker Brent Comment

158 April 13,14,15,16 The Birsbane Flood Vinson Peter Report

158 April 17,18,19 A General Insurance Aproach to Credit Rating Transitions Musset Daniel Review

158 April 20,21 Finding and Working with Mentors Hodgett / Brown / Peter / Andrew / Report

Cook / Ford / Morath / Tony / Anthony / Dick /

Mulcare / Pollard Martin / Ian

158 April 24,25 Risk Appetite and Reinsurance Efficiency Maneval David Comment

158 April 26,27 Our Volunteers Moore Rebecaa Report

159 May 5,6,7 Superannuation - Benefit Projections / Forecasts Starkey Richard Comment

159 May 18,19 From Aeroplane Jelly to Jelly Doughnuts Berry Patricia Comment

159 May 20 Aftershock McNeice David Book Review

159 May 25,26,27 Living Within Our Means Rashbrooke Geoff Review

160 June 5,6,7 Future Pathways in New Zealand Benbow Joe Report

160 June 16,17 Paying Superannuation Death Benefits Trahair Tim Review

160 June 18,19 Disability Care and Support Kong / Ooi Laurel / Ben Review

160 June 20,21 What has Leadershiip fot to o with us? Mulcare Martin Report

160 June 24,25 Why Social Media for Insurers? Venlatrathnam Yanum Comment

160 June 26 Capitalising on Business issues Nicholls Jonathan Report

161 July 5,6,7 Here one minute… gone the next Sparks Jenni Report

161 July 13,14,15 Equity Risk Premium Survey Asher Anthony Review

161 July 16,17,18,19 Unlocking the Equity in Your Home Ferris Shauna Comment

161 July 20 What is next for general and life insurers Johnstone Rebecca Report

161 July 26,27,28 Boston Revisited Loong Bronwyn Postcard

161 July 29 Research Update Latham / Burns Chris /Jennifer Review

162 August 5,6,7 Long Term Care Insurance in Australia - A long Time Coming? Browne Bridget Report

162 August 14,15 The People’s Champion - John Walsh Beattie Yolanda Interview

162 August 16,17 Solvency II and ‘LAGIC’ Duncanson / Stumbles Trang / Michael Review

162 August 18,19,20,21 Private Health Insurance - Dealing With Uncartainty and Instability Carroll Peter Comment

162 August 24,25 Good Public Policy Shaw / Johnstone Rick / Rebecca Review

162 August 30,31,32,33 Members Survey Latham Philip Report

162 August 34,35 Welfare Working Group - New Zealand Counsell Brendan Report

163 September 5,6,7 Health Rreform Unlimited Dunsford Geoff Report

163 September 13,14,15 How Public Relations Benefits Actuaries Fenech Anna Comment

163 Septemeber 16,17 A Qualified Actuary Middleton David Report

163 September 20,21 ACTCALC - The Continuing Role of Commutation Functions Within the Actuarial Profession Millar / Szuch Dave / Bill Review

164 October 5,6 Actuaries - Taking the Lead Brown Andrew Comment

164 October 7 One Actuary - part of the master race! Schwerkolt Rob Report

164 October 18,19 Actuary… to Medical Officer! Lisha Ruth Report

164 October 20,21 On the other Hand - Why Not a Carbon Tax? Wood Matthew Comment

164 October 24,25,26 Health Reform Unlimited - Part 2 Dusnford Geoff Review

164 October 27 Deregulating in the Health Industry Rogers Graham Comment

165 November 5 A Bold New Look for the Institue McFadyen Katrina Review

165 November 11,12,13 Proposed Carbon Pricing Mechanism Claridge James Comment

165 November 16,17 Where Art Meets Numbers - Meredith Brooks Sng Candice Interview

165 November 19 Be an Influential Actuary Nagarajan Sen Review

165 November 20,21 Actuary – Professionalism Course – New Fellows Ellis / Trouville / Scott / Rebecca / Report

Ma / Yeung Wilson / Wynnie

166 December 5,6,7 Research Grant Recipients Interviews Sng Candice Interview

166 December 10,11,12 A Rugby Nation Not Feeling All Black - Actuarial Insights into the Rugby World Cup Nicholls / Fieldes Jonathan / Luke Review

166 December 13,14,15 A Portfolio Career - Tony Coleman Sng Candice Interview

166 December 26, 27 Superannuation for Dummies Buttler Bill Report

166 December 28,29 Professionalism Course - What’s New? Mulcare Martin Interview

166 December 32,33 To Teach is to Learn Twice - Rickly Leung Lisha Ruth Interview

166 December 34,35 Corporate Governance - Year in review Peters Anne Review

166 December 37 Thank you... Volunteers Moore Rebecca Comment

Notices 157 March 28 Introducing our new Council members Council Matters

157 March 29 Congratulation to our 2010 Prize Winners Council Matters / Awards

159 May 21 Accident Compensation Seminar - Call for Papers Notice

160 June 13 Senior Actuaries and Consulting Acturarial Firms Peters Anne Notice

164 October 7 Competition Winners Notice

ArTIcle edITION MONTH PAge(s) TITle AuTHOr’s surNAMe FIrsT NAMe ArTIcle TYPe

2011March April May June

IND

ex

20


165 November 18 Wanted… new Editor(s) for Actuary Australia Notice

Actuary unearthed 157 March 10 Actuary Unearthed Millington-Goodsall David

158 April 9 Actuary Unearthed Seddon Chris

159 May 9 Actuary Unearthed Lyon Richard

160 June 9 Actuary Unearthed Robinson Gae

161 July 9 Actuary Unearthed Grost Tim

162 August 9 Actuary Unearthed Tan Ming

163 September 9 Actuary Unearthed Stephan Kaise

164 October 9 Actuary Unearthed Gifford David

165 November 7 Actuary Unearthed Singh Jas

166 December 9 Actuary Unearthed Snoyman Tony

event reports 159 May 13,14,15,16,17 Biennial Convetion 2011 Traverso / Killick Lesley / John Report

160 June 14, 15 Flood Resilience - Risks, Mitigation and Funding Solutions Ley Susan Report

161 July 21 Capital Review Seminar Report

162 August 26,27 Young Actuaries Program Lee Keri Report

163 September 25 Volunteers Cocktail Parties Event

164 October 17 The 46th Actuarial Research Conference Butt Adam Report

164 October 28,29 Enterprise Risk Management Seminar Brazel Wayne Report

164 October 30,31 Learning About Contextualisation - The CAP Course - Of Course Lee Keri Report

165 November 14,15 1st Australian Compensation Health Research Forum (ACHRF) Collie Alex Report

165 November 25 Tips Form the President - YAP Li Nick Report

165 November 26 Actuaries in Leadership Au - Yeung Joyce Report

166 December 16,17,18,19 Accident Compensation Seminar Driessen / Ailwood / Freeman / Paul / Josh / Sue / Report

Gifford / Smith David / Andrew

event Promotions 157 March 15,16,17,18 Biennial Convention 2011 Event Preveiw

158 April 30 Flood Resilience - Risks, Mitigation and Funding Solutions Event Notice

159 May 28 Insurance Capital Review Seminar Event Notice

159 May 28 ARRA’s View on Diversfield Institutions Markert - Business Luncheon Event Notice

160 June 29 APRA’s View on Diversfield Institutions Markert - Business Luncheon Event Notice

161 July 31 Enterprise Risk Management Seminar Event Notice

161 July 32 Accident Compensation Seminar Event Notice

162 August 36 Accident Compensation Seminar Event Notice

162 August 13 Enterprise Risk Management Seminar Event Preveiw

163 September 18,19 Accident Compensation Seminar Event Notice

164 October 13,14,15,16 Accident Compensation Seminar Event Preview

165 November 27 Financial Services Forum 2012 – Call for Papers Event Notice

166 December 34, 35 Financial Services Forum 2012 – Call for Speakers Event Notice

letters 157 March 27 Letter to the Editor Latham Philip Letters

160 June 28,29 Letters – David Millar / Barry Rafe Millar / Rafe David / Barry Letters

161 July 30 Letter – Murray Glase Glase Murray Letters

162 August 33 Letter – Dave Millar Millar Dave Letter

163 September 27,28 Letters – Collin Westman / Bronwyn Loong / Brent Walker Westman / Loong / Walker Collin / Bownwyn / Brent Letters

165 November 30 Letter – Matthew Wood Wood Matthew Letter

166 December 40, 41,42 Letters – Brent Walker / Frank Ward / Barry Rafe / Walker / Ward / Rafe Brent / Frank / Barry / Letters

Nicholas Yap / Andrew Patterson Yap / Patterson Nicholas / Andrew

student columns 158 April 28 Student Column – Beach day – Going Against the Odds Trinh Jenny Student Column

159 May 29 Student Column – Moral Hazard Li Hanbo Student Column

160 June 27 Student Column – A Real Actuary – my developing view Bhaskaran Chaturi Student Column

161 July 25 Student Column – Learning About Living the Actuarial Dream Kwan Nancy Student Column

162 August 29 Student Column – Hunting for Treasures - ASOC Camp Jing Lucy Student Column

163 September 26 Student Column – Exchange Trip 2011 McCormack Emma Student Column

164 October 32 Student Column – The Pay-As-You-Go Pension Problem Morris James Student Column

165 November 28 Student Column – The European Union: A Year On Sriskantha / Prasad Arreni / Neeharika Student Column

166 December 38 Student Column – Work Experience as an Actuary Jing Lucy Student Column

regular columns

Ask Gae 26 /24 / 24 / 24 / 24 (March, May, July, September, November) Robinson Gae Ask Gae

Editorial 4 Monthly Robertson Hodder / Collier Catherine / James Editorial

Education Update 27 / 28 / 38 (March, August, December) Latham Philip Education Update

In the Margin 22 Monthly Hayes Genevieve In the Margin

More than Maths 23 Monthly Mulcare Martin More than Maths

CEO’s Column 30 Monthly Howes melinda CEO Column

The Actuarial Pulse 10,11,12 Monthly (January – November) The Actuarial Pulse

President’s Column 8 Monthly Rafe Barry President’s Column

ArTIcle edITION MONTH PAge(s) TITle AuTHOr’s surNAMe FIrsT NAMe ArTIcle TYPe

July August September October November December

21

Most solutions to Solvency II for Long TailLiabilities are like the Ptolemaic System

Sometimes a change in perspective is all it takesThe course will provide detailed answers to some of the most common questions regarding uncertainty, variability, reserve distributions and correlations, and SCR, Technical Provisions (Fair Value of Liabilities) and Market Value Margins for the one-year and ultimate-year risk horizons.

Location: HILTON - SYDNEYLevel 1 - Rooms 5 & 6, 1488 George Street, Sydney

Time:

Attendanceis FREE

Synopsis:• Introduction to linear regression, normal distributions, lognormal distributions and correlations;

• Link Ratios, Mack, Murphy and the Extended Link Ratio Family (ELRF) Modelling Framework;

• An introduction to the Bootstrap Technique and how it can be used test model fit;

• The Probabilistic Trend Family (PTF) modelling framework – fitting a distribution to every cell;

• Modelling principles including significance of parameters, discriminatory statistics and parsimony;

• What are the drivers of calendar year liability stream distributions and correlations?

