actuaries...the magazine of the actuaries institute march 2014 issue 187 6 ceo’s column...

8 Comment

More Than Just an Actuary10 Comment

Telematics20 Report

Falling Profits for Australian Life Insurers22 Leading Actuary Profile

An Interview with Phillip Everett28 President’s Column

A Significant Year Ahead...

Introducing David Bell– New CEO of the Actuaries Institute

Actuaries March 2014 ISSUE 187T h e m ag a z i n e o f T h e ac T ua r i e s i n s T i T u T e

6 CEO’s Column

Catastrophe Risk SeminarOn Your Watch 3 June 2014

Amora Hotel Jamison Sydney

The Catastrophe Risk Seminar will focus on how the occurrence of floods, cyclones and earthquakes in Australia and New Zealand in recent years have illustrated that many insurers could improve their catastrophe risk governance and catastrophe risk management.

Registration Opening Soon

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March 2014 Actuaries 3

ContentsMarch 2014 • ISSUE 187

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EvENTS4 Coming UpEdIToRIAl5 Learning the Lessons of the Past ❙ Sharanjit Paddam

CEo’S ColUMN6 Introducing David Bell – New CEO of the Actuaries

Institute ❙ David Bell

CoMMENT8 More Than Just an Actuary ❙ Niki Appleton / Amanda Aitken

CoMMENT10 Telematics ❙ Kaise Stephan / Rick Shaw

UNdER ThE SpoTlIghT13 Charles PollackThE ACTUARIAl pUlSE14 Goals and Resolutions ❙ Genevieve Hayes

REpoRT18 2013 J.P. Morgan - Taylor Fry General Insurance Barometer

❙ Sharanjit Paddam / Kevin Gomes / Josh Jaroudy

REpoRT20 Falling Profits for Australian Life Insurers ❙ Jennifer Lang

lEAdINg ACTUARy pRofIlE22 An Interview with Phillip Everett ❙ Alice Crowley

ACTUARIES TAkINg ThE lEAd24 Bringing Soul into the Workplace ❙ Andrew Brown

EvENT NoTICE26 Financial Services Forum – Scoring Goals in a

Changing WorldpRESIdENT’S ColUMN28 A Significant Year Ahead… ❙ Daniel Smith

IN ThE MARgIN30 Call for the Doctor Actuary ❙ Genevieve Hayes

ASk gAE!31 Old Enough to Not Know Better ❙ Gae Robinson

EdUCATIoN UpdATE32 Latest Results ❙ Philip Latham

hIgh SChoolS pRogRAM33 Actuarial Studies: Problem SolvedACTUARIES AT plAy34 African Cichlids ❙ Ben Qin

CoNgRATUlATIoNS35 Welcome to New Members – February 2014obITUARIES 36 Philip James Ryan ❙ Judi Byrne / Martin Hession / Ian Ferres / Ron McDonald 37 Lindsay Joseph Cutler ❙ Ken Dance

STAyINg AhEAd38 Don’t Fall Behind Your Competitors! ❙ Sue Wetherbee

NoTICE39 Practice Risk Management eLearning Course

4 Actuaries March 2014

Actuaries Coming up

Mar

Apr

May

Insights – Assessing ICAAp in the fCR Wednesday 19 March, SydneyWednesday 19 March, Webinar

Insights – SpS 160: discussion notes on the Actuarial and Self-insurance components of ApRA Superannuation prudential StandardThursday, 20 March, SydneyThursday, 20 March, MelbourneThursday, 20 March, Webinar

young Actuaries program – Risk and Reward in your CareerThursday, 20 March, Hong Kong

Insights – New Capital Standards for private health InsurersMonday 24 March, Sydney Monday 24 March, MelbourneMonday 24 March, Perth

CfA Society of Sydney – The Credit Conundrum Monday 24 March, Sydney

young Actuaries program – Networking and Industry TrendsThursday 3 April, Brisbane

group of Retired Actuaries MelbourneMonday 7 April, Melbourne

Insights Networking – CfA Society of Sydney – Investment Considerations when Approaching RetirementTuesday 8 April, Sydney

financial Services forumMonday 5 – Tuesday 6 May, Sydney

IMpoRTANT INfoRMATIoN foR CoNTRIbUToRSActuaries Magazine welcomes both solicited and unsolicited submissions. The Editorial Committee reserves the right to accept, reject or request changes to all submissions as well as edit articles for length, basic syntax, grammar, spelling and punctuation via [email protected]

All contributions must conform to our submission guidelines which are available from the Communications and Marketing Team.

NExT EdITIoNSA188 - April 2014 A189 - May 2014 Deadline for contributions: 1 April 2014

ACTUARIES EdIToRIAl CoMMITTEEEdIToR Sharanjit [email protected]

INSTITUTE hQ TEAM MEMbERSKatrina McFadyenHayley Schultz

ASSISTINg EdIToRSGenevieve HayesChris LarkinDavid MillarCandice MingSolai Valliappan

MAgAZINE dESIgN Kirk Palmer Design, Sydney www.kirkpalmerdesign.com.au

pRINTINg Ligare, Sydney

Paper: Precision by Spicers PaperAustralian made, ECF, EMS

ACTUARIES INSTITUTE ABN 69 000 423 656Level 7, 4 Martin Place Sydney NSW 2000 Australia t +61 (0) 2 9233 3466 f +61 (0) 2 9233 3446 e [email protected] www.actuaries.asn.auJoin us on Twitter®:http://twitter.com/ActuariesInst

pUblIShEd by ThE ACTUARIES INSTITUTE© The Institute of Actuaries of Australia ISSN 2203-2215

AdvERTISINg polICyPlease refer to the Institute’s website for our advertising policy and rates:www.actuaries.asn.au or email [email protected]

disclaimer Opinions expressed in this publication do not necessarily represent those of either the Actuaries Institute (the ‘Institute’), its officers, employees or agents. The Institute accepts no responsibility for, nor liability for any action taken in respect of, such opinions.

Visit www.actuaries.asn.au/knowledge-bank/actuaries-magazine for full details of our disclaimer notice.


Editorial Sharanjit paddam [email protected]

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It has been six years since the GFC, and whilst Australia escaped the worst of the global recession, many businesses felt the pinch of the ensuing credit crunch. It seems that everyone is keen to move on and put the experience behind

us, but it would be a mistake to forget the lessons we so painfully acquired. Not least amongst them is the potential for systemic failure in the financial system, and how quickly sources of capital can dry up and become an anchor rather than a float for an economy trying to fight its way out of a recession. Arguably, Australia survived the GFC based more on the lucky timing of the Chinese driven commodities boom, than our regulators explicitly prohibiting the banking activities that led to the crisis overseas.

The near future does not look so bright for Australia. Historically, the end of a mining investment boom has been marked by a recession. It remains to be seen if we’ll manage to avoid the prevalent downside risks, or if our luck will run out. The 2012 Financial System Stability Assessment of Australia by the IMF made clear the risks of our current financial system: a combination of high household debt, elevated house prices, reliance on offshore funding, and a highly concentrated and interconnected banking system.

Australia’s four major banks hold 80% of banking assets and 88% of residential mortgages – the highest concentration of banking assets of any developed nation, and the largest exposure to systemic risk. There are major implications for competition, with the IMF noting the major banks are “enjoying a funding cost advantage derived partly from implicit government support and earning larger net interest margins than smaller banks and international peers”. No wonder the non-bank lending sector has all but collapsed in Australia, despite our booming housing market.

APRA followed up on the IMF’s report by identifying the big four Australian banks as Domestically Systemically Important Banks (DSIBs) requiring 1% of risk weighted assets as additional capital. However, this was at the bottom of the range recommended by the IMF and APRA also allowed the banks to reduce management capital buffers to allow for this increase. The net impact was no actual capital increase for DSIBs.

The government is to be commended for instigating the Financial System Inquiry (FSI). This is an important time for actuaries to add their voices to the debate. As experts in financial risk management, predictive analysis, longevity and consumer behaviour we have a significant and useful contribution to make.

In December 2013, the Actuaries Institute recommended that the FSI terms of reference be expanded to include: additional data on the financial service industry; a debate on the balance of market efficiency and prudential security; the impact of the longevity challenge; the role of superannuation and SMSFs as providers of capital; and the role of general and life insurance. Most of these have been included in the FSI’s revised terms of reference. A working party has been set up to provide further feedback both now and after the draft report has been published. I encourage you to get involved.

Sharanjit Paddam

The near future does not look so bright for Australia. historically, the end of a mining investment boom has been marked by a recession.

learning the lessons of the past

Actuaries March 20146

My first column has been written during my second week at the Institute – we all know that starting a new job means a blur of meetings, getting to know your team (which I place a priority on) and trying

to wrap your mind around issues that you are not completely familiar with, all in an unfamiliar work environment.

My early impressions of the Institute are very positive, and I’m looking forward to continuing its good work and learning as much as I can about the profession. Melinda Howes handed over an organisation that is well run and in strong financial shape. The Council has approved a strategy and business plan which makes it very clear where your Institute should be focusing its attention when it comes to member

services, education, CPD and supporting events. Sustaining and developing the actuarial profession and the

business of the Institute will remain strong points of focus for me, as well as making sure

that we continue to enhance the brand of the actuary, the profession, and the

reputation of the Institute. I am looking forward to working

with Daniel Smith and the rest of the Council, as well as the HQ team, to deliver the best possible service for all of our members. My previous experience of running an industry body (acknowledging of course the differences between the Bankers’ Association and the Institute), and my understanding of Council’s guidance so far, is that we should be maximising the benefits that members get for the hard-earned fees they

CEo’s Column

– New CEO of the Actuaries Institute

Introducing... David Bell


pay their industry body and, in particular, paying close attention to, and taking account of, what members actually want from the Institute.

To make sure I stay grounded, and remain clear about what you want in terms of service delivery, I’m making it a priority to meet as many members as possible starting with the many Institute practice and other business-related committees. I will eventually take to social media as well – a form of communication I think has enormous potential for us to develop and use at the Institute. In the meantime, I encourage you to contact me, write me a letter, or drop into the Institute if you would like to catch up.

My contact details are: +61 (0) 2 9239 [email protected]

And by the way, when you drop into see us please note that we are moving from Challis house to our new premises at level 2, 50 Carrington Street early April. by the time of publication we should have been able to let you know the moving date. The new HQ will have better member facilities, especially our large meeting and conference room.

I always like to understand the context in which I am working. It helps provide perspective and direction when making decisions, and trying to work out what should be immediate priorities. And for me, attending an economists’ forum in Sydney, just as I was writing this column, was instructive.

While it has been said that if you ask five economists a question you’ll get five different answers, the panel I listened to seemed to be on the same track when it came to 2014, with Australia’s prospects continuing to improve on the back of a Chinese economy that continues to grow (though not in double-digit figures) and despite the Economist newspaper’s most recent headline ‘China loses its allure’. Coupled with a seemingly improving US economy, a Eurozone that will hold its own, along with a steady Japanese economy, the right external conditions exist for a more positive year.

At the same time we have a relatively new Federal Government that is hitting its straps and is preparing to examine various aspects of our economy, including the much awaited Financial System Inquiry lead by David Murray, and the National Commission of Audit.