• Modelling multiple LOBs using Seemingly Unrelated Regressions (SUR);

• The drivers of reserve distribution correlation including parameter uncertainty, and how we know if two LOBs have common drivers;

• Three types of correlations between LOBs; process correlation, parameter correlation and reserve distribution correlation;

• Reserve distributions and underwriting (pricing) distributions for each LOB and the aggregate of all LOBs (and/or segments);

• Real life examples of risk diversification of Solvency Capital and Market Value Margins;

• Formulation of SCR, Technical Provisions and Market Value Margins for the one-year risk horizon and the ultimate year risk horizon;

• Economic balance sheet, Technical Provisions (Fair Value of Liabilities) and Market Value Margins, and capital allocation by LOB and calendar year.

Register early by emailing Jenny Weinstein at [email protected]

An Intensive One and a Half Day Coursepresented by Dr. David Odell

8.30am to 4.30pm Thursday 1st March 20128.30am to 2.00pm Friday 2nd March 2012 Light breakfast, drinks

and lunch are providedFabulous Hilton 5 *Star Standard

Participants will receive study guides and obtain a free copy of

ICRFS-ELRFTM 10.5.

Measuring Long Tail Liability RisksIncluding SII & IFRS4 Metrics

FREE


24

The Logical Graveyard (AA164 Solution) The details of the five people in the logical graveyard are as follows (with the answers given in the order name-weapon-year of death-means

of death):

• ElizabethMaitland–Knife–1937–Elephants;• FlynnCarsen–LaserGun–1985–Snake;• HenryCurtis–Blunderbuss–2004–Boulder;• JesseHuston–Whip–1950–Cannibals;• KarenRoss–Sword–1995–Lion.

36 correct answerswere submitted. Thewinner of thismonth’sprize, selected randomly from among the correct entries, wasDavid McNab,whowillreceivea$50bookvoucher.

Wordoku“Itcan’tbemuchfurthernow,canit?”askedKatherineGainsborough,leaning against a tree in order to steal a few moments’ rest.

“No,” said Allan Quatermain, himself happy to have an excuse to take a break. “I don’t think it could be more than half a day’s trek. In fact, it would be best if we stopped and made camp here for the night. I’d much rather reach the Mines by daylight than in the dark. You never know what traps we might still face.”

Katherinesatdownontheground,gratefulfortherespite,andpulledabatteredandwaterstainedpuzzlebookfromherbackpack.

“I thought you’d finished everything in that book,” said Allan, looking over her shoulder.

“Thisisthelastone,”saidKatherine.“I’llletyouhelp,ifyou’dlike.”

It’s All Fun and Games until Someone Loses an EyeThe next morning, Allan woke at dawn and examined the map to KingSolomon’sMinesforwhathehopedwasthefinaltime.Ithadtaken him ten months to reach this point and he was eager to get started and make the final leg of the journey. As he watched the sunriseabovethehorizon,hewonderedifthelegendsweretrue.Were the Mines really a place of unimaginable wealth and riches or had their journey been in vain?”

Below is the metapuzzle grid from which the location of KingSolomon’sMinescanbedetermined.Eachofthepuzzlespresentedthroughoutthisyear(includingthepreviouspuzzle)hasacluewordorphrasehiddenwithineitherthepuzzlequestionorsolution.

This clue may be clearly visible (for example, an acrostic of the words that form the solution) or require some decoding orfurther thought (for example, the solution to the puzzle given in the August issuewasaquestion– to find theclue,youmustanswerthisquestion).

Once you have collected all ten clues, you must use them to identifytenwordsorphrases.Byinsertingthesewords/phrasesinthe correct order into the metapuzzle grid, the location of the Mines willberevealed.

puzzles

IntheMarginwithGenevieveHayes “Ihavediscoveredatrulymarvelousproofofthis,whichthismarginistoonarrowtocontain”–Fermat.

with Genevieve Hayes

“I have discovered a truly marvellous proof of this, which this margin is too narrow to contain” – Fermat

in themargin@actuar ies.asn.au

Foryourchancetowintheextra special prize of a $100 book voucher and the title of 2011 Puzzle Champion,determinethelocationofKingSolomon’sMinesandemailyoursolution(withworking)to:[email protected]. ▲


25

A fter three years of contributing to this column I have decidedto freeupsomespace in this journal in2012.Yes,dearreader,thiswillbemylastcontributiontoAA inthisform.Ihopeyoudon’tmind,inreminiscingabout

the first 29 columns, indulging in some broad observations aboutcommunication.IthinkthatIhavelearntagreatdealsince2008.

How v WhatThere is no doubt that in preparing any form of communication most people put a strong emphasis on what they are going tocommunicate – and this is especially true of actuaries in my experience. Right from my first column I have attempted toencouragereaderstoputmoreemphasisonhowtheyaregoingtocommunicate.Thisisalsothefocusofmyworkshopsinthisarea.Ifanything, in the last fewyears, Ihavebecomemoreobsessedwith the importance of the ‘how’ having seen so many great‘whats’ignoredormisinterpreted.

For example, I have found that I have changed my guidance to people on their presentations. Where once I was very keen toclarifytheirkeymessage(eg“Howwouldyousummarisethemostimportant points you want to convey?”) I am now much moreenthusiasticaboutthemclarifyingtheresulttheywanttoachieve(eg “What impact– thoughts,actions, feelings–doyouwant tohaveonyouraudience?”). Iamalsonowvery interestedin‘why’they are doing it. For an inspiring articulation of the interaction of why/how/what I recommenddevoting 18minutes to listening toSimonSinekonwww.ted.com.

Reminder of Existing Skills v Learning New SkillsIt has been rewarding to hear feedback and I have enjoyed anumber of conversations about the subjectmatter. People haveoftenexpressed thebenefitof thecolumnasa ‘reminder’abouta particular behaviour. That is great to hear. At the same time, the moreIlistentopeopletalkingabouttheirowncommunicationskillsthe greater my unease that too many people believe that they have all theskills that theyneedand that they justneed to rememberto use them. Iwould urge all readers to seek feedbackon theircommunicationskillsand,inparticular,tocriticallyassesswhetheranysub-optimalcommunicationisafunctionof‘memory’or‘skillbase’.Ifyourdiagnosisisincorrectsowillbethetreatment.

This links to one of my hobby horse homilies, simplified here in the interests of space: You are not stuck with your current

communication style. You can learn and get better. My regular reminder of this is in my workshop on framing questions.Participants usually start with the attitude of “how hard canit be”, progress to “it’s just about being more aware” beforereluctantly concluding that they could learn some framing skills. Notconvinced?Thinkaboutaclosedquestionthatyoucurrentlyuseatwork(eg“Anyquestions?”).Nowre-worditandapplyittogetabetterresult (assumingthatreceivingaquestion isabetterresult). Will you need reminders or skill to implement it?

Self-Awareness v Awareness of Others I think this isoneareawheremy viewshaveevolvedmore thanany other. Most of my columns have stressed the need to be aware of the personwe are communicatingwith: their personalstyle (eg detail v big picture), their preference for medium (eg verbalvwritten),theirphysiology(egstandingvsitting),theirtone(soft v harsh) or their language (eg complex v simple). I still believe that these considerations are vital for successful communication. However,on reflection, Inow think thatmore importanceshouldbe placed on our self-awareness and understanding our owncommunication strengths and weaknesses. This extends toawarenessoftheimpactofstressonourcommunication.

Hereisashortexercisetoillustratethepoint:1. Thinkofarecentexperiencewhereyouhavebeeninvolvedina

communicationbreakdown…2. What, in hindsight, could you have done differently to avoid the

breakdown?3. Whydidn’tyoudothatatthetime?

It is Q.3 that represents the real test of your self-awareness.

It takes more than maths to communicate effectively and professionally. ▲

Martin [email protected]

Thank you to all readers for your interest in the column. If you wouldlikeaccesstothefullsettheyareavailableat

http://etiam.com.au/resources/articles/.Merry Christmas and Happy New Year.

more than maths

what does it all mean?


26 review

Amajor finding from theGovernment’sCooperReviewinto the superannuation system was that it is toocomplicated, and as a result, people are not engaging withtheirsuperannuation.

Superannuation is a complex product. It packages insurance, investment and retirement funding – each of these can be a difficult technical topic in itself. Thus, it is not unusual that consumers’eyes glaze over when confronted by the jargon used in modernsuperannuation literature.

However,evengrantingtheinherentcomplexityofsuperannuation,the current regulatory structure does very little to help interested consumers understand and compare superannuation products.

Investorswouldbebetterequippedtomakedecisionsaboutsuperifthe Government mandated standardised measures and terminology for more meaningful comparison of investment strategies and fees charged by superannuation funds.

Investment strategies – not just performance measuresWheninvestorscomparesuperfunds,theyshouldconsider:

● the expected future return; ● the expected future volatility; ● their personal risk appetite; and ● otherriskcharacteristicssuchasliquidityandriskofdefault.

Oneof thecomponentsof theGovernment’snew‘StrongerSuper’reform package is the introduction of a standardised ‘MySuper’product as the basis for compulsory super contributions for employees whodonotwishtochoosetheirowninvestmentstrategy.

MySuper may go some way towards simplifying the investmentcomponent of superannuation, but employees will still need amethod to compare MySuper strategies offered by different funds whentheychangejobs.Theonlytoolscurrentlyattheirdisposalarethe published past performance and the trustee’s stated strategyandobjectives.Themajordifficultieswiththesetoolsarea lackofstandardisation in the calculation methods and the presentation of the results (if you can find them).

To help investors make informed comparisons and decisions about their super fund, the Government should mandate and provide free access to additional measures to facilitate more accurate comparisonsofafund’sinvestmentstrategy:

● average performance, net of investment-related taxes, feesand costs, calculated on a consistent basis over one or more (agreed) timeframes;

● a measure of historical volatility, such as the ‘standard riskmeasure’;

● a liquidity measure such as the percentage of ‘listed’ versus‘unlisted’assets;

● a standardised investment expense ratio based on only investment-relatedfeesandcosts;and

Superannuation for

DummiesLack of investor engagement with superannuation is a widespread issue. The Institute Benefits Projection Working Group provides guidance on fee comparison for retail investors, and argues standardised measures would help both consumers and financial advisers.


27

● other standardised indicators of investment strategy differences such as ‘growth’ versus ‘defensive’ assets, overseas versusdomestic assets, hedging ratio for overseas assets and use of ‘active’versus‘passive’management.

Manyfundmemberswouldneedprofessionaladvicetounderstandandapplyallofthesemeasures,buttheywouldbeassistedgreatlyif advisers and commentators have access to a standardised set of regular performance measures.

Separating fees and costsAmajorweaknessofthecurrentdisclosureregimeisalackofclarityinhow feesandcostsarechargedanddisclosed.While feesareby no means the main driver of retirement outcomes, it should be possible for consumers to at least understand and compare the fees charged by different funds.

Some fees simply cover administration services such as the cost of collecting contributions, keeping records, and in some cases, additional services includingweb access and helplines. Formostconsumers,there’slittlepointinpayingextrafeesforadministration,unlesstheybelievetheadditionalservicesareworththecost.

By contrast, many investors will be prepared to pay higherinvestment fees to gain access to asset classes that may earn better investment returns or achieve a better diversification.

Thefeesconsumersarewillingtopayshouldvaryaccordingtotheirlifestage.Forexample:

● for younger employees starting their first job or changingemployersforthefirsttime,thefocuswillusuallybeonportability,simplicityandlowfees;

● as employeesmove into the early stages of family life, whenfamilies are young and mortgages are high, a fund that provides optimum insurance may be the best solution; and

● later in their working life, when superannuation balances arelarger,personalcommitmentsare lowerandretirement ismuchcloser, employeesmay bemorewilling to pay a higher fee forprofessional advice regarding investment or retirement strategies.

To enable consumers to make informed super fund choices, fees and costs should be separated into three components:

1. administration;

2. advice; and

3. investment.

This may seem obvious, but many funds currently charge a single fee to cover all these components. Some funds charge a separatedollarfeeforadministration,butpartofthe“managementfee” covers administration and advice, as well as investmentmanagement costs.

Sowhat’sthebigdeal?Ayoungemployeewantingtochoosealow-costfundtoreceivecontributionsfromapart-timeemployerwouldhave to understand the complexities of such a fund’s investment

strategy to be able to assess whether the package as a wholerepresents reasonable value for money – an unreasonable demand.

Comparing fees and costsThe Cooper Review suggested that the regulatory body (APRA)shouldproducea‘leaguetable’enablingfundmemberstocomparefees on a consistent basis.

Thedifficultywiththisproposal isthattheimpactofadministrationfees on a fund member’s account balance depends on thecombinationoffixeddollarandasset-basedfees,andthesizeofthemember’saccountbalanceandannualcontributions.

As such, every case is different. Moreover, the fixation on fees is unhealthy, unless it is placed in the context of retirement outcomes (which are, after all, the ultimate objective of retirement fundingpolicy).

Abetterapproachwouldbetofocusontheimpactofadministrationfees and costs on the eventual retirement benefit outcome over a workinglifetime.APRAcouldprovideprojectionsforahypotheticalemployeestartingacareeratage25andretiringatage65,ignoringdifferences in investment strategy, but showing the impact ofadministration fees and costs alone.

An even better approach would be for APRA to provide astandardised framework for super funds to do the calculationsthemselves. ▲

Bill ButlerConvenor, Superannuation Benefit [email protected]

This article was first published in Money Management on 14September2011.

A major weakness of the current disclosure regime is a lack of clarity in how fees and costs are charged and disclosed. It should

be possible for consumers to at least understand and compare the fees charged

by different funds.

review▲


28 review

The Professionalism Course used to be conducted twice a year in Sydney, primarily as the last step in the education for new Fellows. The pattern has changed in the last two years. What is going on?

MM: The introduction of the new designation for Actuaries hasbeen the main driver. You may recall that when the ActuarydesignationwasannouncedAssociateswereinvitedtotakeuptheopportunity tocall themselvesanActuary, subject tocompletionof the Professionalism Course. That meant that we had a newaudience,ofanunknownnumber,fortheCourse.Sowehadafewdecisions to make to accommodate the increased and perhaps different demand.

AA: Why didn’t you just offer a new Course for the Actuaries?

MM: Thatwasoneoftheoptions,ofcourse.However,onbalance,wedidn’twanttogiveanimpressionof‘differentcourses’becausewebelieve that the fundamentals of professional conduct are thesame, irrespective of title. We also hoped that the diversity of the participantswouldaddtothe learningexperience.Therewasalsothe practical challenge of guessing (or should I say predicting) the numberofparticipants.Byschedulingadditionalcoursesthatwereopentoallweimprovedtheflexibilityofthescheduleandprovidedgreater choice for the members.

AA: What do you mean by choice?

MM: One of the great pleasures of being involved with theProfessionalism Course is attending the Graduation Dinner andwitnessing the proud involvement of the family and friends of thegraduates. With more opportunities to attend this improves the likelihood of selecting a time that suits the participant’s supportnetwork.WealsohavescheduledacourseinMelbourneeachyearto improve the choice of location and make it more convenient for Melbourne members and their families.

AA: You mentioned the diversity of the participants. How has that worked out?

MM: Whilst the composition has varied considerably across the eight Courses that have been conducted during the last twoyears, there have always been a material number of both newFellows and new Actuaries at each. And let’s not forget that wealsoenjoyasubsetofparticipantsfromoverseasateverycourse,

There have been some significant changes in the profile of the participants as well as the programming of the

Professionalism Course since 2009. We caught up with the Facilitator, Martin Mulcare, to find out what’s different…

Martin Mulcare

what’s new?with the professionalism Course


29

both Australian members based overseas and members of other associationswho find it convenient toattendourCourse tomeettheirmembershiprequirements.Thisalladdsuptoagreatmeltingpot of backgrounds, experiences and motivations.

AA: Motivation is an interesting word. What do you think has prompted almost 200 Associates to attend the Professionalism Course in the last two years?

MM: That’s a great question and, two years ago,wewere reallynot surehowmanywouldbewilling toattend. I think there is anobvious motivation to attend in order to call oneself an Actuary. Certainlythedesignationhashadsomeappeal.However,intalkingto the Actuaries it has been fascinating to hear more compelling if sometimesemotionaldrivers.Therehavebeentworecurringthemesemerge in my conversations. The first is based on recognition, being publicly and professionally recognised as an Actuary after many yearsofhardwork.Thesecond,partiallyconnected, is thesenseof satisfaction in attending. This includes words like ‘fulfilment’,‘completion’ and ‘achievement’. At its raw edge, I have heardActuariescombine these two themesandconfess that theyhavefelt like failures for so many years and the designation provides a powerfulsenseofclosureforthem.

AA: I guess that’s a little different to the Fellows who feel that they “have to attend” to receive their Fellowship certificate. How do the two groups compare in their participation?

MM:Pleasepermitmetousesomegeneralisationstoanswerthatquestion. I will use the term Associates to refer to the ActuarieswhoarenolongeronthejourneytoFellowship,todifferentiatefromtheyoungActuarieswhostillplanonbecomingFellows.Generally,theAssociates tend tobemoreexperiencedandwork inawiderrangeof roles forawider rangeofemployers.Thishasproducedtwo outcomes which I think have been fantastic for the learningexperience. Firstly, their greater experience enables the Associates to provide more practical and more commercial responses to the case study scenarios. Secondly, their more diverse employment has given them greater perspective to apply to the group discussions. I thinkthatthequalityofthegroupworkhasbeen,therefore,greatlyenhanced by the contribution of the Associates.

AA: That’s great for the new Fellows and young Actuaries but what do the Associates get out of it?

MM: Imust say that it botheredme for awhile that the balanceofcontributingand learningwasnotsatisfying for theAssociates.However,thefeedbackhasbeenthattheyhavefoundtheCoursebeneficialinotherways.ManyhadnothadmuchcontactwiththeInstitute in recent years and they learn a lot about member services that they did not know existed. More importantly, they obtain agreater appreciation of the application of the Code of Conduct to theirworld.AnotherbenefitistomeetotherActuarieswhofeelthesamewaythattheydoaboutthenewdesignation.

AA: How different is the new Professionalism Course?

MM: Inmanyways,ofcourse, it isnot ‘new’.Thesame learningobjectives exist and the principles of professional behaviour have

not changed. What is different is the examples and scenarios that we discuss. The involvement of the Actuaries, and indeed theprofession’sexpansionintowiderfields,causedustoreplaceallofthe case studies used to illustrate the application of the old Code of Conduct.Thepreviousemphasis,understandably,wasonFellowsinformalroles incorepracticeareas likeAppointedActuary.Now,none of those case studies involve traditional scenarios.

AA: But is there a danger that the subject matter loses relevance for them? MM: Atfirstglance,thatisarisk.Wehavefound,however,thattheuseofnon-corecasestudieshasdeliveredsomecuriousbenefits.There ismoreof a ‘level playing field’ in thediscussionby takingaway, for example, the apparent advantage that life insuranceparticipantshavewhenaddressingalifeinsurancescenario.Italsoforces the participants to focus on the principles of the case study rather than be distracted by the technical details.

AA: What else is different?

MM: With the greater diversity of the participants, including the overseascontingent,wereallywanttoleveragethatfeature.Hence,wehaveintroducedmoreinteractivesessionsandcallonindividualparticipants to speak at almost all sessions, not just the groupsessions.Wearemoreconsciousofmixingpeopleaswellsowehavetwosetsofgroupsforsyndicatework,whicharedifferentfromthe tables that they originally sit at. We also encourage (some say ‘force’)peopletomovetablesattheMondaynightdinner.Thisalsounderlines thevalueofnetworkingandprovidesanopportunity topractise those skills.

AA: Any final thoughts?

MM:Ifwearegoingtocontinuetoenjoythebenefitsofdiversitythen I would love to have more Associates attend the Course in 2012. ▲

Martin [email protected]

Associates have been finding the course beneficial in unanticipated ways –

identifying member services they were unaware of; gaining a deeper appreciation of the Code of Conduct, and discovering

new networking opportunities.

▲

review


30 event notice

The Actuaries Institute will convene the 2012 Financial Services Forum in Melbourne on 30 April – 1 May 2012. The theme for the Forum is ‘Think Big’.

We must ‘think big’ if we are to successfully navigate the short-term turmoil whilst preparing for the long-term structural changes facing Australia and the global community. How can we manage the risks, capitalise on the opportunities and push the boundaries to continue to add value to our industry and to the millions of Australians who entrust their money to us?

The program is now being prepared and we are seeking papers or presentations. A limited number of concurrent presentation slots are available. Presentations will be 20 minutes in duration and presenters should be prepared for another 20 minutes of discussion and question time. Supporting papers are encouraged but not required.

Melville FSF Prize

The Melville Financial Services Forum prize (monetary value $4,500) may be awarded to an author of a paper considered by the judging panel to have either effected significant advance in the actuarial profession’s understanding or knowledge of a specific subject or sphere of knowledge;

OR

collected or presented existing material in such a way as to raise the awareness of the profession regarding an important contemporary issue.