Having previously run the Bankers’ Association, you would expect that I have a strong interest in public policy and ensuring the right government policies and regulations are in place to ensure our economy prospers. I also understand the value of developing a good reputation for a sector or industry, and the benefits that accrue as a result. Of course, it’s absolutely critical that when the Institute represents the views of its members, those views must have been agreed to by Council, and have the support of the broader membership. While this takes time and care, it’s an important step to take. In doing so I also look forward to working with our designated and trained spokespeople from the membership, and helping them with any experience I’ve been able to gain in previous roles.

So what does this potentially mean for my approach at the Institute?

Actuaries have a crucial role to play in business, not only as valued and expert advisors in existing and new fields like ‘big data’, but also as business leaders. Let me extend the point. We all understand that the Global Financial Crisis changed the financial services sector forever in profound ways. One striking example, I believe, is the relationship between senior business executives and the complex financial models which underpin the very existence of the financial services sector and some other industries. It’s critical that senior executives understand how these models work, and their relationship to the performance of their particular business. Actuaries are almost uniquely placed in the post-GFC world to do this because of their detailed and profound knowledge of these models. And it’s this type of ability that I think needs to be brought to the fore when people think of actuaries, and their potential to both lead and advise organisations. There are, of course, other similar examples which can show the important contribution of actuaries.

On the public policy front I am very interested in building the Institute’s capacity to influence public policy and make sure that the views of members are accurately and appropriately reflected when the Institute publishes its views through submissions and public commentary. The Financial System Inquiry is a great opportunity for us to get our views on the record for this once-in-a-generation review, and I’m committed to making sure we deliver the best possible submission and follow-up. Doing so can only enhance the standing and reputation of actuaries and the profession.

For those of you who are vaguely interested in my non-work life, I can report that I’m married to Wendy with three teenage/early 20s children (none of whom are studying to be actuaries). My army background remains in my DNA and I try to keep fit. I play an average game of golf, ride a Harley Davidson (tragic I know), yearn for a life in south west France one day, and help my family run a small cattle business near Taree on NSW’s mid-North Coast. In my spare time I’m doing a PhD on a World War II Australian general called Sir Iven Mackay, who led the first major Australian expeditionary contingent into battle against the Italians at Bardia, Libya, delivering a triumph of arms for Australia and its allies, at a time when hope and confidence were in short supply.

It goes without saying that I’m really looking forward to the job and really understanding the views and interests of as many members as possible, so that I can do my job even better.

david [email protected]

I am very interested in building the Institute’s capacity to influence public policy and make sure that the views of members are accurately and appropriately reflected when the Institute publishes its views.


Have you ever thought about what sort of actuary you are or what sort of actuary you’d like to be? Have you daydreamed about people fighting

to book time in your diary because your advice is so insightful and strategic? Frank Mitchell Redington once said “An actuary who is only an actuary is not an actuary.” We think this is worth keeping in mind as you progress through your actuarial career.

In this article, we draw on our experiences and those of our colleagues at WorkSafe Victoria to speculate on how to become more than just an actuary.

Why EMploy AN ACTUARy?Through our experience at WorkSafe and prior roles, it seems clear that all actuaries bring the following skills to an organisation:• an ability to understand numbers;• an understanding of lifetime costs and long

term trends;• sound training in using hypothesis testing

to work through uncertainty; and• an aptitude for looking at problems

holistically (remember those Control Cycle classes!).

These skills make actuaries a somewhat natural fit for WorkSafe and other injury insurance schemes, where there are key linkages between the long tail nature of the business, claims liabilities and premiums. Our ability to understand these linkages is very important.

WhAT MAkES SoME ACTUARIES STANd oUT fRoM ThE CRoWd?The skills listed previously are not enough, on their own, to make you the kind of actuary that people kick the door down to visit. Why not? Here’s what some of our WorkSafe colleagues thought.• Numbers aren’t the only thing that

counts. In a business like WorkSafe, people matter most; in particular, injured workers who have needs and expectations that are just as important as the financial viability of the scheme.

• To stand out from the crowd you need to go beyond identifying and measuring a problem by helping to find solutions. To be really valuable, you also need to guide the business in how best to implement those solutions:

• Businesses require decisiveness. In actuarial science, there’s never a right or wrong answer. We can analyse data all day but eventually we need to use ‘gut feel’ to put forward a recommendation that the business will have confidence in adopting.

• Qualitative information is important. This might take the form of subject matter expertise, the market place and the broader economy, which all add another layer of information to consider.

• You have to be able to influence and engage others, sometimes without the authority to do so. It is all very well to undertake some sophisticated analysis that identifies the root of a problem and

then develop a solution. However, if you aren’t able to engage others and bring them with you on the journey, then your solution won’t get very far.

• You need to speak in plain English to translate complex actuarial concepts into language that will keep your audience awake.

ATTRIbUTES of A vAlUAblE ACTUARyTaking all of the above into account, a position description to recruit an actuary who is more than just an actuary might include the following capabilities:• numeracy;• strong analytical skills;• an ability to think in lifetime costs and

long-term trends;• confidence in working with uncertainty;• a holistic view of the world; including

being able to consider non-financial impacts;

• experience in identifying, measuring and solving problems and implementing solutions;

• an aptitude for giving weight to qualitative information before forming conclusions;

• an ability to influence and engage others;• communication skills to explain difficult

actuarial concepts in plain English; and• a collaborative working ethos to

enable formation of strong business partnerships.

Comment

More Than Just an Actuary

“The best actuaries are the ones that… through their engaging personalities and communication skills are able to take the brilliance from their spreadsheet and share it with a wider audience” – Nicolette Rubinsztein, General Manager of Strategy at Colonial First State

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It’s important to stress that these ideas aren’t new. Many of the same ideas have been discussed by leading actuaries and other professionals in the financial services industry.

Why doN’T All ACTUARIES hAvE ThESE SkIllS? There are a few possible reasons…

Typical Actuarial PersonalityActuaries are stereotypically considered logical, analytical, longer term thinkers. We were interested to see that both Leonie Tickle’s research and participants in David Miller’s ‘be an influential Actuary’ CPD tour tended to confirm this stereotype. That does not mean all actuaries match this stereotype, nor that those born with these strengths can’t also develop others. It does, however, highlight the need for actuaries to be self-aware and learn how to build non-technical capabilities that may not come naturally to us.

Actuarial EducationThe current actuarial syllabus focuses very heavily on technical knowledge. We see the use of many low level verbs such as ‘define’ and ‘estimate’, rather than high level verbs such as ‘compare,’ ‘discuss’ or ‘advise.’ The structure of most of the syllabus gives little opportunity to develop non-technical capabilities. There is little opportunity for students to practise engaging, communicating and influencing.

Community Expectations What came first: the chicken or the egg? Did we create the ‘nerdy’ actuary perception in the community by focusing on our technical expertise or have the business community’s expectations driven us further in that direction? It’s probably a bit of both.

Professional CircumstancesWorkplaces play an important part in shaping our development. In-house actuaries in large corporations have the opportunity to be exposed to different professionals and the inner workings of the business, helping them to understand the importance of qualitative information and how to operationalise projects. On the other hand, consulting firms place a lot of focus on developing soft skills, such as coaching, influencing and communication.

It is important for actuaries to experience a balance between both environments but this is not always the case.

hoW do WE ENCoURAgE TodAy’S STUdENTS To dEvElop ThESE vAlUAblE SofT SkIllS?Steps we have already madeThe Institute has already undertaken a number of steps towards achieving this goal, including:• Actuaries for the Future Project

(Capability Framework & Assessment Tool);

• Education Strategy Working Group;• Rebranding Campaign;• Recognition of non-traditional areas;• Mentoring Program;• CPD Tour events; and• Professional Standard 1: CPD.

However, there must be more that we could be doing.

What we can learn from other professionsWe looked at several other professional bodies for ideas. Most have now developed capability frameworks or competency standards. The medical profession stood out as being more progressive than most. Medical course applicants must undertake ‘Multiple Mini Interviews’ that test soft skills, such as cultural sensitivity, collaboration and communication. The course aims to align both technical and non-technical skills. For example, one course component is ‘Self-attribute’ under which students are expected to demonstrate understanding, empathy and management of uncertainty.

Mapping the capability framework to the education syllabusThis process provides an opportunity to:• identify areas of the current syllabus

which the capability framework can map to;

• identify which capabilities are missing from the syllabus;

• reassess service delivery and integrate other assessment formats, such as those involving collaboration opportunities; and

• consider providing formal soft skill courses (e.g. Myers Briggs).

Increase diversity of personalitiesResearch by Leonie Tickle suggests that the profession could benefit from a greater

diversity of personalities. Similarly, our WorkSafe colleagues stressed the value of having a range of personalities on a team. The Institute’s rebranding campaign is a good starting point, but the technical nature of the current education syllabus may still be a deterrent for non-typical actuarial students.

Development opportunities within workplacesWe need to ensure that students are aware of these development opportunities and seek them out. Perhaps we should measure this as part of continuing professional development requirements?

Coaching/MentoringWe could make it compulsory for all students to have a coach/mentor who can reinforce the importance of:• developing self-awareness;• identifying capability gaps;• having a range of experiences by working

in different types of organisations, on different projects and by getting exposure to people from different backgrounds; and

• seeking out learning opportunities that focus on soft skill development.

Enhancing existing Institute guidelines and messagingGreater emphasis should be placed on soft skill development within the continuing professional development framework, perhaps by requiring a minimum number of hours in this area. The professional education requirement seems a natural place to increase the soft skill focus, given that these skills can be developed through on the job training, coaching and mentoring.

So WhAT doES IT All MEAN?As a profession, we have identified an issue: we want to shift the stereotyped image of actuaries being technical boffins, and instead, promote ourselves as thought consultants. The Institute has started to address this through various initiatives.

However, some of the most valuable soft skills may not come naturally to many of us and our current education process falls short on developing these. There is more that we can and need to do to solve this problem.

Niki Appleton [email protected];

Amanda [email protected]


Telematics describes the process of long-distance transmission of computer-based information sourced from within road vehicles. It represents a significant increase in the breadth of driving behaviour data available at the driver level. Table 1 illustrates some of the information that can be collected using Telematics.

Table 1: Examples of information gathered through Telematics

Measurement description

Mileage (by road type) Total distance driven, distinguishing highway driving from suburban driving and urban versus country.

Number of trips Number of trips driven, indication of commercial use.

Night mileage Distance driven during the night.

Speeding event Number of times vehicle exceeds speed limit by various thresholds.

Hard acceleration or braking events

The number of times acceleration or deceleration exceeds various thresholds.

Relative speed Speed relative to other drivers.

A number of Telematics devices are available with varying degrees of sophistication. Mobile phone apps are convenient and are low cost, yet questions remain over the quality of data gathered. High-end on-board diagnostic (OBD) devices, on the other hand, are able to capture a wide range of quality information. For instance, some OBD devices include GPS, gyroscope and accelerometer measurements and may even include open/close status of doors. Many other devices sit between these extremes, trading off data quality for cost savings to various degrees.

From an insurance perspective, the benefits derived from Telematics are well known; anti-theft and fraud preventative measures reduce claim costs and more accurate pricing reduces underwriting risk. Insurer experience from the U.S. and Europe have demonstrated each of these benefits to various degrees and concerns around privacy and data ownership have been identified and dealt with in these locations. In 2013, two Australian insurers (AI Insurance and QBE) launched Telematics based insurance products in Australia and a number of other Australian insurers have carried out or are considering feasibility studies.

This article provides an overview of some of the non-insurance impacts of Telematics.

Telematics

Comment


INdUSTRIES IMpACTEd by TElEMATICS Telematics has wide-ranging applications for numerous industries, some of which are listed below in Table 2.

Table 2: Industries affected by Telematics

gICS sector1 potential Applications

Information Technology Application Software: Gamification, such as Nike’s Fuel Band peer comparison web portal.

Metals and Mining Steel: maintenance management, lease negotiations of iron ore dump trucks and excavators.

Utilities Multi-Utilities: compliance audits of transmission and distribution asset inspections.

Telecommunication Services Integrated Telecommunication Services: providing mobile network coverage to carry communications.

Consumer Discretionary Education Services: extending driver training into post-licencing and post-infringement.

Media Broadcasting: increased accuracy of weather forecasts by piggy backing weather stations to Telematics devices.

Automobile Manufacturers: feedback on new vehicle performance, location based advertising.

Consumer Electronics: provide Telematics devices.

Consumer Services: legal services around tort advice.

Industrials Transportation: simplification of log booking for trucking.

Infrastructure: identification of black spots, live traffic management.

Financials Insurance: underwriting, pricing and claims management.

Healthcare Healthcare Services: Ambulance fleet management.

Government Tax office: Fringe benefit tax reporting.

Traffic enforcement and Judiciary: speeding evidence.

In Australia, Komatsu and Caterpillar now install Telematics devices in most of their newer vehicles. The installations serve two purposes.

Firstly, Telematics enables monitoring of leased vehicles to safeguard assets and manage maintenance costs. For example, Caterpillar has in place a process for notifying fleet managers if a driver is in breach of lease conditions.

Secondly, Telematics web portals can be on-sold to fleet managers. Fleet managers purchase Telematics web portal licences to assist in optimising fleet productivity, vehicle utilisation and fuel efficiency amongst other things.

Leasor installed Telematics applications are expanding into registered light vehicle (car) fleets.

SoCIETAl IMpACTSTelematics has the potential to reduce accident frequency and vehicle-based injuries. Our presentation2 at the recent Injury Schemes Seminar discusses some of the Telematics pathways to saving lives and reducing injuries:

kaise Stephan [email protected]

Rick Shaw [email protected]

Telematics has wide-ranging applications for numerous industries. Two Australian insurers launched Telematics based insurance products in Australia and a number of other insurers have carried out or are considering feasibility studies.


figure 1: Telematic pathways to saving lives and reducing injuries

Three of these pathways are: changing driver behaviour, identifying black spots and first-responder capability.

ChANgINg dRIvER bEhAvIoURTelematics pricing and reporting enables feedback to drivers on their driving style, encouraging better driver behaviour. A 2013 Swedish study has shown how Telematics-based premium discounting changed driver behaviour. Drivers with Telematics fitted in their car tended to speed less than the control group, where no Telematics units were fitted.

figure 2: proportion of speeding3 driver by speed limit

The link between speeding and the road toll is well understood, hence by reducing speeding, Telematics will save lives.

IdENTIfyINg blACk SpoTSA less straightforward example of a Telematics pathway to reducing accident frequency and injuries is the identification and remediation of black spots. Telematics will assist in identifying and categorising black spots. This may lead to fewer motor accidents and lower claim frequency.

The location of accidents will be recorded by the Telematics device, which can be matched with insurance records. This will also provide an accurate source of data for government departments to allocate road safety budgets.

Telematics can also identify areas where accidents are waiting to happen, i.e. higher risk areas. For instance, areas where there is hard breaking or more frequent activation of ABS/stability control systems indicating a higher risk area.

In some cases, the remediation of a black spot may involve reducing the speed limit. Telematics will be able to provide evidence of whether speed limit reductions are effective or further remediation is required.

fIRST RESpoNdERSOnce a motor accident has occurred, Telematics can improve the triage of injured persons. Telematics will enable insurers and First Responders (police, ambulance and fire services) to identify when a major accident has occurred by a vehicle’s deceleration signature. Emergency crews will be able to get accurate coordinates of the location of deceleration and can be automatically dispatched to the accident site.

E-call, a non-insurance-based Telematics initiative, is a First Responder trigger mechanism based on airbag deployment or activation of impact sensors. E-call is set to be implemented within the European Union by 2015. The European Commission has estimated that under E-call, ‘emergency services’ response times will be reduced by 50% in rural areas and 40% in urban areas, leading to a reduction in fatalities estimated to be between 2% and 10%, and a reduction in the severity of injuries between 2% and 15%, depending on the country.

For less severe motor accidents, insurers will be able to provide courtesy calls to policyholders, potentially assisting the driver who may be distressed or in shock.

Telematics is inevitable technology. The take-up in Australia is lagging Europe and the US. In a car-centred culture such as Australia, the impacts are potentially enormous, both for insurance and the wider societal benefits. Telematics is another example of the increasing tendency for data to be collected at the individual level. This has both privacy and societal challenges. For business users, there are a number of paths to adoption of Telematics, from selection of suitable devices to taking full advantage of the information collected and embedding the technology and information into business models.

1 GICS - Global Industry Classification Standard2 http://www.actuaries.asn.au/Library/Events/ACS/2013/

StephanTelematics.pdf3 >6km over the speed limit

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Telematics Pathway

Exposure Management

Safe Speeds

Policy Cancellation

Injury Management

Behavioural Feedback

Identifying Black Spots

Alignment of Interests

First Responders

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Title… Chief Actuary

organisation… Youi Pty Ltd

Summarise yourself in one sentence… A competitive person who is always willing to call a spade a spade but then at the end of the day spend quality time with the family

My interesting/quirky hobbies... Plane spotting and train spotting

My favourite energetic pursuit… Cycling up a hill somewhere, followed closely by rowing

The sport I most like to watch... Le Tour (and it coincides nicely with EOFY late night work!)

The last book I read (and when)... QF32 – some time in 2013

My favourite artist / album / film… Steve Winwood

The person I’d most like to cook for… My wife and kids

I’m most passionate about… People taking responsibility for themselves and their actions

What gets my goat… The handout/entitlement mentality

I’d like to be brave enough to… Spend a month with no means of electronic communication

In my life I’m planning to change… The amount of time I allocate to reading (do more)

Not many people know this but I… Paddle my kayak to work when my timetable permits

four words that sum me up… Focused, energetic, fun, creative

What I wanted to be when I grew up… Train driver (before high school), Pilot (high school)

Why and how I became an actuary… In 1989 the Pilot’s dispute put an end to any aspirations of being a pilot that I had. Actuary sounded interesting and tapped into all of the things I was good at in school. At that time a marketing pack went around to schools and my Maths teacher put me on to it, so off to Sydney I went

Where I studied to become an actuary and qualifications obtained… Macquarie Uni – B.Ec.

My work history… Sun Alliance and Royal Insurance for a couple of years (finance department gave me the best all-round view of an insurance company that I could ever hope to start with, and a great understanding of the GI P&L), FAI for three years including 12 months in the marketing department, Suncorp for nearly 10 years, then Youi for the last five years

What I find most interesting about my current role... The opportunity (and organisational willingness) to (take the risk to) make changes that improve things

My role’s greatest challenges… Balancing the ‘creating’ side with the routine ‘non-negotiable’ work

Who has been the biggest influence on my career (and why)… At work, my manager at FAI – Ian Heppell – who inspired me to be creative in my role and gave me the opportunity to learn some really cool and valuable techniques.

Overall, my wife Melissa who has supported me for over 20 years, including moving cities and moving to a less secure ‘start-up’ opportunity at a time when we were renovating our house

My proudest career achievement to date is… GIPE – Suncorp’s ‘GI Pricing Engine’

10 years from now, I will be… Probably still kayaking to work

Why I’m proud to be an actuary… We can work behind the scenes to make a difference to everyday people

When I retire, my legacy will be… GIPE already is one ‘legacy’ (don’t mention the word legacy and insurance systems – that is nearly always a bad thing!). Throughout my career hopefully I have helped others I have worked with/managed to develop their own skills and make their careers meaningful

The most valuable trait an actuary can possess is… Thinking outside the square

If I were president of the Institute, one thing I would improve is… Market ‘Actuary’ to schools more effectively

At least once in their life, every actuary should… Take a risk

My best advice for younger actuaries… Develop good skills working with and analysing data – they will take you a long way

If I could travel back in time I would… Take a bit more time to smell the roses

If I win the lottery, I would… Take a bit more time to smell the roses

Charles [email protected]

Charles pollack

Under the Spotlight


WhAT WoUld yoU lIkE To kNoW? If yoU hAvE A QUESTIoN yoU WoUld lIkE To pUT To ThE MEMbERShIp, EMAIl IT To [email protected]

REpoRT gENERATEd oN 7 fEbRUARy 2014, 260 RESpoNSES

It’s said that most New Year’s resolutions are broken within the first two weeks of the year, but is this true for actuaries? Do actuaries even believe in making resolutions in the first place? In this month’s Pulse survey, we explore goals and resolutions in an

attempt to find out what does and doesn’t work when it comes to making changes in your life.

Q1: WhAT IS yoUR AgE?

Response % Count

Under 25 7% 19

25 - 34 30% 78

35 - 44 22% 57

45 - 54 26% 66

55 - 64 12% 30

65+ 3% 9

Q2: WhAT IS yoUR gENdER?

Response % Count

Female 31% 80

Male 69% 177

The purpose of the first two questions is to determine the demographic profile of the survey respondents. These results are typical of other Pulse surveys and will be used to assist in analysing the results of the other survey questions.

Q3: do yoU bElIEvE ThAT SETTINg goAlS/MAkINg RESolUTIoNS IS USEfUl?

Response % Count

Yes 85% 215

No 15% 38

Much has been written on the importance of goal setting. Studies have been conducted that demonstrate that people who write down their goals accomplish significantly more than those who don’t and there are dozens of websites, such as http://www.43things.com and http://dayzeroproject.com, that exist specifically so that people can share their goals with others throughout the world.

At the same time, goal setting is clearly not for everyone. According to Dilbert creator Scott Adams in his book How to Fail at Almost Everything and Still Win Big, “goals are for losers”. If you set yourself a goal, “you will spend every moment until you reach the goal… feeling as if you were short of your goal” and if you do achieve the goal, you will have lost the thing that gave you purpose and direction.

Adams argues that, instead of goals, people should develop continuous lifestyle ‘systems’ or habits for themselves that maximise their chances of success in the long term (for example, continuously upgrading your skills).

Among the respondents to this survey, 85% believe that setting goals or making resolutions is useful, with belief in goal setting being slightly higher among females (90%) than males (83%), and slightly higher among those under 55 (86%) than those aged 55 and over (79%). As most of the actuaries I have met are very intelligent and successful people (i.e. ‘winners’), these high percentages appear to run counter to Adams’ hypothesis of goals being for ‘losers’, but we will explore this in further detail later in this report.

Goals and Resolutions

The Actuarial pulse

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The Actuarial Pulse is an anonymous, web-based survey of Institute members, run on a monthly basis, giving members an opportunity to express their opinions on a mixture of serious and not-so-serious issues.