Contacts

Rob Daly [email protected] +61 (0) 2 9448 9877

Ismar Tuzovic [email protected] +61 (0) 2 9220 1375

Sean McGing [email protected] +61 (0) 3 8641 6970

Key Deadlines

Friday 3 February 2012Lodgement with the Institute of Synopsis and Submission Form

Friday 17 February 2012Author advised if presentation/paper accepted or not

Monday 8 March 2012Draft paper to Peer Reviewer

Friday 30 March 2012Completed Paper to Actuaries Institute

Friday 6 April 2012Completed PPT Presentation to Actuaries Institute

30 April - 1 May 20122012 Financial Services Forum - Melbourne

2012 Financial Services ForumCall for Speakers


31

▲ event notice

Suggested Topics

Structural Reform & Public Policy– challenges of an ageing population and long longevity– the impact of medical advancements– financial reform after the crisis– housing affordability, what can be done?– actuaries and thought leadership in public policy- where are the big opportunities for actuarial work?– impact of regulatory changes: Basel II, III – FOFA – Stronger Super – APRA Capital & ICAs– operating in a green economy and implications of pricing emissions

Driving Value in Financial Services– what next for the banking sector, the implications of declining credit growth for the economy and

financial services industry– the actuarial role in banking – where can we add value?– improving efficiency in financial services organisations– what can be done about underinsurance?– International markets and exporting expertise and services to the Asian growth engine– industry consolidation and its impact on competition– investment strategies for financial services firms

Superannuation & Wealth Management– implications of MySuper, Stronger Super & Superstream– SMSF / Industry / Retail – what to expect– is post-retirement the next big thing?– are Industry funds the mutual life insurance companies of the future?– educating fund members – is financial literacy an impossible dream?– investing in a post GFC world – have the fundamentals of the way we invest changed?

Enterprise Risk Management & Corporate Governance– Enterprise Risk Management – latest developments, leading edge approaches – how actuaries are

adding value– the value to business of good risk management– operationalising Risk Appetite– risk reporting and management information systems– driving a risk management culture– the actuarial role in risk management – where can we add value?– governance for superannuation funds; what skills will trustees need in the evolving retirement landscape?– What are the key skills for actuaries in the new world?– policing executive remuneration

Connecting with Consumers– marketing analytics and consumer targeting– going digital– smarter consumer engagement models– the actuarial role in financial planning – where can we add value?– how can actuaries be more creative?– product development; what do consumers really need?– direct marketing approaches


32 report

Ricky startedoffhisactuarialcareeratMLCworkinginthe life insurance area undertaking valuations. After three years, he made the move to actuarial consulting atPricewaterhouseCoopers (PwC)within the financial

services team. The work at PwC was quite diverse, as per thenature of consulting firms andRickywas able to dabble inmanyprojectsrangingfromunitpricingwork(whichwasthe‘inthing’todoforawhile)tosecondmentsdoinglifeinsurancework,toprojectsrelating to remuneration and bonuses for executives at banks and lifeinsurers.OfcoursetherewerealsoauditsofvariouslifeinsurerswhichRickysayshethoroughlyenjoyed.

Likemanystudents,Rickyhelpedpayhiswaythroughuniversityby tutoringhigh school students.AlthoughEnglishwashisbettersubject at school, it was in mathematics that he found himselfprovidingcoaching.WhatsetsRickyapartfrommostisthathekepttutoringafterhecommenced full timeemployment–workingatatutoring company on Saturdays. This meant, for almost 10 years, Ricky’sweekends consisted of a single day of relaxation and thetutoring had turned from a source of income into a vocation.

Heenjoyedhisactuarialcareerandtheworkthatcamewithit.It

“To teach is to learn twice”

– Joseph Joubert

In the October edition of Actuary AustraliawemetKatelynPriesterwhochangedhercareerfromActuary to Medical officer. In this seriesofinterviewswearemeetingActuarieswhohavechangedtheircareer directions; some into areas completelyunrelatedtowhere theybegan.ThismonthwemeetRicky Leung...

Ricky Leung


33

▲

report

waschallengingandstretchednotonlyhisintellectbuthiscreativityinwaysheneverthoughtpossible.HoweverRickyhadwantedtodomore teaching but with full timework commitments and onlyone freeday leftofhisweeksomethinghad tochange toenablethis to happen.

Making the moveAsisthecasewithmanybigchanges,theydon’thappenovernight.Over a period of around 18 months, Ricky considered theopportunities thatwereavailableat the tutoringcompanyafterhisbossofferedhimamoreinvolvedrolewiththechanceofinfluencingthe direction of the company. He hadmany discussionswith hisfamilyandcolleaguesatPWCaboutmakingthemove.

Ononehand,hisparentswereperplexedastowhy,afterdoingthe hard yards in obtaining his Fellowship he would not want tocontinuewith his actuarial career.On the other hand,Ricky had aclear desire to make a difference in the life of students – assisting themnotonlywiththeirstudiesbutalsowiththeiraspirations.HelpingwithhisdecisionwasthefactthatRicky’swifehadrecentlyalsomadeacareerchange–sotheconceptwasn’tcompletelyforeigntohim.

I askedRickywhya tutoringschool insteadofbecominga fulltime teacher. The benefits of the tutoring school weremany – hewasn’t required to obtain a formal teaching qualification (no morestudy!); the students attending the tutoring school, are in the main, there by choice and are more eager to learn; there is more flexibility in his hours and there could be more flexibility in his teaching style (not locked intoaprescribedcurriculum). Inaddition therewas thebusinessaspectofthetutoringcompany–hewasnotonlyatutor,butwasalsolookingathowhecouldexpandthebusiness.

How life is nowWith the extra time on his hands, Ricky has been able to beginwritingmathematic textbooks,agoal thatwastuckedaway inhislistofotherprioritiesuntil now.Hisnewbornson (Max) isanotherbeneficiaryoftheaddedtimeathome,alongwithhiswifeandthelawn/weeds in their backyard. Life hasdefinitely sloweddown forRicky–whichisfantastic,headds.IaskedRickyabouthowmuchdifference his career move has made to his bank account. There certainly is adifference,but it is offsetwell and trulyby theextratime he haswith his family and the reward he gets from helping his students.

Thewarmfuzzyfeelingfromteachingisfairlydifferenttothebuzzgained from actuarial work. Ricky explains that with teaching theimpact you make is probably more direct than a lot of the actuarial projects he did. Acknowledgement from students, reports, testresults, feedback from parents etc., shows that your influence ismuchmore obvious. It is comfortingwhen your clients know yourname, care about yourwork and youare integral to a very crucialpart of their life.He feels like he ismaking a positive difference tothekidsatatimewhentheyaremostimpressionable(theirteenageyears)-thisiswhatexciteshimabouthisnewcareer.Thisfeelingofbeingable tohavedirect influencewasnot immediatelyobvious inhis actuarial roles.

What about your actuarial skills.....ForRicky,itwasinterestingthattheactuarialdisciplinesofproblemsolving, communicating and explaining at high and low levels,mathematical rigour and application etc., are used in abundance

while teaching (andhisExcel skillshaveprovedextremelyuseful).In the industry of private tuition, it is fair to say that amajority oftutors have backgrounds as either ‘real’ teachers (i.e. working atschoolsduring theweek) orworkpart-timewaiting for their ‘real’careerstostart.Rickyfeelsthathehasacompetitiveadvantagebytransitioning from the corporate environment; taking the core skills learntandapplyingthemtothisindustryinnewways.

Ricky also has an obvious advantage in that he can provideguidance to students about pursuing an actuarial career. With around 25%ofhisstudents interestedinactuarialmathematics,hespendssometimetryingtodemystifywhatitisthatactuariesdo.Headds,itisacareerforwhichitisdifficulttoobtainaclearideaofwhatitisallaboutsimplyby‘readinguponit’.

Any regrets?From my conversation with Ricky, I didn’t detect even a hint ofregret.Hedoesmisstheintellectualstretchfromtheprojectswherehewasthrownintothedeepend.Healsomissesthechallengeofcoming upwith solutions that hewould have never envisaged atthestartofaproject,hencelearningaheapaboutasubjectarea,and himself, in the process. I was surprised he made this lattercomment, as it sounds, from our discussion that he continues to stretchhimself–justinadifferentdirection.

Perhapstheslightlyolderandmorematureaudiencetohisanticsismissedbutitisgoodtofeellikeyou’rethesmartestpersonintheroom on a daily basis. Actuaries are much harder to impress!

I asked Ricky if he could go back in time, would he still havebecome an actuary, or would he have gone straight into his newcareer. Fortunately forRicky,hedidbothsimultaneously so it gavehim the option to choose. But if he had to choose one to start first, yes,becominganactuarywoulddefinitelyhavebeenhispreference.The skills he has learnt set him up nicely for a career in teaching, supplemented with a wealth of experience to draw on to tackleeveryday situations.

Any possibility of returning?EverytimeRickymeetsupwithex-workmates(whichisquiteoften),he loves hearing about their projects/work and his other fellowactuaries.Sowhoknows,onedayhemightfeellikereturningonceagaintowhereitallbegan,ormaybeembarkonsomehybrid likeprivateactuarialtutoring–nowthat,headds,wouldbeanindustrythatwould surely take off. (Maybe he should have kept that idea to himself!)

Rickyhashadsometemptingoffersfromoldmanagerstoreturntothefold.Heis,howeverreallyenjoyinghisroleatthemomentandin particular has a very high desire to complete his text book. BUT ashisstudentswouldquotefromthe‘great’JustinBeiber–“neversay never!”

Absolutely,withoutadoubthewould recommend theactuarialprofession.Heseestheactuarialdisciplineasastrongandversatilepiece of arsenal to have. Even though at times it can be extremely hardwork (especially the qualification process), hewould definitelyrecommend becoming an actuary to anyone.

Finally,Rickywantedthankallthosewhomadeanimpressioninhisactuarialjourney.Hisnewlifeandcareerhaveyoutothankforit.▲

Ruth [email protected]


34 review

This year has continued to see a number of developments and improvements across many areas of governance of the Institute and the profession, some of which arehighlighted in this article.

Practice regulationInthepracticeregulationarea–whichremainsvitaltosafeguardingtheprofession’sreputation–therehavebeensignificantdevelopmentsacrossarangeofpracticeareas,withaparticularemphasisonriskmanagement:

▲

general insurance – a revised Professional Standard forexternal peer review has been approved by Council at its 6December 2011 meeting. With the imminent conclusion of APRA’s LAGIC review, thework program in this areawill rampupagainin2012withconsequentialreviewsoftheProfessionalStandards on valuations of general insurance claims and financial condition reports;

▲

life insurance –asubstantialInformationNotewasreleasedonasymmetricrisks.Allowanceforsuchcomplexrisksisimportantfor members providing actuarial advice across a wide rangeof life insurance practice areas, in particular determination of policy liabilities, economic valuations, product pricing, bonus philosophy and setting investment policy;

▲

superannuation – a discussion draft of a proposedPracticeGuideline on financial condition reporting for superannuation fundswasreleased.Thisworkisverytimelyinlightofthedormantrisksrevealedbytheglobalfinancialcrisis,aswellaschangingriskprofiles in thesector.AlthoughnotmandatedbyAPRA insuperannuation, financial condition reporting –whichprovidesanobjectiveassessmentforfundtrusteesandexecutivesofthefund’s financial strength,modelling of the fund’s sustainability,a thorough risk review and deep dive stress tests on keyareasofrisk–wouldmovethe industrytowardsbestpracticerisk management. In other superannuation developments, a ProfessionalStandardonsummariesofactuarialreportsonthefinancialconditionofDBsuperfundsandaGuidanceNoteonpre1July1988fundingcreditswerewithdrawn;

▲

private health insurance – thispracticearea’sfirstProfessionalStandard – on financial condition reports for private health

insurers – was released, as well as an Information Note onrebate means testing. The new Professional Standard onfinancial condition reportsbrings the requirements in thisareaintolinewiththoseapplyingtostatutoryAppointedActuaryrolesin general insurance and life insurance;

▲

risk management –anInformationNoteonactuarialadviceregarding risk management of a life insurer or general insurer was released. The InformationNote suggestsways inwhichAppointed Actuaries, their support staff and actuaries in general might satisfy themselves as to the appropriateness of theirorganisation’sriskmanagementframeworks.