Q4: hAvE yoU EvER MAdE A NEW yEAR’S RESolUTIoN?

Response % Count

Yes – often 23% 58

Yes – once or twice 35% 89

No – but I’ve made resolutions/set goals at other times

30% 77

No – never 12% 30

New Year’s Resolutions are a special subset of goals. Although New Year’s Day is really just another day in the calendar, to many, a new year is a new beginning and a chance to start afresh, doing things differently from how they were previously done. As one respondent pointed out, “I make plans at various times (of the year), not just New

Year’s, but sometimes a New Year’s resolution has more significance.” 58% of respondents have made New Year’s Resolutions at least once or twice in their lives, which is broadly consistent with University of Sydney research which found that 50% of Australians make such resolutions each year. Similar to what was found in the previous question’s analysis, New Year’s Resolution making is more common among females (70%) than males (53%), and is most common among respondents in the 35 – 44 year age band (68%).

Q5: hoW loNg do yoU TypICAlly kEEp A RESolUTIoN/goAl AfTER MAkINg IT?

Response % Count

Less than 1 week 5% 13

1 – 2 weeks 8% 19

2 weeks – 1 month 7% 17

1 – 3 months 19% 45

3 – 6 months 8% 19

More than 6 months 9% 21

As long as it takes to achieve the intended result

44% 105

According to an article published in The Sydney Morning Herald in late 2012, there is a failure rate of around 88% when it comes to achieving resolutions, but it appears that actuaries are better at sticking with goals than the average Australian. 44% of respondents claim to stick with a goal for as long as it takes to achieve.

Although, in previous questions, we have found that younger respondents are more likely to find goals and resolutions useful, it is, surprisingly, the older respondents who are more likely to see their goals through to the end. 49% of respondents aged 45 and over stay with their goals for as long as it takes, compared to only 40% of the under 45s.

Q6: hoW MANy RESolUTIoNS/goAlS hAvE yoU SET yoURSElf So fAR IN 2014?

Response % Count

0 34% 83

1 27% 67

2 21% 52

3 – 4 14% 36

5+ 4% 10

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genevieve hayes [email protected]


The Actuarial pulse continued

Q7: AppRoxIMATEly WhAT pRopoRTIoN of yoUR 2014 RESolUTIoNS hAvE yoU kEpT To dATE?

Response % Count

0% 18% 29

25% 9% 14

50% 15% 25

75% 10% 17

100% 48% 79

During 2007, British psychologist Richard Wiseman tracked over 3,000 people attempting to achieve a range of New Year’s Resolutions. Among the many things he concluded from his research was that the chances of succeeding in achieving resolutions or goals is far greater if you focus on achieving one goal rather than many.

Based on this observation, it would be expected that those respondents to this Pulse survey with a greater number of resolutions in 2014 would have kept a smaller proportion of these resolutions than those with a smaller number.

Yet, to date, 58% of respondents with three or more resolutions have kept 75% or more of those resolutions, which is on par with the 59% of respondents with one or two resolutions who have kept 75% or more of those resolutions. Nevertheless, this survey was conducted in early February, just one month into the New Year. It’s easy enough to keep a resolution for 31 days, but can you keep it for the next 11 months? I suspect these results would differ greatly if this survey was repeated later in the year.

Q8: WhAT IS CURRENTly yoUR NUMbER oNE goAl IN lIfE?

Response % Count

Improve health/fitness 40% 93

Improve financial situation 10% 24

Get a new job/promotion 9% 21

Spend more time with family 10% 22

Travel more 6% 13

Change attitude e.g. be more positive 6% 15

Other 19% 43

By far, improving your health or fitness was the most popular life goal among respondents, with improving your financial situation coming in third after ‘Other’. Yet, the popularity of certain goals varies by age and gender.

Females respondents are more interested in improving their health than their male counterparts, with 48% of females selecting this as their number one goal compared with 37% of males. Males, on the

other hand, are more interested in spending more time with family, with 13% listing this as their top priority compared to only 1% of females.

Under 45s, who, in many cases, will be trying to save for a house, pay off a mortgage or put their kids through school, are more interested in improving their financial situation than over 45s, with 14% of under 45s listing this as their number one goal compared to 5% of over 45s; while over 45s, whose kids may have grown up and left home, giving them new-found freedom, are interested in travelling. 9% of over 45s want to travel more, compared to 4% of under 45s. Some of the other goals listed by respondents to this question include: • buy a house; • find a girlfriend;• pass Part III exams;• religious (e.g. discover the meaning of life or get to know God

better);• spend less time using my iPhone;• finish writing my book; and• give to the profession… by answering more Pulse surveys!

Q9: WhERE yoU hAvE fAIlEd To AChIEvE goAlS/RESolUTIoNS yoU hAvE SET yoURSElf, WhAT IS ThE MAIN REASoN foR yoUR fAIlURE?

Response % Count

Lack of planning 4% 9

Too busy with other things 24% 57

Lack of motivation 22% 51

Uncertain of what to do 5% 11

Too much effort required 8% 19

Changing priorities 25% 59

Other 12% 27

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The three main obstacles to success, according to respondents, are: changing priorities, being too busy and lack of motivation, with each receiving a similarly high number of votes.

Lack of motivation is more of an obstacle to success for females than males, with 32% of females listing this response compared to 17% of males, while changing priorities is a bigger stumbling block for males, with 27% of males selecting this option, compared to 21% of females.

It is the younger respondents, however, who have the hardest time finding enough time to achieve their goals. 27% of under 45s consider being too busy their biggest obstacle to success, compared to 20% of the over 45s.

Other reasons why respondents have found it difficult to achieve their goals in the past include:• kids; • I forgot I made them. This survey reminded me of them; and• If I knew, I would have succeeded.

Q10: WhERE yoU hAvE AChIEvEd goAlS/RESolUTIoNS yoU hAvE SET yoURSElf, WhAT WAS ThE MAIN CoNTRIbUTINg fACToR To ThIS SUCCESS?

Response % Count

Making a detailed plan 10% 23

Support from others 6% 14

Rewarding myself for making progress 2% 5

Failure not an option 16% 37

Establishing a regular routine 54% 123

Other 12% 27

On the flip side of the success coin, when respondents have succeeded, the majority of respondents agree that it was due to establishing a regular routine.

Developing a routine is one of the main actions psychologists and life coaches recommend when it comes to achieving goals and is broadly consistent with Scott Adams’ hypothesis (discussed in Question 3) that habits or systems are more important than goals in achieving success.

In fact, even though Adams claims that “goals are for losers”, at the end of his book he softens this by rephrasing his sentiments as: “Humans will always think in terms of goals. Our brains are wired that way. But goals make sense only if you also have a system that moves you in the right direction.” Based on this it appears that even Adams believes that a combination of both goals and systems is the secret to success. Other factors that helped respondents achieve success include:• regularly reminding myself of the goal;• only establishing goals I’m really interested in;• seeing a deadline loom;• team members relying on my achieving the goal;• tracking progress and referring to that data regularly; and• making my goal known to friends and challenging them to

achieve the goal, too.

CoNClUSIoNActor Bruce Lee once said “A goal is not always meant to be reached, it often serves simply as something to aim at.” Yet, based on the responses to this survey, actuaries don’t just set goals as aspirational targets, they follow them through for as long as it takes to achieve them, and I’m not in the least bit surprised.

It is extremely difficult to qualify as an actuary and only the most determined individuals are likely to be prepared to put in the time and effort needed to gain this qualification. With this in mind, the next time you have a goal you wish to achieve, you should think back to everything you went through in order to join the actuarial profession in the first place.

Actuarial training doesn’t just prepare you for one of the most desirable jobs in the world, it also teaches you how to succeed in life. If you can qualify as an actuary, there is nothing out there you can’t achieve if you put your mind to it.

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Report

2013 J.P. Morgan - Taylor Fry General Insurance Barometer

Australian insurers are facing growth constraints driven by increasing competition, claims pressures, an expected slowdown in premium

rates and macroeconomic factors despite reporting improved profitability in 2013, according to the 2013 J.P. Morgan and Taylor Fry General Insurance Barometer.

The Barometer is a collaboration between J.P. Morgan and Taylor Fry, and is based on a detailed survey of the majority of the underwriters, reinsurers and brokers active in the Australian general insurance industry. The survey has been running for 21 years, and includes both actual historical results and forecasts for the future. It also includes a survey of the key issues affecting the market.

Whilst the full report is only available to the survey participants, we have summarised the key issues and trends here.

MACRoECoNoMIC bACkgRoUNdThe outlook for the Australian economy in 2014 appears reasonable, but is less favourable than recent years when compared against international markets. For Australian insurers this means weaker growth prospects than previously. Low investment yields used to support claims also continue to be a concern and a risk to returns particularly for long tail products.

CoMbINEd RATIo TRENdSThe 2013 financial year showed an overall improvement in combined ratios for the industry as a whole and particularly in commercial insurance lines.

For personal insurance, the combined ratio in 2013 remained stable at 89%. In commercial insurance the combined ratio improved to 90% in 2013, from 98% in 2012. Both personal and commercial insurance were supported by improved loss ratios and more favourable bond yields in 2013 compared to 2012. Commercial insurance combined ratios were significantly better in 2013, primarily due to the impact of previous rate increases, no adverse hits from interest rate movements and greater reserve releases than in 2012. This was offset partially by an increase in natural peril activity to trend levels.

The current shift to more neutral near term weather conditions forecast by the Bureau of Meteorology would normally benefit insurers’ catastrophe cost trends. Nevertheless, overall industry profitability is expected to deteriorate slightly in the coming years in part driven by the expected slowing down of premium rate increases.

Looking forward, the industry is forecasting a slight deterioration to combined ratio trends overall for the next couple of years, though they are still expected to be reasonably profitable. ©

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The outlook for the Australian economy in 2014 appears reasonable, but is less favourable than recent years when compared against international markets.


pREMIUM RATE TRENdSThe Barometer revealed mixed premium rates in 2013, with rates expected to come under more pressure in 2014. The industry showed strong rate increases in personal insurance of 8%, driven predominantly by householders, while for commercial insurance rates in 2013 were significantly worse than the 5% forecast in 2012 (-1% in aggregate).

The outlook for premium rates is much weaker for 2014. The industry is forecasting a slowing in rate increases in domestic lines and flat rates for commercial lines.

ISSUES CoNfRoNTINg ThE INdUSTRyThe Barometer found 69% of underwriters in the survey identified the increasing regulatory burden as a key concern. This was followed by concerns over the competitive environment (38% of respondents) and staff engagement and retention (33% of respondents). This last factor may be driven by the increasing impact of outsourcing on the market.

For insurance brokers, participants indicated retaining staff as a key issue (57% of respondents), followed by the issue of an excessively competitive rates environment and natural perils activity impacting on capacity in the market (43% of respondents).

REINSURERSReinsurance participants experienced an unexpected drop in premium rates during 2013, with the exception of the Property Proportional category, driven by new capacity entering the market, as well as benign catastrophe claims experience during the year.

There appears to be significant pressure in this segment. The abundance of capacity and competition were identified by reinsurers as the greatest issues confronting the industry, in addition to regulatory concerns, with APRA’s increased focus on board review of catastrophe modelling, as well as the capacity of insurers to meet multiple catastrophe losses leading to increased demand for reinsurance protection.