Although the primary objective of the Information Note is toprovide information to members concerning the actuarial requirements relating to risk management under relevantAPRA Prudential Standards and Prudential Practice Guides,referencesarealsomadetothewaysinwhichactuariesmaymore specifically assist in strengthening the risk management frameworks of life insurers and general insurers. Actuariescan contribute by identifying opportunities to appropriately enhance a company’s risk management framework. Takingopportunities to assist in shaping sound risk management and governance processes can assist in protecting companies againstawiderangeofpotentialadversescenarios;and

▲

multi practice – a revisedPracticeGuideline on economicvaluationswasreleased.Amongstotherchanges,therevisedPractice Guideline included additionalmaterial on distressedandilliquidmarkets,aswellasupdatesforrecentdevelopmentsinthe“fairvalue”debate.

The revision, or development, of a range of practice regulation materialscontinueswithworkunderwayornearingcompletionontopics such as the determination of accrued benefits for DB super funds and valuation of share based payments.

Alsoduringtheyear,anauditwasconductedofselectedmembers’compliancewiththeInstitute’scontinuingprofessionaldevelopmentrequirements. A pleasing outcome was an improvement incompliance rates, although there remains evidence that some membersneedtoimprovetheirawarenessof,andcompliancewith,thoserequirements.

Corporate Governance

2011 in review


35

▲

review

Professional regulationIn2011,thenewRuleforActuarialFirmswasreleased(replacingthe previous Rule for the Registration of Consulting ActuarialFirms).1Onekeychangeunderthenewrulewastheintroductionofa requirement for theSeniorActuary toensure thathisorherfirm has in place a process for members of his or her firm to seek guidance in relation to professional matters. It is hoped that, by creatingamoreformalprocesswithinafirm,thosememberswhohave not yet developed a professional network of trusted andexperiencedcontactswillbesupportedandencouragedinraisingprofessional issues.

TeachingofprofessionalobligationscontinuedattheProfessionalismCourses held during the year. Covering issues such as legal obligations (for example, the duty of care), risk management, the CodeofProfessionalConduct,CPDand thedisciplinary scheme,feedbackwasagainverypositive.Thisyear, thesessionstructurewas changed to incorporate time to discuss case studies drawnfrom actual disciplinary actions. This approach was very wellreceived and, particularly in discussing the disciplinary action referredtobelow,engenderedlivelydiscussions.

Member disciplineThis year saw the first expulsionof amemberunder the Institute’sDisciplinary Scheme.2 In one sense, it was a sadmoment for theprofession. In another sense, however, it was pleasing that thecircumstances were not related to professional practice as anactuary and that, ultimately, the profession is prepared to stand by its expectations of high standards for itself in appropriate circumstances.

At present, plans are underway to propose amendments to theDisciplinarySchemeformembers’approvalatageneralmeetingin2012. A key proposed change is to publish full reports of disciplinary actions.Thiswouldhavethedualbenefitsof:

▲

creating a more transparent system of precedents whichassists in avoiding the possibility of inconsistency. Presently,the significant effort and analysis put in by Investigating Sub-Committees, Tribunals and Appeal Boards as to the reasons for reaching a particular conclusion, are available only to the particular Complainant and the Respondent and, generally,cannot be made available to later disciplinary bodies; and

▲

increasingtheeducativeeffectformembersgenerallyastowhatis, or is not, acceptable conduct.

International developmentsIn 2011, the International Actuarial Association (“IAA”) releasedan Exposure Draft of its first proposed standard covering general actuarial practice (“ISAP 1”). The Exposure Draft deals withissues such as: accepting assignments; knowledge of relevantcircumstances; employed actuaries; reliance on others; materiality; data quality; assumptions and methodology; peer review;documentation; communications; and disclosures. The current intention of the IAA is to produce model standards for adoption or adaption by member associations.

TheInstitutehasbeencloselyinvolvedintheworkonISAP1,whichwill continue in 2012.While the Institute does not, at this stage,

haveadefinitiveviewastohowitwillaccommodate ISAPswithinits existing structure of standards, it is expected that it may not be practical simply to adopt them (given its existing standards and the interconnectionof suchwith theAustralian regulatory regimesin place across different areas of practice). Instead, it may amend its standards to ensure that they at least meet the requirementsof the ISAPs, if necessary. However, this will ultimately dependon the specific content of each ISAP. The IAA currently intendsto develop further standards covering: insurance liabilities; IAS19 (superannuation liabilities on employer balance sheets); socialsecurity; and enterprise risk management.

Internal governanceThisyearsawthecompletionofan18monthprogramtoreviewandupdateallexistingCouncilpolicies,aswellasintroducenewpoliciesinareaswherethereweregaps.Whilstsuchwork isaprocessofcontinuous improvement, the recent reviewhasprovidedasoundbasis for moving forward to best practice. For example, there isnowaCodeofConductinplaceforCouncillors,aswellasaprobitypolicy covering the CEO and Institute staff. Both policies have been modelled on similar documents in place for entities in the financial services sector.

OnCouncilmatters,moreformaltrainingopportunitiesondirectors’dutieswereprovidedduringtheyearandtheInstitutehascommittedto supporting relevant training for new directors and intensivetraining for incomingVicePresidents. Inaddition,anewbrochureon joiningCouncilwas released.Designed for those interested instanding for election to Council, it covers a range of topics including Council’srole,thekeyexpectationsofaCouncillor,thecommitmentinvolved,directors’dutiesandtheelectionprocess.

ACommitteeCompendiumwasreleasedthisyear.TheCompendium,which is available in themembers’ area of the website, providescommittee convenors and members with access to a range ofrelevant informationandpoliciestoassist inmeetingtheInstitute’sgovernancerequirementsandexpectations.

Note of thanksAsmemberswouldappreciate,noneoftheabovewouldhavebeenpossiblewithouttheeffortsofalargenumberofcommittedmembers.Our thanks go to all members of Council, Practice Committees,the Professional Standards Committee, the Professional ConductCommittee, theDisciplinaryTribunalPanel, theDisciplinaryAppealBoard Panel and the many ad hoc groups working on thedevelopment of particular practice instruments. ▲

Anne [email protected]

1 For more information on the rule, refer to

Actuary Australia, June 2011, page 13.2 Formoreinformation,goto:

www.actuaries.asn.au/Discipline

and refer to the section on disciplinary

notices.


36

Part III Exams

In courses directly assessed by the Institute of Actuaries of Australia (C1 Investments , C2A Life Insurance, C2B Life Insurance, C3A General Insurance, C3B General Insurance, C5A Investments Management and Finance, C6B Global

Retirement Income Systems, and C10 Commercial ActuarialPractice) 421 examswere sat in 16 locations around theworld .Exams for thesesubjectswereheldbetween17and21October2011. Numbers sitting the UK ST9 exam as the assessment forCourse7AEnterpriseRiskManagementarenotyetknown.

Thetablesbelowshowthenumberofstudentsateachlocation.

Agreatdealofhardworkhasgoneintopreparingforthesemester2 2011 exams. I would like to thank all theCourse Leaders andother volunteers for their role inwriting theexams;scrutineers forreviewing and road testing the exams; External Examiners, ChiefExaminers and the Chair and Assistant Chairs of the Board of Examiners for their role in reviewing and approving exams; examsupervisors all around the world; and exam markers. Finally,I’d like to thank Rebecca Moore, the Institute’s Education andVolunteersManager,forkeepingeverythingontrackwiththeexamdevelopment,reviewandmarkingprocessesandLizMurdockandBelindaHannanfortheirworkwiththeexamadministration.

Inparticular, Iwould liketothankGaryMusgrave,theChairoftheBoard of Examiners.

Part III results were published on 15December2011.▲

Philip Latham [email protected]

education UPdATE

education / notice

Exam location No. of students

Sydney 271

Melbourne 73

UK 17

Singapore 15

HongKong 9

NewZealand 7

Malaysia 6

Brisbane 5

Canberra 5

Exam location No. of students

China 4

Adelaide 3

Perth 2

Indonesia 1

Jordan 1

Netherlands 1

Thailand 1

TOTAL 421

CongratulationsCongratulations to Young Gohwhowasawardedsecondplaceinthe2011AustralianLifeUnderwritersandClaimsAssociation(ALUCA) TurksLegal Scholarship for his submission Managing GroupDisabilityIncomeClaims.

ALUCA is a professional association established to advance the knowledgeandprofessionalismofitsmembersinunderwritingandclaims issues relating to life and disability insurance products.

Now in its fifth year, the TurksLegal Scholarship provides aforum for ALUCA members to contribute their ideas on cutting edge issuesaffectingtheindustry’sfutureandrecognisesexcellenceandprofessionalgrowthaswellasprovidingagreatcareerdevelopmentopportunityforallthosewhoparticipate.

Entrants are asked to submit a paper, up to 2,500 words,addressing one of six questions drawn from topic areas asdiverse as the claims process, re-insurance relationships, groupdisability income claims, changeover pains, generational change and the underinsurance gap. Entrants can choose from a number ofquestionsthatarerelevanttheirindustrybackground.

The 2011 scholarship attracted the highest level of entries so farwith27submitted–agreatresultforYoungagainstsuchstrongcompetition!Anarticleonhissubmissionwillbepublishedinafutureedition of Actuary Australia. ▲

Young Goh (2nd from left) at the award ceremony


37report

A verybigthankyoutoallthevolunteerswhoassistedusinSemester22011of thePart III educationprogram.It’s a great team effort each semester and dueto the collaboration and support from all of our

volunteerswewereonceagaininapositiontosuccessfullydelivera quality education program. To our Course Leaders, who fillthe most under resourced roles and who have spent hours onhours drafting questions for both the assignment and exams,preparing and delivering tutorials and monitoring the online learning managementsystem,wethankyouonceagainforyourenthusiasmandcommitmentandforgivingbacktotheprofessioninthisway.

Our Chief and Assistant Examiners, who take ownership of theexamination process, and who once again spend an enormousamount of time and energy on reviewing and providing feedbackon the exam and borderline candidates, your dedication and effort trulyenrichtheprocessandwethankyou!TheFacultyandBoardofExaminerChairsalsoplaykeyrolesbydiligentlyreviewingandsigningoff on the assessments. Your quality attention to detail and timelyturnaroundsgetusacrossthelineeverysemester.Finally,Iwouldalsoliketothankandacknowledgeallofthescrutineers,assignmentandexammarkerswhovolunteeredinsemester22011.

Each and every one gives up precious personal time to contribute to thedeliveryoftheeducationprogram.It’sfittingthatwecelebratetheirefforts-withoutthiswewouldnotbeinapositiontodeliverahighqualityeducationprogramtoourstudents.

Get involved in Semester 1, 2012Some of our Course Leaders and Examiners continue over several semesters, their commitment to and support of the education programisoutstanding.VolunteerssuchasDavidService,DavidMcNeice, David Gifford, Jim Qin, Bruce Thomson and GaryMusgravearetonamebutafew.Whilewearemanagingtosourcevolunteers for the less experienced roles we continue to havedifficulty in fillingthemoreseniorpositions. IfyouareaqualifiedFellowwithmorethanthreeyearsexperience,whydon’tyougetinvolved?

BelowaredetailsofthoseCourseLeadersandExaminerscurrentlycommittedtothePartIIIeducationprograminSemester12012.As you can see there are still some gaps to fill.

If you are interested in getting involved either in Semester 1 2012 or in a future semester, please do not hesitate to contact me, I wouldlovetohearfromyou.

From all of us in the Education Team, a very big thank you once again and very bestwishesfortheFestiveSeasonandtheNewYear.▲

Rebecca [email protected]

Thankyou... voLUNTEERS

Course

C1

C2A

C2B

C3A

C3B

C5A

C6A

C10

Examiners

DavidPitt(CourseExaminer) Bruce Graham (External Examiner)

WarwickYoung(ChiefExaminer)AlanaPaterson(AssistantExaminer)TBC(Assistant Examiner)

Gary Musgrave (Chief Examiner)TBC (Assistant Examiner)TBC (Assistant Examiner)

David Gifford (Chief Examiner) Yvonne Wong (Assistant Examiner) JamesPettifer(AssistantExaminer)

Jim Qin (Chief Examiner) TBC (Assistant Examiner)

DavidPitt(CourseExaminer) YuFanNg(ExternalExaminer)

Stephen Woods (Chief Examiner) JimRepanis(AssistantExaminer)

Bruce Thomson (Chief Examiner) TBC (Assistant Examiner)

Note:thislistexcludesC7AEnterpriseRiskManagementwhichisnotassessedbythe Actuaries Institute.volunteers ‘Thank You’ cocktail party, in The Rocks, Sydney

Course Leader(s)

AccessMacquarie (all roles)

Steve Miles (exam)Bruce Thomson (tutorials, forums & participation)

TBC (Exam)Steve Miles (tutorials, forums & participation)

TBC (exam) TBC (tutorials, forums and participation)

RickShaw(allroles)

AccessMacquarie (all roles)

DavidMcNeice (all roles)

David Service (all roles)


38 student column

What is an actuary? What do they do? What are my career options after graduation? I have been very lucky tobeoneof a fewuniversity studentswho have had the opportunity to experience

whatit isliketolearnandapplyactuarialtheoryatthesametime.This has helped me tremendously to understand the career that I have chosen, aswell as to realise the benefit and importance of workexperience.

I entered intomy firsteveractuarial relatedworkplacement inaninsurance company in the summer after my first year at university. At the time, I had only completed an introductory actuarial course. As youcanimagine,Iwasabundleofnervesandexcitement!

IwasplacedintotheFinanceteamwhereIspentalmostmyentirethree-month placement working on an Embedded Value analysisproject. I was challenged and pushed out of my comfort zone,havingbeengivenanend-to-endproject that Iworkedonalmostindependently,whichledtotheopportunitytopresentmyfindingsto senior management.

These experiences gave me a sense of accomplishment and the knowledge that somebody who had not even started theirPart Is could contribute valuable work to an insurer. Forme, theon-the-joblearningopportunityenabledmycomputing,writingandpresentation skills to develop in leaps and bounds.

Most importantly, I felt the constructive feedback I received wasessential formyprofessional development. Perhaps I hadmissedoutonabeach-filledsummer,butitwasdefinitelyanimportantandunforgettableoneinitsownright.

Starting my second industry placement in June this year, I wasnearingthecompletionofmyPartIsandunlikemyfirstplacement,I felt some pressure to uphold the reputation of my university peers.

ThistimeIwasataconsultingfirmforsixmonths,andIextendedmy knowledge in a wide range of areas, from increasing mybusinessawareness,toprogramming,todealingwithdomesticandinternationalclients,andevengettingatasteofwhatnon-traditionalactuarialworkislike!BeingabitolderthistimeroundalsomeantIwasgivenmoretasksthatrequiredprofessionaljudgement.

The consulting environment also encouraged me to problem solve and learn independently. Due to the nature of consulting, I had various managers to report to, enabling me to increase my awareness of managing expectations and communication of workprogress.

Writingthisarticlehasrequiredmetoreflectonmyworkexperienceas a student. From my perspective, the value to employers of hiring a graduate with work experience is the soft skills and businessawarenessthatcanonlybedevelopedthroughpersonalexperience,asopposedtoincreasedtechnicalknowledgewhichcanbetaught.

These are by nomeans new ideas – all employers recognise thebenefit of recruiting graduates who have been exposed to theindustry.SowhenIheardthattheUniversityofNewSouthWaleswillbeincludingaworkexperiencecomponentinthenewBachelorofActuarial Studies program that could be available to future students as early as 2013, I applauded the move.

TheHead of the School of Risk and Actuarial Studies at UNSW,JohnEvans,indicatedthattheoverallobjectiveofthenewprogramis to “enhance the ‘work ready’ status of graduates through anincreased emphasis on non-technical graduate attributes beingintegratedthroughoutthedegree.”StudentswillhavetheoptionofenrollingconcurrentlyinaDiplomaofProfessionalPracticethatwillincludecourses(mainlyonlinetobestudiedatthestudent’sdesiredpace) in work practice to allow students to reflect on situationsthey might face as well as an internship. The Diploma will beadministered by the Teaching and Learning Unit in the Chancellery andwillnotbecompulsory.

I think this is an exciting advancement in the education of actuarial students, and I encourage companies to involve themselves more in the professional development of university students through offering work experienceopportunities–youwon’tregretit!▲

Lucy [email protected]

work experience as an Actuary


39

Ihave had lots of feedback from members that you are sensing a new energy about theActuaries Institute. That is fantastic,becausethisisexactlywhattheteamandIsetouttoachievejustundertwoyearsagowhenIstartedinthisrole.

Sowhathaschanged?Ihaveapproachedthisinthreeparts:

Part 1: The BusinessMyfirstgoalwastostabilisethebusinessandgetitrunningefficiently,effectively and electronically. We have documented procedures, automated manual processes and digitised paper processes and member records. We have tightened and strengthened the financial and risk management of the business. We had a newCRMsystem,andanewwebsite(furtherimprovementstothewebare coming next year). My fantastic team have been shaped into anewconfigurationwithanemphasisonserviceandmarketing.The team have been supported, developed and trained in giving excellent customer service. Managers have received management training. We have a clear strategy and business plan whichcascades into team and individual goals. We have accountability andaculturewhereit’sOKtoidentifythingsthataregoingwrong–andthenproactivelysuggesthowtofixthem.

Yourteamatthesecretariatarecertainlyfeelingthenewsensation–theyhaveworkedsohardthisyearwithsuchdedicationandIamextremelyproudofthem.I’msuretheyarelookingforwardtoourChristmasshutdown(betweenChristmasandNewYear)forsomewell-earnedR&R.

Part 2: You – The MembersOurnextsetofprojectshasbeenallaboutthevaluepropositionforyou,ourmembers.After listeningtoyour feedback,weknowthatyouwantvalue foryourmembershipsubscription.Youhavealsotoldusyouwant:

● supportindevelopmentofyourknowledgeandskills;● a sense of belonging to a professional community; ● leadership in the field; and● building the standing of members.

In responsewehave revamped the feescale,andhave radicallyreducedExemptionfeesforPartIandIIeducationin2011andaproposal is going to Council in December to further reduce them in 2012.We’re providingmore free or low costmember eventsin more locations and increased opportunities for networking.In 2013wewill be further extending the rangeof free events tocover more physical locations and a broad range of topics from businesstotechnicaltotheall-importantsoftskillsandleadership

development.WehavestartedamajorprojecttoupdatethewaywedeliverPart III education– includingnomoreassignments,amultiplechoiceelementandcomputer-basedexams.Thiswillbepiloted in 2012 and completed in 2013. We have launched live webinars (which can also be viewed ‘dead’ after the event) andenteredtheTwittersphere(followusatActuariesInstorfollowmeatHowesMelinda).Wehaverevampedourelectroniccommunicationstomakethemshorter,smarterandmorerelevanttoyou.Andweare tracking the things you don’t like…and changing themonebyone.Pleasekeepthefeedback(bothconstructiveandpositive)cominginbecausewelovetoimprovewhatwearedoing!

Part 3: The World2012willbeabout taking theactuarybrand ‘out there’!Nowthatwehaveournew, fresh,e-enabledcorporate identity therewillbenostoppingus.WehaveanewLeadershipCommitteewhohavesome great plans for 2012 including profiles of leading actuaries, an ‘actuariesonBoards’programandleadershiptraining.Wecontinueto engage with non-actuaries who are employers of actuaries orkey business decisions makers to ensure they understand the valueoftheactuarieswhoworkforthem.Wewillbeholdingmorebusiness lunches designed for you to invite your clients, andwehaveagoaltogetasignificantproportionofnon-actuariesatsomeof our big events (like the Financial Services Forum on 30 April – 1May2012).Wewillbe furtherpromoting the ‘actuary’brandasintelligent problems solvers, and thoughtful business advisers.

WewillpromoteactuarialworkinERM,andinDCsuperannuation.We will see how we can start to hook our actuarial star to thebooming mining industry in Australia… surely this is an industrycryingoutforpeopletohelpthemriskmanagelong-dateduncertaincashflows!Wewillcontinuewithourproactivepublicpolicyworkintheareasofretirementincomes,ERM,energyandtheenvironmentandhealthfunding.Inshort–wewillassistyoutodevelopmoreofaprofileasanactuarywithyouremployerandwithyourcustomers.Perhapsevenwithyourfriends!