Industry actual combined ratios

Industry actual premium rate movements

financial year 2011 2012 2013

Personal Insurance

Motor 93 95 91

Home 107 83 89

CTP (NSW) 106 92 91

CTP (QLD) 70 87 74

Total personal 98 89 89

Commercial Insurance

Fire & ISR 134 90 95

Motor 91 99 90

Public & Product Liability 86 110 88

Workers Compensation (WA) 94 92 78

Workers Compensation (TAS, NT & ACT) 104 103 104

Professional Indemnity 98 92 85

Directors & Officers 85 102 80

Total Commercial 106 98 90

Total 98 98 87

financial year 2011 2012 2013

Personal Insurance

Motor 2 3 4

Home 10 15 12

CTP (NSW) 8 4 8

CTP (QLD) -6 2 4

Total personal 5 9 8

Commercial Insurance

Fire & ISR 7 9 -2

Motor 4 6 4

Public & Product Liability -1 1 -2

Workers Compensation (WA) -4 4 3

Workers Compensation (TAS, NT & ACT) 2 8 1

Professional indemnity 1 1 -2

Directors & Officers 0 2 -1

Total Commercial 3 5 -1

Sharanjit paddam [email protected]

kevin gomes [email protected]

Josh [email protected]


The life insurance industry has had a particularly poor few years, particularly in the disability classes of business. Recent reports from Swiss Re and Munich Re – two of Australia’s major life reinsurers – have continued the bad

news. More recently, APRA released their quarterly statistics for the quarter ending September 2013, and commented on them in their quarterly update. Overall, the life insurance risk part of the life insurance industry has made 4% profit after tax, as a percentage of revenue, in the 12 months to September 2013. Group Insurance, which generally insures corporate and industry superannuation funds, made a 6% loss after tax, over the same 12 months, as a percentage of revenue.

The life insurance industry is not making sustainable profits, and the news seems to be getting worse not better, as insurer after insurer strengthens their reserves.

This hasn’t gone unnoticed in the actuarial profession, with much of the life insurance part of the recent risk and regulation seminar discussing the sustainability of the industry, and a whole Insights session recently devoted to Group Insurance. The slides are worth reading in their entirety. The Insights session pointed out that there are a number of different issues affecting the group market at the same time.

The average insurance product within the group market as a whole has gradually made the definitions of disability less stringent at the same time as making it easier to qualify for insurance with little or no underwriting. Members have become increasingly aware that they have insurance, which is often driven by increased benefits. Lawyers have become more involved, as the benefits have become higher, and higher unemployment in some areas of the economy makes it much harder for disabled people to return to work.

Another speaker in the Insights session pointed to the major reduction in capacity affecting the group market: in 2011, five to six insurers participated in tenders; in 2013, for medium or large plans, two to three insurers were often participating.

Anyone who has been involved in long tail classes will recognise

Falling Profits for Australian Life Insurers

Report

Jennifer lang is Chief Actuary at NAb Wealth. The views expressed in this article are her own personal views,

and do not necessarily reflect the views of her employer. This article was originally published in her blog, actuarial eye; www.actuarialeye.com.

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some of the symptoms of a classic insurance cycle. As profits increase, insurers relax terms and conditions and reduce prices. Then as claims start coming in, insurers realise they have given too much away, and tighten terms and conditions, increasing prices and reducing capacity. In my view, one of the major preconditions for the creation of insurance cycles is that there needs to be a reasonably long tail between the incidence of the claim and the payment, so that insurers cannot be definitive about the cost or profitability of the insurance cover they are selling for several years. That creates a feedback loop that takes some time to work its way through the system.

So what is the answer? Back in 2006, Lloyd’s recommended seven steps for managing insurance cycles.

1. doN’T folloW ThE hERdInsurers need to be prepared to walk away from markets when prices fall below a prudent, risk-based premium.

2. INvEST IN ThE lATEST RISk MANAgEMENT ToolS Insurers must push for continuous improvement of these tools based on the latest science around issues such as climate change, and make full use of them to communicate their pricing and coverage decisions.

3. doN’T lET SURplUS CApITAl dICTATE yoUR UNdERWRITINgAn excess of capital available for underwriting can easily push an insurer to deploy the capital in unsustainable ways,

rather than having that capital migrate to other uses such as hedge funds and equities, or returning it to shareholders.

4. doN’T bE dAZZlEd by hIghER INvESTMENT RETURNSDon’t let higher investment returns replace disciplined underwriting as base rates creep up on both sides of the Atlantic. Notionally, splitting the business into insurance and asset management operations, and monitoring each separately, is one way to achieve this.

5. doN’T REly oN ‘ThE bIg oNE’ To pUSh pRICES UpWARdSThe spectacular insured loss should not be used as an excuse to raise prices in unrelated lines of business. Regulators, rating agencies, and analysts – not to mention insurance buyers – are increasingly resisting such behaviour.

6. REdEploy CApITAl fRoM lINES WhERE MARgINS ARE UNSUSTAINAblEThere is little that individual insurers can do to alter overall supply-and-demand conditions. But insurers can set up internal monitoring systems to ensure that they scale back in lines in which margins have become unsustainable and migrate to other lines.

7. gET SMARTER WITh UNdERWRITER ANd MANAgER INCENTIvESIncentives for key staff should be structured to reward efficient deployment of capital, linking such rewards to target shareholder returns rather than volume growth.

In some ways, none of the suggestions above are anything other than recommendations for sensible management. At their heart, these are recommendations to analyse risk carefully, price for it, make sure all of your internal incentives encourage sensible behaviour, and do as much as you can to set up a contract that pays out in the event of genuine loss. There isn’t a magic bullet that will create profitability. Each lever of profitability is important, and they all need to be used appropriately. Sometimes it is good to take a step back, in the midst of continuing bad news, and look at the fundamentals.

Jennifer lang [email protected]

Source: APRA and my own analysis

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Life Insurance Industry Profits

Total Revenue Profit Margin After Tax Rolling Annual Profit Margin After Tax

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Wholesale Life Insurance Profits

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AdApTATIoN IS kEyIn his early school days Phillip Everett was very strong in applying mathematics, so he seemed destined to become an actuary from a young age.

“My father came across an actuary who was a tenant in the building he was working in and they began discussing my skillset. Without ever meeting me, my father’s colleague recommended the profession as a good career for me and the seed was planted,” said Phillip.

Phillip went on to study Economics and Statistics at the University of Adelaide and began his career as an actuarial analyst at National Mutual. In this role Phillip began to learn the importance of having an open mind and being adaptable, something he has carried with him throughout his entire career.

“In my mind there is nothing more important than being able to adapt in your career. I have constantly adapted to the environment around me, which hasn’t always been easy but has been necessary to stay in the game. At National Mutual in Adelaide we had a specialist consulting firm Palmer Gould Evans that worked across a number of areas including defined benefit super schemes, master trusts, workers compensation, friendly societies, legal work and general insurance. We were forced to adapt our skills to all areas; there was no room for one trick ponies. Learning how to do this was one of the most valuable lessons in my career,” Phillip explains.

leading Actuary profile

Head of Group Capital & Pricing Intelligence – National Australia Bank (NAB)

The Institute’s newly formed banking practice Committee has been established to support

actuarial development in the banking industry at a time of heightened focus on the Australia’s financial system. phillip Everett, head of group & Capital pricing Intelligence – National Australia bank (NAb) will lead the group with the aim of contributing to the strategic direction of the Institute, actively supporting the development of actuarial practice, and identifying and promoting opportunities for members working in banking.

phillip took a break from his busy schedule to discuss his diversified career and the changing landscape of actuaries in banking.

Phillip EverettAn Interview with


Alice Crowley [email protected]

National Mutual sold Palmer Gould Evans to Buck Consultants and Phillip ended up moving to Melbourne shortly after. On qualifying, he wanted to expand his horizons and began studying a Diploma of Financial Planning, which led him to his next role as a product actuary at Plum.

“Joining Plum was the best decision I ever made. I would recommend that everyone join a similar firm at some stage of their career. It was an end to end business and I was exposed to every aspect of the company and was lucky enough to work with a variety of people – from those in the sales team to senior management, relationship managers and other product managers. Having visibility of the entire company showed me how all the different business units work together,” he said.

“I also received some of the best career advice from the sales team at Plum. As an actuary we can find it overwhelming presenting and connecting to senior executives. The sales team taught me people are just people no matter what their position is,” he said.

Since then, Phillip’s career has flourished within the Australian banking industry at NAB. Over his time at NAB he has held a number of roles including Head of Portfolio Strategy and Pricing, Head of Portfolio Pricing and Capital Management in Business Banking, Senior Adviser in Capital Insights and his latest role as head of Group Capital & Pricing Intelligence.

“Working for a bank opened more doors for me than I could have ever imagined. By branching out of some of the traditional actuarial areas I could embrace far more varied professional opportunities. My career took off after joining the bank.

“I only have one career regret, which is spending too much time in a role simply because it was comfortable and safe. When I really thought about it I wasn’t that happy with the scenario and the work wasn’t satisfying. I wish that I had branched out sooner because once I did I never looked back,” he said.

oppoRTUNITIES ACRoSS bANkINgDuring the past eight years in banking, Phillip realised that bringing together information from a number of different areas of the bank was the most enjoyable part of his job.

“The large banks are massive institutions with pockets of highly intelligent and skilled people such as people who build risk models, treasury specialists and corporate finance specialists. I get satisfaction from bringing these all together and solving things in a pragmatic way,” he explained.

“In this industry people still have a narrow view of the ability of actuaries and still do not fully understand what we do. It is important we brand ourselves as financial services professionals with a highly useful actuarial skillset.

He said individuals need to demonstrate what they are capable of and not expect there to be a career path solely based on their actuarial qualifications.

“Bankers are very straight forward people and you need to be able to demonstrate how you can add value. Interestingly, a lot is based on other skills which are usually developed throughout a career and one of the most powerful tools we have as actuaries is translating those skills across industries. There are lots of talented actuaries who have done this successfully,” he said.

In June 2013 Phillip and a number of actuarial colleagues working in the banking industry established the Banking Practice Committee to help link more actuaries in the industry.

“The power of the Banking Practice Committee is our ability to give Institute members better visibility across the areas of banking that actuaries are working in, with the view to promoting the actuary brand within banking and helping actuaries understand the opportunities available to them.”

A ChANgINg lANdSCApE Phillip believes it is highly important to act as a mentor for the younger generation of actuaries and he aims to encourage and develop people to help them take career risks, especially as the landscape of the profession changes.

“We need to mentor the younger generation and support them as they develop their careers. It’s so important to encourage as many actuaries as possible to branch out of traditional roles and to be more flexible in the type of roles they consider working in.

“The actuarial landscape is changing. With a number of data based roles being taken overseas or replaced by technology, actuaries need to work on providing on-the-ground advice and explaining what is behind the numbers.

“This is where the opportunity lies for actuaries. We need to work on diversifying our skillset and embrace the changing landscape of the actuarial profession,” he concluded.

don’t bank on one skillset: be prepared to change your spots.

H ave you ever worked in a job, a team or an organisation which left you feeling as if you are a cog in a large machine, a resource to

be used up and spat out when there is no more foreseeable value? Have you ever felt a deep sense of disconnection between what you sense you are on this planet to do, and what your daily job is asking you to do? Have you ever come back from leave and noticed what seems like numbness, anxiety or even insanity in the people surrounding you?

If so, you are not alone. Many people spend large portions of their working lives feeling this way, yet with seemingly little way out with mortgages, school fees and other commitments. While the risks of pursuing your own path are significant, the costs of not following your passion can be a living death – a sense of emptiness and loneliness which gradually builds and can manifest in a variety of unhealthy ways. Physical illness, addictions such as alcohol, smoking or caffeine, or erratic behaviour and debilitating moods are some examples. Looking at this list, I just realised that at a low point in my career I got a tick in each box – not sure it’s something to be proud of.

Yet there are also organisations that are truly joyful places to work that create great value. Raj Sisodia, one of the founders of the Conscious Capitalism movement, identified in his book, Firms of Endearment, many organisations that are creating working environments with soul. At the heart of these organisations is the honouring of all stakeholders – shareholders, customers, staff and communities.

To explore what can be done to develop more soulful places to work it is useful to look at some of the causes of workplace malaise.

ECoNoMIC ENvIRoNMENT – almost all the learning and development specialists I know or collaborate with share one fundamental experience of the recent

years – few organisations are seeking aspirational leadership development or strategic development. The emphasis is on cost reduction, embedding competency models for expected ways of behaving and on basic management capability. While these are all important, they focus on stability and homogeneity without addressing the needs of growth, diversity and adapting to change.

lACk of CARE – in many organisations, there is commonly a sense of prevailing sadness, fatigue and cynicism. A sense that the organisation doesn’t care for or value the individual’s contribution and that most senior people are out of touch with what it is like to work at the coal face. In some instances, the senior management rhetoric espouses the need for cost cutting, reducing bonuses and downsizing, while the most senior people maintain excessive bonuses or are rewarded even further through these programs.

The consequence of the ‘more with less’ philosophy in the more technical and process oriented areas is significantly increased volumes of work that creates such an emphasis on output that development, feedback and connection to meaning are buried beneath the frenzy.

pARAdIgM blINdNESS – many organisations espouse the need for stability regardless of how affected the organisation or team is by external forces. The more the organisation craves certainty to placate market participants and to demonstrate its capacity to achieve, the greater will be its denial of the need for change. For example, as practising actuaries, there may be pressure brought to bear to set assumptions at a level that allows for a steady profit release or incremental increase in value. Over time, artificial stability reduces organisational resilience and increases the likelihood of systemic failure.

Actuaries Taking the Lead


bringing Soul into the Workplace

“The search for meaning is changing expectations in the marketplace and in the workplace, and therefore is changing the very soul of capitalism.”

– Raj Sisodia, Firms of Endearment

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Incapacity to allow individuals to bring their whole selves to work – the paradigm of ‘you’re only as good as your last project’ builds short-term focus on excellence… and longer term fatigue. The sense of always being on probation ultimately weighs down the human spirit. People often desire to be seen as perfect to protect their hard fought reputation, which means hiding the imperfections and denying the need for development. As Leonard Cohen suggests, no light can get in if you forever cover over the cracks.

dISCoNNECTIoN fRoM pERSoNAl MEANINg ANd pURpoSE – the intent of organisational mission and vision statements is to provide clarity of direction and engage people in the purpose of the organisation. Yet if this mission or vision is incongruent with the individual’s values or provides no space for their own expression of what is important to them, people will feel alienated and disconnected.

ASyMMETRy of ThE CoNTRACT bETWEEN ThE INdIvIdUAl ANd oRgANISATIoN – recently a colleague shared with me a conflict they faced. In their organisation, managers were asked to commit heart and soul to the vision and strategy without any certainty as to whether they and / or their teams would be part of the organisation going forward.

There are moments in my career where I dreaded going back to work the next day, to deliver unrealistic deadlines and produce meaningless reports which few people ever read and which barely cast a breath in the organisational hurricane. For me personally, this sensitised me to what it is like to feel powerless and worthless and it led me towards my current work, in supporting organisations to build structures, processes and mindsets that allow individuals to bring their innate wisdom and compassion into their day-to-day roles.

Call me an idealist, but I truly believe that the level of pain being experienced in organisations will lead to a significant

shift in cultures towards a more humanistic approach. The following are some ways of creating more soulful workplaces.

dAN pINk1 has completed extensive research on what motivates people in the workforce. And it’s not money. His findings are that while bonuses are effective mechanisms for rudimentary tasks and roles, there is a huge body of evidence that larger bonuses actually lead to a REDUCTION in effectiveness for more complex tasks. His research suggests that excessive emphasis on bonuses introduces a level of anxiety around performance that inhibits creativity, focuses on the short term and is more likely to lead to unethical or highly risky behaviour.

Pink found that the major things that motivate people in the workforce, once they have sufficient salaries to allow security, are Purpose, Mastery and Autonomy. Working on something they truly believe in, having the opportunity every week to do something they are good at or can improve at, and a healthy balance between having some personal freedom and personal accountability.

dAvId WhyTE, best-selling author of The heart aroused – preserving the soul in corporate America is a poet who has been exploring themes of soul in the workplace for over two decades. He believes there are several ways to enable the preservation or thriving of soul in the workplace.• Set boundaries on behaviours rather

than deep prescriptive expectations. This allows individual freedom within these boundaries yet helps to shape expectations and sets clarity on what is not acceptable.

• Create some distance from an unpleasant event before taking action, i.e. taking a broader perspective, a third or fourth person perspective. Seek the positive intent of other parties to this event.

• Design organisational structures and processes that mimic robust ecosystems. These include encouraging diversity of ideas and styles, and honouring individuals by providing them with opportunities to work on what they are most passionate about.

The best test of the ideas in this article is your own personal experiences of work and how strongly or otherwise they resonate with the themes outlined here. As managers, as actuarial specialists, as people engaged in creating our own livelihoods, how important is bringing soul into the workplace for you?

1 A video outlining Dan pink’s research on motivation can be found at http://www.youtube.com/watch?v=u6xApnuFjjc


Andrew brown [email protected]

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26

Event Notice

Financial Services ForumScoring Goals in a Changing World

5-6 May 2014 • Hilton Sydney

REGISTRATION NOW OPENREgISTER by fRIdAy 11 ApRIl 2013 To TAkE AdvANTAgE of ThE EARly bIRd dISCoUNT – WWW.ACTUARIES.ASN.AU/fSf2014

The Financial Services Forum – another great conference with a consistently high standard of content.

Register online – www.actuaries.asn.au/fSf2014

Scoring goals in a changing world is the theme of the 2014 financial Services forum. Scoring goals is key if the financial services industry is to continue to flourish.

dElEgATES CAN ExpECT:

High-profile speakers

Diverse program featuring five plenary sessions and 48 concurrent sessions

Gain in-depth insights and analysis

Build relationships with leaders and professionals in the industry


Supporting Partners

Bronze Sponsor

Silver Sponsors

CFA SocietiesAustralia


plENARy SpEAkERS

don’t miss out on seeing the financial Services forum’s impressive line upof plenary speakers...

kEyNoTE AddRESS

glenn Mcgrath AM*, Former Australian cricket player, Co-Founder and President of the McGrath Foundation Board

fACIlITAToR

Naomi Edwards, Actuary, MC

Carol Austin, Investment Services Director, Contango Asset ManagementJohn brogden, CEO, Financial Services CouncilJacqui Colwell, Chief Risk Officer, Personal Banking, National Australia BankChris Cuffe, Chairman, Australian Philanthropic ServicesRamneek gupta, Managing Director and Head of Venture Investing, Citi VenturesIan harper, Partner, Deloitte Access EconomicsSteven Münchenberg, CEO, Australian Bankers’ Associationdavid parsons, Emergency Management Adviser, Sydney Waterdeborah Ralston, Executive Director, Australian Centre for Financial Studies and Professor of Finance, Monash University dr Norman Swan, Host, The Health Report, ABC Radio National and Tonic on ABC News24Susan Thorp, Professor of Finance and Superannuation, University of Technology SydneyMark Thorpe, Director, QANTAS Superannuation Board, Pilot and ActuaryTim Trumper, Director, QuantiumRob Whelan, CEO and Director, Insurance Council Australia duncan West, Director, Avant Insurance and Lawcover Insurance

* Glenn McGrath appears by arrangement with Saxton Speakers Bureau.

Glenn McGrath

Naomi Edwards

Jacqui Colwell

Ramneek Gupta

Steven Münchenberg

Chris Cuffe

Carol Austin

John Brogden

Mark Thorpe

Duncan West

Deborah Ralston

Ian Harper

David Parsons

Dr Norman Swan

Susan Thorp

Tim Trumper

Rob Whelan


Welcome to 2014, although by the time you will be reading this we will be well and truly into the New Year!

As is the modern way, I have prepared a video outlining my thoughts for 2014 and it can be viewed on the Institute’s website. For those of you more inclined to read than watch, I have outlined some of the key components in this article.

WhERE hAS ThE pRESIdENTIAl AddRESS goNE?Toward the end of last year I had a few people ask me to consider reverting to the previous method of preparing a Presidential Address via a formal paper which would then be presented and discussed at meetings in at least Sydney and Melbourne. I decided against doing so for a handful of reasons:

I was never a great reader of the Presidential Addresses and my understanding has been that a large number of members do not read the address.

Preparing a lengthy document takes considerable time, which is hard to justify spending if it is not going to be widely read.

With an annual rotation of President it is important for each President to support and enhance the long-term strategy set by Council. It is my view that an annual change in direction to accommodate the interests of the current President is far from useful.

A transcript of this video is available and this can act as a quasi-Presidential Address but will be more useful when combined with the Institute’s strategic intent.

Meetings with the President are held in most capital cities and in some centres in Asia. There is time at

those meetings for members to discuss the issues I’ll raise later, as well as to discuss any other issues that members are interested in. Thus, the lack of a formal written document does not prevent members from discussing and debating issues facing the Institute.

If you feel strongly about the Presidential Address issue then let me know. If there is sufficient member demand then future Presidents will feel more inclined to prepare a formal paper.

WhAT’S oN CoUNCIl’S ACTIoN lIST?We have achieved quite a lot in recent years maintaining the high regard with which the actuarial profession is held and continually ranking highly as one of the best careers in the world.

Nevertheless, a number of people have highlighted issues facing the profession such as pressure on the number of roles in traditional areas, competition from other professions and the need for globally accepted skills.

Council’s current strategic intent was set with these issues in mind and it contains three elements:

to enhance the brand of actuary and the reputation of the Institute;

to sustain and develop the actuarial profession; and to sustain and develop the Institute’s business.

Council is currently reviewing the Institute’s mission statement and, upon completion, will revisit the strategic intent to ensure it aligns with the mission (to the extent that they change from our current statement).

At the same time, a taskforce will review the governance processes of the Institute, which will include consideration of the manner in which members are elected to Council as well as the term and election of Presidents.

These reviews need member input and will involve extensive communication with members.

There are also a range of initiatives underway to fulfil our current strategic intent and it is these that our new CEO, David Bell, will be focused on.