As Iwindupthe lastcolumnfor theyear, I justwanttosayhowmuch I am loving this job as your CEO. It is by far the mostinteresting, most challenging, most varied and most rewardingjob I have ever undertaken. And best of all, I have a cause! Ipassionatelybelievethatactuariesareundervalued,andwehavemuchmore tooffer thanmostpeople realise.My job iseasy– Idon’t have tocreate something that isn’t there. I simplyhave tohelptoshinethelightonwhatisthere.Actuaries–inallourglory!

Havea fantasticChristmasand I hope toseeyouatoneofourevents(comingtoatownnearyou!)verysoon.

A new sensation...

CeO’s Column

1


40 CeO’s Column / letters

Practising, or not... a difficult question?

Dear Editor,IreadwithinterestthestoryaboutKatelynPriesterintheOctoberedition of Actuary Australia. Katelyn qualified andworked as anactuarybutchangedtoacareerinmedicine.Sheisnowaresidentmedical officer based in Albury. A disappointing aspect of the story is that the changes in our fees led to her dropping her membership of the Institutebecauseweremoved thesubstantialdiscount fornon-practisingactuaries.MatthewWoodalsocommentedonthesameissueintheNovemberedition.

There were a number of tricky issues with the non-practicingdiscount that caused a financial and more importantly, a strategic risk for the Institute. Firstly, the financial risk was that mostmemberswerenotactuallyawareofthenon-practisingdiscount,me included, and many members, probably more than 30%,arenotpractisingasactuariesandhencewouldhavebeenableto claim the discount. If we had promoted the discount morewidelywewouldnothavebeenabletorunthebusinesswiththesignificant drop in revenue.

Thestrategicriskfortheprofessionwasthatdeterminingafeebasedontheconceptofpractisingvs.non-practisingwouldhaverequiredus to develop a definition for a practising actuary that is precisely whatwedonotwanttodo.Theopportunityfortheprofessionistoleverageour core skills into newareas and staplingourselves to adefinitionof‘practising’actuarywouldhavebeencounterproductive.Anydefinitionofpractisingwouldhavebeenlimiting.

InsettingthenewfeebasisCouncilwereawareofthecompromises.We developed a set of criteria to assess fee options.Whilstwecouldnotmeetall of thecriteriaweestablisheda feebasis thatappearedoptimal.Thecriteriawere:

1. There is reduced complexity in the fee basis. 2. Thereisnopractisingvs.non-practisingdistinctioninfees.3. Thereisalowerfeeforthoseactuariesonlowincomes.4. Oldermemberswhoarenolongerpractisingasactuarieshave

an incentive to stay a member.

5. Itremainsattractive/competitiveforwiderfieldactuariestostaymembers;

6. Itassumesthatmemberswillbepayingtheirownfees.7. Peopleareencouraged tocontinue toFellowshipby reducing

thefinancialgap/disincentivebetweenAssociateandFellow.8. Affiliaterateprovidesincentivesfornon-memberstojoin.9. WestaycompetitiveinAsiawithoverseasInstitutes,andthere

is a logical differential for remote members in Australia vs. overseas.

10.Feesarecompetitiveincomparisonwithotherprofessions.11.Fee structure should recognise the ‘user pays’ philosophy as

setoutintheCPDchargingpolicyrecognisingthatmanyCPDevents should be free.

12.Wherepossible,rewardlong-servingmembers.

As part of the changes in fees we are also introducing newservices tomembers and aim to slowly phase out some of theexemptionfeesformembers.Thesechangeswilltaketimetoflowthrough and there are a number of targeted projects to roll outnewinitiativeswithatargetofnot increasing,andinsomecasesreducing, fees.

Whilst it is unfortunate that we will lose contact with somemembers it is also important that the fees are set in away thatreflect the strategy of the Institute and ensure a sustainable future.

Barry [email protected]

A taxing issue

Dear EditorI’m a former actuarial trainee who has just started his PhD thisyear.IwasjustreadingyourarticleinthelatestissueoftheActuary Australia.It’sgoodtoseethatMatthewWoodhastakentheinitiativeof highlighting the relevance of a carbon tax to our profession (October 2011 edition of Actuary Australia), no doubt educating someofuswhoarestillinthedarkastowhatacarbontaxis!

Thank youIwould liketothankthemagazineEditors,CatherineRobertson-HodderandJamesCollier,fortheirfantasticworkoverthelasttwoyears.Theygotthemixjustright–interesting,topicalarticlesandsomecontroversy!Theywillbesorelymissed.▲

Melinda [email protected]

1 Which80’sOzsupergrouphadasongbythistitle?(Youcantellmyvintage(GenX)bythese1980’spopculturereferences.)

letters to the editor

Barry Rafe, Tony Snoyman, Melinda Howes, Genevieve Hayes at the Accident Compensation Seminar

▲


41letters

I must say that I agree with Matthew’s points on why NOT acarbon tax! I’ll actuallyaddoneadditionalpoint to the list.Now,by signing the Kyoto Protocol, Australia has agreed to reduceemissionsbyaset level.Nodoubtacarbontaxwould leadtoareductionof emissions, but theproblem it faces is this:Atwhatlevelshouldwesetthetaxattomeetourreductioncommitments?Itisnotaneasyquestiontoanswer,anditreallyaproblemoftrial and error.

NowthisiswhereI’mafraidIhavetopointoutthatMatthewhasmade a terriblemistake in slighting amarket-based scheme foremissions. I really think an emissions trading scheme deserves so muchmorethanthat!Icouldspendthewholenighttalkingaboutwhy YES an emissions trading scheme but I think I’ll make thethreepointswhichIfeelaremostrelevanthere:

1. The emissions market will no doubt be subjected to some‘strategicbehavior’byfirmsandnon-governmentorganisations.But in rebuttal, Iwould like to say that firstly, firms that try tomanipulate prices also face the risk of permits prices falling too. For example, in the first phase of the European Emissions Trading Scheme (or EU ETS) the price actually hit zero by the endofthefirstcomplianceperiod,initssecondphasetherewasasharpdropinthepriceafteragentsrealisedthattherewasanexcesssupplyofcarboncredits.Secondly,theextenttowhichsuch behavior is detrimental is limited by the fact that there is a naturalcaponemissionprices.ToseewhatImean,thinkaboutthe followingexample. Ifa firm is fined40Euros forevery tonofcarbontheyemitoverwhattheirholdingsinpermitsentitledto,doyouthinktheywouldgotothemarketandpay50eurosforapermitthatallowsthemtoemitanadditionalton?No,theywouldjustpaythefine.

2. Anemissionstradingschemeactuallyallowsthegovernmenttosetalevelofemissionsitwantstoadopt.Theycapthelevelof emissions, and then divide this capped level amongst firms. That’sthebestpartaboutit!

3. Furthermore, unlike a carbon tax, an emission trading scheme actuallyallowsfirmsthatactivelyseektoreducetheircarbonfootprint to benefit from the sale of any excess credits that are accrued in the process. The fundamental argument here is that withanemissionstradingscheme,wehavebothacarrotandastick,whilewithacarbontax,weonlyhaveastick.Whichdo you think is better?

In any case, I hope more people realise that an emissions trading scheme is the way to go. The first ETS – the SO2 acid rainprogramintheUSwasasuccessandEuropeiswellonitswaytoreducingitsemissionstoo.Ifyouwouldliketoknowmore,havealookatthefollowingtworeadingstostart:

• Markets in licensesandefficientpollutioncontrolprograms by W D Montgomery (a bit technical but it is the seminal paper on emissions trading).

• Chapter17ofEnvironmentalandNaturalResourceEconomics by Tom Tietenberg.

Nicholas [email protected]

Insurance history

Dear Editor,ImustrespectfullydisagreewithmygoodfriendGrahamRogersinhis opinion piece on pricing private health insurance in the October edition of Actuary Australia. There are three main reasons for my disagreement.

The first reason for my disagreement with Graham is related tothe alleviation of political risk conferred by the current system. For most of the 44 years I have worked in private health insuranceinsurerswereabletoincreasetheirpremiumrateswhenevertheywished–subjecttovettingbytheRegistrationCommittee,whichincluded theCommonwealthGovernment Actuary, and approvalby the Commonwealth Dept of Health. During that time I havewitnessed a number of attempts by politicians to influence theoutcome of the approval process even when the RegistrationCommittee recommended the premium rates be approved. This pressure was applied either directly to officers of the insurer towithdraw the application or indirectly to departmental officers torefuse the application. Usually these pressures were applied forpolitical expediency such as a forthcoming election.

In those early days I provided an actuarial certification that the intendedpremiumrateswere“inthebestinterestsofcontributors”.This comforted both the directors of the insurer and the public servants assessing the proposal although it did not certify the actual premium rates. However such a certification reduced theflexibility of the insurer and the government in dealing with theapplication during politically sensitive times.

In1997 theMinisterofHealthnegotiatedwith theprivatehealthinsurance industry to adopt the current premium round process. Thisfreedupalotofhistimethatwasotherwisebeingspentonhealth insurance pricing matters. This process had the effect of taking health insurance industry price rises off the front pages of newspapersduringtheyearandconcentratingtheissueintojustaweekortwo.Italsoreducedthedisgruntledcorrespondencefrompolicy holders to a trickle.

It is important to note actuaries do not certify the premium rates in thecurrentpremiumprocess.Theyonlycertifythattheprojectionmodel that provides the projected outcomes is appropriate. Inshort thesearrangements,whichhavebeen inplace fornearlyadecade and a half, have substantially reduced the political risks for thegovernment,theindustryandtheactuarieswhoadvisethem.TheApril1datechosenforthepriceriseswaschosenastheleastlikelydatethatwouldclashwithanunexpectedelection.

The second reason is that private health insurance in Australia is mispriced.Privatehealthinsurerstakeonverylong-termrisksbutpricetheserisksasthoughtheyareshort-term(yearly)risks.Thisisbecauseprivatehealthinsurerscannotrefuseanewentrantnorcantheyrefusetorenewacontractbut theypricethe insuranceas though membership selection doesn’t occur and the optionto renew does not exist. Were health insurers to properly pricethe contractual arrangements then the community rated prices charged would be some multiple of the premiums currentlybeingchargedand the resulting reduction inmembershipwould

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eliminate most, if not all, of the social good private health insurance currentlyprovides.Havingasystem inplacewhere theactuary’sresponsibility for pricing is in effect transferred to the Minister of Health enables the actuary to ignore the long-term contractualarrangements inherent in the health insurance contracts.

The third reason is the forthcoming international accounting standards. The new standards will not permit long-term risksto be unaccounted. Our Institute has been arguing strongly to the International Actuarial Association and the International Accounting Standards Board that not accounting for membership selectionandtherenewaloptionisappropriatewhentheinsurancecontract is repriced yearly and there is significant Ministerial and regulatory involvement. If this involvement were eliminated, asGrahamsuggests,thenasactuarieswewouldhavetotreatprivatehealth insurance like life insurance and recognise the cost of the options that are currently mispriced. Our profession has not yet wonitsargumentstotheIASBbutitisveryhopefulthatitwill.