These include the ‘See What We See’ marketing campaign, continuing development in our education and CPD program and exploring ways to provide better services to non-Sydney members. David will, of course, need to manage these along with the day-to-day running of HQ and support of Council.

Further, there are a range of key areas that we need to address in 2014:

Education – A fundamental review of the education requirements of an actuary has commenced, led by our Senior Vice-President, Estelle Pearson.

president’s Column

A Significant year Ahead...


Overseas members – To date we have not defined our strategy well in relation to members outside of Australia and with about 25% of our members now in that category it is important that we do.

Big data and data analytics – Actuaries have the core skills needed to extract usable information from the masses of data that are now available to pretty much any organisation. We need to be able to position the brand of actuary such that purchasers of data analytics solutions see actuaries as the logical choice.

Banking – We now have a number of actuaries working in traditional banking roles and we are working with the South African Society on developing a Part III banking subject.

Risk management – Whilst we have made some progress in this area we still have work to do to establish ourselves as recognised risk managers across a broad range of areas.

Longevity – Much has been said about the longevity issue but not a lot has been done. There is a lot more that actuaries can contribute and we should continue to drive the debate.

WhAT AM I goINg To do AS pRESIdENT?As President I see my role as one of chairing the Council and ensuring, as far as possible, that Council is able to set, guide and monitor the strategy for the successful future of the profession. I do not have a particular agenda and

will see success as being a year in which Council works as a team to enhance the status of the profession and to ensure that the interests and needs of the broad range of members are served.

It is important to ensure that we are part of the global profession and we will be continuing to consider how we most effectively take part in the various international forums, particularly given the financial cost involved in us attending overseas conferences and meetings.

I am expecting a very busy year representing the Institute and I look forward to meeting many members who I have not had the opportunity to meet before. In addition, I look forward to your feedback throughout the year as we continue to strive to improve the services to members and the standing of the profession.

fINAlly, A bIg ThANk yoU!I would like to finish by thanking two people who will be stepping back from Institute work somewhat in 2014 – John Newman and Melinda Howes. I spent five years on Council with John, he has always acted in the best interests of the profession and as President he initiated the campaign to promote the profession externally. As CEO of the Institute Melinda exhibited great passion and enthusiasm and has left the Institute and HQ in a better position than when she started.

I hope you all have a fulfilling and prosperous 2014.

daniel [email protected]

President Daniel Smith addressing the Sydney Fellowship and Graduation Dinner attendees in February 2014.


M y AdvENTURES WITh ThE ACTUARy Greetings and salutations, readers, and welcome back to

In the Margin for 2014. This year, I am going to share with you an unusual experience that happened to me recently. I swear, every word is true – give or take a lie or two.

I was the last one left in the office, stuck working back late on a presentation, when I heard a strange whooshing noise coming from the kitchen. Hoping it was just the television, but fearing the worst, I went to see what it could be. However, my actuarial training had not prepared me in the least for what I found. Parked in the middle of the kitchen was a blue police phone box, much like the ones they had in London in the 1960s.

While I was staring at it, speechless, uncertain of what to do, the door of the box opened and out stepped a strange looking man.

“Hello,” he said. “I’m the Actuary.”“Don’t you mean the Doctor?” I

stammered, once I regained the ability to speak.

“The Doctor? Never heard of him. No, I’m the Actuary. I travel through time and space solving puzzles.”

“How do I know you’re telling the truth?”The Actuary gestured towards the police

box. “Well, firstly, a space and time travelling police box is standing in the middle of your kitchen, which is strong evidence in favour of the whole time and space travel thing, and if you have a puzzle handy, I can prove the puzzle solving part. I have never encountered a puzzle I couldn’t solve.”

I looked around the kitchen and noticed a puzzle that someone had left lying unsolved on one of the tables. “OK,” I said, picking it up and handing it to the Actuary. “Try this one.”

The Actuary studied the puzzle for a few moments and then pulled out a pen. “Oh, this one’s easy.”

Hidden in the following wordsearch are the names of 50 movies that contain numbers in their titles. However, the numbers have been removed, as has the word ‘the’ from any titles beginning with the definite article (e.g. The Lucky One would

appear simply as ‘Lucky’). No sequels have been included and where multiple titles exist that are identical except for the number component (e.g. 88 Minutes and 15 Minutes) only one is counted.

for your chance to win a $50 book voucher, identify all 50 titles, use the remaining letters to create two more titles, and email your solution to: [email protected].

genevieve hayes [email protected]

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

In the Margin

Call for the doctor Actuary

hypERSUdokU ACTuARIES 185 SolUTIoNThe solution to the Hypersudoku puzzle given in Actuaries 185 is:

38 correct answers were submitted. The winner of this month’s prize, selected randomly from among the correct entries, was Alan Wylie, who will receive a $50 book voucher.

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2 5 3 4 6 7 8 9 1

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5 2 8 3 4 9 7 1 6

1 7 4 5 2 6 3 8 9

3 9 6 8 7 1 2 5 4

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ThE SlIppERy SlopE My parents are in their 70s and are starting to do old people stuff like chatting with strangers and stockpiling bars of soap. Can I prevent this from happening to me?

I’m sure that, as I write, some neuroscientist out there is doing ground-breaking research on these important questions. How DO our young person’s brains turn into middle-aged

brains, and then slowly progress into quaint old person brains? Are there genes for crankiness, inflexibility and fear of running out of household goods that are only expressed when we pass a crucial age threshold?

We can see the signs of this mysterious progression all around us.

It’s my contention that everyone over 40 is just a little bit mad…each in our own special way. Some of us are obsessed with things: dietary fibre, grammar, handicrafts, the weather forecast. Some are grumpy in the extreme. Others prattle at length about topics that are of no interest to our listeners. I’ve been involved in some pretty lame conversations myself; last year at a dinner party, six intelligent adults discussed – completely without irony – the reliability and stacking efficiency of a range of brands of dishwashers. (If you are interested in which brand came out on top, get a grip!)

Then there’s the driving. I remember, in my twenties, my personal rule of thumb being ’10 km/h above the speed limit is perfect’. These days, if I’m going as fast as 10 km/h below the speed limit I feel I’m just about hurtling out of control. I’m only a couple of steps away from not being comfortable driving outside my own suburb and needing to get home before dark.

Old folk are great for random compliments. During my youth, aged strangers were constantly popping up from doorways, crossing roads and calling out from their houses to tell me what ‘lovely hair’ I had. This hasn’t happened for many years, but it won’t be long before I’m doing it myself. Once I can no longer stifle the impulses, I’ll be loudly admiring luscious curls on the bus, and telling silly young women in the street to get themselves some sensible shoes.

I see these changes in myself and, basically (sadly?), they don’t bother me. My friends are going the same way, so I don’t feel weird. And we’re all concerned that our occasional difficulty recalling words or names heralds the onset of horrifying dementia.

But there are some habits of REALLY old people that I don’t want to develop. I’m making a list of dos and don’ts for my future ancient self right now. I’ll keep it somewhere handy and start reading it daily at the age of 75 (if I can remember where I put it). The rules so far:1. If you have more than a month’s worth of any household supply,

DO NOT buy more.2. DO NOT show anyone more than 200 of your cruise holiday

photos in one sitting.

3. If you wobble when you walk, just swallow your pride and DO use the walking stick your helpful daughter has bought you.

4. It is OK to buy a ferry ticket without learning anything about the life history of the person who’s selling it to you. If there’s more than one ticket buyer in the line behind you please DO move on.

5. You can get the breakfast things out in the morning – you DO NOT need to set them out the night before.

6. DO NOT say “promise you’ll never put me in a home”. This may lead to your living unsupervised in your own house long after this is a safe option, while your children agonise and argue about whether they can break their promise.

7. If the young folk next door are keeping you awake with their partying, DO NOT complain or call the police unless they have done this more than three times in the last month.

8. DO wear pants with elastic waists – every day, if you like! But DO NOT tuck your top into these pants.

9. DO NOT turn your hearing aid off “to save the batteries”.10. DO obey any instruction from your daughter that starts with “Oh

for god’s sake, Mum, just…”

Who knows whether this list will have any impact at all on 80-year-old me! Perhaps I’ll be happily breaking half the rules, while thinking it was hilarious that I ever thought them reasonable. I might have a good laugh about it with my two younger sisters, who for reasons best known to themselves will keep insisting that they are in fact my two daughters.

I hope that in my doddery years the young people will also follow one important rule: if I’m not doing anyone (including myself) any harm, just smile indulgently and leave me be!

gae Robinson [email protected]

Gae answers serious and not-so-serious questions about life in the office, career, study and coping as an actuary in the real world

Ask gae!

old Enough to Not know better


P ART III RESUlTS SEMESTER 2 2013In Semester 2 2013 the new computer-based exams were used for the first time in General Insurance and Investment Management and Finance subjects, as well as Life Insurance

subjects (which had used the new exams for the previous two semesters).

The overall pass rate for Semester 2 2013 dropped to 35% (including non-Fellows only for C7A ERM, the UK ST1 Heath and Care and ASSA F101 Health Principles subjects). This represents a 6% decrease on the previous semester. Low pass rates in the UK exams contributed to this decrease. The pass rate excluding the UK exams was 39%, which was only a 2% decrease on the previous semester.

The pass rates over the last ten semesters (including C7A for non-Fellows since 2010, the UK ST1 and ASSA F101 exams since 2012) are as follows:

2013 2013 2012 2012 2011 2011 2010 2010 2009 2009 (2) (1) (2) (1) (2) (1) (2) (1) (2) (1)

35% 41% 39% 37% 33% 36% 40% 40% 40% 44%

It was pleasing to see increases in the pass rate on the previous semester in three courses: Course 2B Life Insurance, Course 6B Global Retirement Income Systems and Course 10 Commercial Actuarial Practice. Pass rates dropped for all other courses and it was disappointing to see particularly low pass rates and significant decreases on the previous semester in General Insurance and the UK ERM and Health and Care exams.

Below are the pass rates for each course in Semester 2 2013 compared with the previous four semesters:

Course 2013 2013 2013 2013 2013 (2) (1) (2) (1) (2)

Course 1 Investments n/a n/a 42% 30% 31%

Course 2A life Insurance 42% 52% 33% 33% 20%

Course 2b life Insurance 39% 26% 40% 25% 15%

Course 3A general Insurance 18% 32% 30% 28% 23%

Course 3b general Insurance 27% 35% 38% 38% 31%

Course 5A Investment 51% n/a 57% n/a 62%Management and finance

Course 5b Investment n/a 57% n/a 59% n/aManagement and finance

Course 6A global Retirement n/a 42% n/a 31% n/aIncome Systems

Course 6b global Retirement 41% n/a 21% n/a 63%Income Systems

Course 7A Enterprise Risk 22% 40% 33% 37% 26%Management*

Uk ST1 health and Care 10% 45% 38% 38% n/a

Course 10 Commercial Actuarial 58% 53% 56% 57% 55%practice

* Pass rates for C7A ERM above are for non-Fellows only. The pass rates for Fellows in the C7A ERM subject have been as follows:Semester 2 2013: 6 sat, 2 passed, (33%). Pass rate for all members 39%.Semester 1 2013: 3 sat, 0 passed, (0%). Pass rate for all members 39%.Semester 2 2012: 4 sat, 2 passed, (50%). Pass rate for all members 33%.Semester 1 2012: 6 sat, 4 passed, (67%). Pass rate for all members 39%.Semester 2 2011: 7 sat, 2 passed, (29%). Pass rate for all members 26%.

pASS RATES ANd ExAM CENTRES

Location 2013 2013 2012 2012 2011 (2) (1) (2) (1) (2)

Sydney 34% 41% 37% 34% 35%

Melbourne 31% 38% 38% 45% 36%

other Australian 57% 41% 59% 29% 24%

overseas 35% 47% 36% 30% 21%

It was pleasing to see that the highest pass rate in Semester 1 2013 was in the Overseas category with 47%. The Other Australian category achieved a significantly higher pass rate in Semester 2 2013, as it did in Semester 2 2012. There was no significant difference in the pass rates for Sydney, Melbourne and Overseas categories in Semester 2 2013.

philip latham head of [email protected] Update

latest Results

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high Schools program

Institute HQ has undertaken a review of the previous program to promote the profession to high school students (More than Maths) and is launching the revamped program – Actuarial Studies: Problem Solved.