GeorgeBernardShawoncefamouslysaid“Ifhistoryrepeatsitself,andtheunexpectedalwayshappens,howincapablemustManbeoflearningfromexperience.”Thehistoryofhowtheindustrygottothecurrentannualcollective re-pricingarrangements is thereforeimportant. So, we must not be incapable of learning from ourpreviouslongexperienceinhealthinsuranceforotherwisewewillendupwithunexpectedconsequences.

Brent [email protected]

Logological

Dear EditorWhat is it about the new logo that givesme a vague feeling ofunease every time I look at it? Is it the lack of symmetry – the unbalanced combination of text and symbols? Is it because the words ‘Actuaries Institute’ don’t look grammatically correct? Isit the strange mix of ancient Egyptian and Greek symbols – the pyramid and sigma sign? What is the meaning of these symbols? Does the pyramid reflect the historical involvement of actuaries in the study of mortality (pyramids being a place of burial)? Does the sigma indicate that the role of actuaries is to add up numbers? I’d like tosuggest thatActuary Australia magazine ask members to submit designs for a new logo. Thiswould givemembers anopportunity toapply their talents inabroadernon-actuarial field.I’m sure there are some talented actuarieswho could come upwithattractivealternativedesignsatnocosttotheinstitute.

Andrew [email protected]

Punished again

Dear Editor,Expelling a convicted person (Actuary Australia, October 2011) seemstobepenalisingaperson twiceand Iamwonderingwhyaconviction forsexualabuseofaminorwoulddisableaperson

from performing their actuarial skills. An Institute that holds a monopolistic position – albeit a very limited one nowadays –should not lightly tamper with a person’s livelihood. I’d like tothink actuaries think people matter more than institutions and thatweweremoreakintodoctorsthatcareaboutsicknessthanlawyers that seek retribution. An English actuary was convictedofmanslaughter inJanuary2005andpromptlyexpelledfrommyoriginal Institute. She and her husband spent more than a year in prison and then theywere exonerated inMarch 2007 –withoutcompensation–andtheywereprobablytheonlyblamelesspeopleinvolvedinthesaga.Thejudgehadsaidfivetimesinhissumminguptothe jurythat theyhadfedsalt tothechild,despitethisnotbeing factual evidence. Nothing in court procedures has beenchangedasaconsequenceofthisorthousandsofsimilarcases.

Barry Rafe in the same Actuary Australia edition has words ofwisdom about the Control Cycle not being exclusive to us butdefinitely it is missing from the legal profession. I’ve been anactuary for 50 years and I think I had actually retiredbefore theInstitute introduced Control Cycle courses and I’m guessing it’sa broader development of the Analysis of Surplus of my era, comparing expected and actual outcomes between successiveNetPremiumvaluations.

By chance, as I write, I’ve just heard on ABC news that theprosecutorsaidtothejury“MichaelJackson’sdoctorhasdeprivedhis children of a father...” illustrating again how distractionsfrom factual evidence of a crime are littered throughout court proceedings. The reasoning required to pass actuarial examsand the reasoning of court processes seem to have little in common. There’s a lot that doesn’t add up and though that ismore an accountancy skill, I’d like to think Actuaries too wouldbeconcerned. Itcouldwellbe timewhen justicewasdispensedwithanactuarialmodeltoriditofdrama,irrelevancesandaboveall inconsistencies.

P.S.TheInstitutehasneveraskedmeaboutmycriminalhistory.

Frank [email protected]

The Institute notes:

1. Clause4.1.2of theCodeofProfessionalConduct statesthat “when taken together the law, the Constitution, thisCodeandtheProfessionalStandards,bothingeneralandas they relate to specific roles and responsibilities, define a Member’sprofessionalresponsibility”.

2. TheMemberconcernedisabletore-applyformembershipof the Institute at a future date.

3. On application for membership of the Institute, applicants are required to disclose whether they have ever beenconvicted of, or are currently chargedwith, an indictableoffence. Members are required, under Rule 3.3 of theDisciplinary Scheme, to notify the Institute if, whilst aMember, they have been convicted of an indictable criminal offence. ▲

letters

Lesley Traverso Claire Street Tania Lee T: +61 2 9226 7459 T: +61 2 9226 7418 T: +61 2 9226 7411 M: +61 433 129 390 M: +61 401 606 171 M: +61 412 445 612 [email protected] [email protected] [email protected]

1300 22 88 279 (1300 ACTUARY) www.dwsimpson.com

Strategically placing Actuaries around the globe.

EUROPE | ASIA | AUSTRALIA & NEW ZEALAND | MIDDLE EAST | NORTH AMERICA | SOUTH AMERICA

Whilst a blanket of economic uncertainly has shrouded most of the Western world during the past year or so, the Insurance market in Asia remains strong and continues to develop and evolve at pace. Consequently, it is an exciting time to be an actuary in Asia and we are experiencing a significant increase in the demand for actuaries across the region.

In response to this demand and as part of our continued commitment to Asia we are expanding our presence in the region with additional members joining our team in Hong Kong and a new office opening in Singapore.

James Lecoutre, Senior Partner for Asia Pacific, will be spearheading the expansion and growth of this significant market sector, relocating from Australia to our new Hong Kong location at the beginning of 2012. “This is a fantastic opportunity to drive the business ‘on the ground’ here in Asia, providing greater ability to strengthen current client and candidate relationships as well as forge new relationships in the region” says Lecoutre.

Also joining the team in Hong Kong is Senior Consultant Bally Binji. Bally has over ten years sales experience gained in financial software solutions, as well as over 2 years Executive Search experience in Hong Kong. Along with this valuable experience, Bally brings with her an energetic personality and excellent relationship building skills, making her a valuable addition to our Hong Kong team.

Rachel Eagleton is the Senior Consultant in our Singapore office. Rachel is a Fellow of the Institute of Actuaries of Australia and has more than 15 years experience in the insurance industry in Asia and Australia. Having worked in both Life and General Insurance fields in Singapore and Hong Kong, Rachel comes to us with a wealth of actuarial knowledge and an understanding of the specific needs of the Asia markets.

D W Simpson is already well established as a leading recruiter in the Asia region however, with a greater presence in Hong Kong and now Singapore, we are the number one choice for clients looking for suitably qualified actuaries and candidates looking to explore new career opportunities across the region.

To find out more about what’s happening in Asia or for details of suitable opportunities in the region, please contact:

Asia is booming....and so are we!

James Lecoutre Bally Binji Rachel Eagleton T: +852 3975 3285 T: +852 3975 3286 T: +65 6632 3496 M: +852 9720 6345 M: +852 9751 7137 M: +65 8181 1104 [email protected] [email protected] [email protected]

For more information about these roles and other positions within Australia please contact:

Sydney – Senior Pricing Actuary, Life Reinsurance

Brisbane – Associates/Fellows, General Insurance

This large global life reinsurer is looking for a senior pricing actuary to join their actuarial marketing team. The role is varied, covering both life and disability risk business across reinsurance and group insurance markets and you will work closely with underwriters, claims and admin teams to provide pricing recommendations. There will be extensive client relationship management with this role and as such you must have excellent communication skills and the ability to design workable and competitive solutions. You will be a FIAA or close to qualification with extensive pricing experience.

This diverse consulting company is looking for strong GI actuaries at various levels of experience to join their dynamic and friendly team. You will have in depth pricing experience of either personal or commercial lines and ideally some well-developed consulting skills or the ability to develop these. Providing trusted advice to clients with cutting edge techniques for various pricing projects, you will also possess a strong academic record, SAS experience and be technically savvy but with the ability to “think outside the box”

Due to continuing growth, this leading actuarial consultancy, with an impressive track record of success, is looking for an experienced General Insurance actuary or analyst to join their team in Brisbane. You will have between 5 and 10 years of experience, either in a company or consulting environment preferably with personal lines pricing experience, capital modelling experience and strong overall mathematical/statistical skills. SAS and GLM experience is essential along with the ability to manage projects and clients.

Sydney – Consulting Actuary, General Insurance

Meantime, in Australia.....our business partners continue to strengthen their teams:

DWS_Actuary Ad_DEC2011_FINAL.indd 1 1/12/11 5:00 PM

Runbyactuaries foractuaries

John Killick Jas Singh FIAATel 02 8235 7912 Tel 02 8235 7901Mobile 0430 145 810 Mobile 0418 310 [email protected] [email protected]

www.acumen-resources.com

Acumen Resources would like to thank our candidates and clients for supporting our business and we wish you and

your families a safe and enjoyable festive season and a prosperous 2012. As 2011 draws to a close we refl ect on what

has been an unpredictable year that will fi nish with a fl urry of activity. Indications for the next 12 months are extremely

positive for career enhancement as our clients continue to create new opportunities and focus on building capability.

From our Sydney base we have active roles to discuss with you throughout Australia, in New Zealand, Singapore, Hong

Kong, mainland China, Korea, India and Sri Lanka. Below is a very small sample of current vacancies:

Senior Manager, Financial ReportingHong KongWorking with the Chief Actuary, you will coordinate all fi nancial reporting tasks, manage the outcomes of specifi c projects and prepare the communications piece for senior management and regulators. The key element will be to lead a team of six with control for actuarial analysis, valuation and reporting for assigned countries on IFRS, US GAAP and HK statutory basis. Your exceptional communication, leadership and analytical skills should complement at least a decade of experience in the life insurance arena.

Actuary – ReinsuranceBeijingAs China continues to prosper we have a great opportunity for an experienced actuary to join a global reinsurance broker with a collegiate and collaborative culture. Partnering the Regional Head of Broking, you will draw on your knowledge of local business practice to deliver quality technical support, guidance and mentorship to junior staff members. Reinsurance experience is preferred but a well-rounded background in non-life insurance will be seriously considered. It is essential that you are fl uent in Mandarin.

Actuary – Commercial LinesSydneyThis newly created role manages all aspects of reserving and valuation of commercial line products with an extremely prominent Australian general insurance fi rm. Your proven understanding of actuarial principles and their practical application, combined with a natural ability to communicate effectively with both fellow actuaries and non-technical product line managers are pivotal skills for this position. It is expected that you will be a qualifi ed actuary but greater emphasis will be placed on your fi ve to eight years of relevant experience in a multi-tasking environment. Strong Excel skills and previous exposure to SAS completes the list of key requirements. Sponsorship of overseas nationals will be considered.

GI and Analytics ConsultantAustralian Eastern Seaboard – location fl exibleThis well regarded consulting fi rm has created an opening for a 2–5 year pqe non-life actuary to join a project pricing and analytics solutions team. Working with large insurers and niche fi nancial services suppliers you will require sound modelling and pricing experience, an ambitious approach to your career and an ability to engage with clients to forge long-term, fi scally sustainable relationships. Sponsorship is available for the right individual.

[email protected]

Tel +353 1 6099 400

[email protected]

Tel +44 20 3189 2900

[email protected]

Tel +61 2 9262 1612

Hong Kongasiapacifi [email protected]

Tel +852 5808 1307

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