We want to tell high school students that becoming an Actuary is a brilliant career choice and let them – plus their parents and career advisors – know about the education program, the work that actuaries do, the career opportunities and the benefits of joining such a great profession.

hIgh SChool vISITS

A visit typically involves up to two actuaries – one with several years of experience and the other just starting out in their career. HQ will coordinate the visits, provide a presentation, and handouts for the students and organise the logistics.

gET INvolvEd

Actuarial Studies: Problem Solved will only be launched in NSW in 2014 and will be rolled out across other states from 2015.

If you would like to get involved, email: [email protected].

You can either nominate a particular school or we can talk to you about the high schools we are targeting.


Are you sick of boring old goldfish and furry little rabbits for pets? Why not try some African cichlids for a change. These are indeed flamboyant, hardy and full of character. Not convinced? (How could you not

love these delightful specimens opposite!) Originating from the three great lakes in Africa – Lake Malawi, Lake Tanganiyika and Lake Victoria, these creatures have made it into tanks in many of our homes as pets.

yoU WIll NEEd:1x large glass tank (4ft and above); 1x substrate material (preferably fine crushed coral sand); 1x Aquarium Filter;1x Heater; 1x Air pump with air stone; 1x weekly water changes (1-2 buckets only); many rocks, ceramic pots, slates to create caving structures – Now just add some fish and your cichlid tank should look like the one above.

AUThoR’S oWN ExpERIENCEI have kept and bred these interesting pets for many years now. They are indeed a great alternative to keeping common dogs and cats as pets. Apart from the massive range of colours and species that exist, they are largely territorial creatures. This is makes it very interesting to watch the different behaviours they display, whether they are:• The dominant species establishing balance of power by

claiming their territory (e.g. largest piece of rock in the tank, or entrance of a cave which its mates can take refuge in).

• The male display of dominance over other males.• Their unique mating dance.• The females’ use of their own mouths as egg incubators and

to protect the young, over many weeks.

CURRENT CoUNT5x adult, 30x juvenile Electric Blue5x adult, 15x juvenile Electric Yellow1x adult 6-Bar Frontosa 1x adult Synodontus Eupterus – ‘Whiskers’1x Eastern long-necked turtle1x Crown-tail Siamese fighter – ‘Bubbles’

ben Qin [email protected] at play

African Cichlids

1. Protomelas taeniolatus – Red Empress

3. Labidochromis caeruleus – Electric Yellow

5. Protomelas – Tanzania

7. Cyphotilapia frontosa – known as ‘6-Bar Frontosas’

2. Sciaenochromis fryeri – Electric Blue

4. Protomelas steveni – Taiwan Reef

6. Cyrtocara moorii – Blue Dolphin

Tank view

with Ben QinCichlid aquariums are a great way to spice up your workplace or home. If you are in need of any advice, or in need of helping hand in starting up contact the author.


Welcome to New Members – february 2014

Lucus Hayato ALLERTON ACTAlex ANTONY VICAndre BEDON NSWNaomi Jade CARTER WAElly CHEN NSWSimon CHENG NSWMun Yin CHEONG WAAaron CHONG VICPhilip CHOW NSWCameron James CURKO NSWRohan CURRIE ACTNing DING NSWAlice Catherine EVANS NSWMengxiao FENG VICYining FENG VICKathleen Jane FRASER VICJoshua Robert FREEMAN VICKarno GANGOPADHYAY NSWFei GAO NSWAndrew James GLEESON NSWLiza GONZALEZ-BANUELOS NSWAni GOPAL NSWSamuel Corey GREENUP QLDHoward GU NSWQi GUAN ACTJunliang GUO NSWAlan Khai HOANG NSWYingxin HOU NSWEmily Shu-Mei HUANG VICPriscilla Jie Ling HUANG NSWBrayden David IRVING VICAugustine Thania ISTANTO NSWJohn Wright JONES III NSWJohn KASUKU WAArthur KONG VIC

Divya KUMAR ACTKarina KUSUMO NSWJeffrey KWOK NSWMatthew Fung LAM VICEmily Tzu-Tung LAW NSWKa Yin LAW NSWHye-Rin LEE NSWJessica LEE NSWHan-Bo LI VICHuijie LI NSWJia Jun Johnny LI NSWJing LI NSWQingye LI VICKevin LIAN NSWYi Xian LIM VICSuwen LIU ACTTong LIU NSWMi LU NSWThi Phuong Thuy MAC NSWLisa Marie MORAN NSWMichael Phillip MOUSSA NSWJoey Ka Kit MUI NSWDaniel NEYLAND SASinn-Shun NG NSWJoshua ONG VICWen Lin ONG VICRongbin OU VICYinan PAN NSWMichelle Nina PIGGOTT NSWNeeharika Awadh PRASAD ACTHenry Gunawan PUTRA VICAmanda Louise REES VICDan Qing SHI VICJiawei SONG NSWSu Ann SONG VIC

Joshua Iyn Zhou SOO ACTMatthew STOJANOVIC NSWAnqi SUN NSWWilson SUSANTO ACTDavid Robert SZOMOLNOKI NSWChenxi TANG ACTLizhu TANG NSWVincent Hui Ee TING NSWJared Yuan Wen TOE QLDJenny TRINH QLDDaniel TRUONG NSWJoshua TSEITLIN VICNick Chia Chun WEI NSWYaxin WEN VICErwin WIBOWO VICAda Lo Lam WONG NSWJeffrey Cheuk Hei WONG NSWChengyang WU NSWZhuojun WU NSWDavid Yiquan XIE VICYang XU WAChen YANG VICArian YEGANEH NSWWen Qian YONG NSWXiao Ling YONG NSWTheresa YOU NSWSimiao YU WANeema ZAHEDI NSWCarl Jiwei ZHANG NSWJames ZHANG NSWYaming ZHANG NSWYuanyuan ZHANG VICWilliam ZHENG VICYang ZHENG VICAlice ZHOU VIC

Guan Liang CHEN CanadaShijie CHEN ChinaHyunsik CHOI Korea (S)Kristee Peta HARDACRE New ZealandDarren HO Hong KongAswan JAYA SingaporeLing Keat KANG MalaysiaChun Liang LEE MalaysiaErika Ai-Wei LEE SingaporeZhao LI New Zealand

Shih Yan LIM MalaysiaTeng LIN ChinaNitchan LORCHAIYANAN ThailandChuong Phan Anh LUONG VietnamRam NANDRAJOG MalaysiaChin Yee NG SingaporeGary Teck JOO NG MalaysiaKarthik SANKARALINGAM New ZealandJoanne TAN SingaporeKang Jing TAN Singapore

Jia Chin TEO SingaporeMing Jie THAM SingaporeHau Yip Brian TU Hong KongJonathan David VALOIS New ZealandZheng Lik YEAP MalaysiaDongxue YOU New ZealandZhen ZENG ChinaFanchao ZHANG ChinaRuilin ZHANG China

NEW MEMbERS – AUSTRAlIA

NEW MEMbERS – ovERSEAS

Congratulations


Philip James Ryan, AM, FIA, FCA, FCIS was born in Kew, Victoria, on 9 June 1915. He was baptised, married his wife of 66 years, Mavis, and was

farewelled by his many friends on 14 January 2014 at the local Catholic Church, Sacred Heart. That Church played an integral part in his life both socially and in supporting his lifelong commitment to his faith.

His later school years were spent at Xavier College, Kew. Phil liked music, but was not a good singer. It was suggested he leave the choir, and spend time with the maths master. This led to his love of mathematics.

Initially he worked at the Tax Office, and later at Hutchinson Flour. He studied and completed the accountancy and secretarial courses during these years– becoming a Fellow in both disciplines.

A chance meeting with the maths master, and his love of mathematics, led Phil to commence actuarial studies. He studied part time for many years, as Actuarial examinations were then conducted by correspondence through the Institute of Actuaries in the UK. In one particular year Phil’s papers were sent off for marking but unfortunately the papers were on a ship that was sunk – it was war time after all – and so he had to repeat them the following year!

Phil joined The National Mutual Life Association in 1949, and qualified FIA in 1952. Phil found a real niche at National Mutual (NM) where he was to become Investments Manager, Chief Financial Officer and finally its Assistant General Manager, responsible for all Finance and Investment activities.

Phil also served a term as President of the Insurance Institute of Australia. As was common for Life Office actuaries in that era, Phil was pension fund actuary for several private pension funds (the largest being State Electricity Commission of Victoria). Actuarial students in Investments could earn overtime assisting Phil in that work. They marvelled at his ability to correctly add in his head long columns of pounds, shilling and pence faster than they could with an adding machine. He retired from NM in June 1977.

Phil was an ‘old-style’ investor, seeking sound opportunities with steady income and good long-term growth prospects. (Thankfully, he did not have to deal with the short-term visions of today’s commentators). His motto was “the simpler the better“

for all transactions. He was also a great supporter of companies and business ventures where the principals had strong ethical standards. And when satisfied about the quality of his own managers, he backed their views strongly. He was particularly involved in NM’s thrust into Finance Companies, Merchant Banking and agricultural investments.

While work was very important to Phil, so too was sport. He played many different sports, invariably at a high standard. But it was football that he most enjoyed, playing 52 games for Hawthorn Football Club between 1941-1947. He was the Club’s Best Team Player in 1942.

We can say with some certainty that Phil is the only qualified Actuary to have ever played VFL/AFL football at the highest level.

And not only did he play football, but Phil went on to be one of Hawthorn’s great administrators. He held many roles there culminating in his Presidency from 1968 to 1979. Hawthorn would win three premierships in this period – 1971, 1976, 1978. They had won only one flag in their previous 40 odd years in the VFL.

He was made a Hawthorn Life Member in 1951 and inducted into its Hall of Fame in 2003. He was VFL Vice President for several years and lost out by one vote in 1977 to being elected VFL President.

Phil was a great supporter of charitable enterprises, generously giving his time and expertise to St Vincent’s Hospital, and several Aged Care facilities.

Phil was above all else a family man. He adored his two beautiful daughters, their partners and his five grandchildren, and three great grandchildren.

In his later years Phil was unwell but never complained about his health. He was a man who hated fuss and did not look for praise or reward.

In spite of this, he was awarded a Member of the Order of Australia in 1991. The citation reads “For service to the community and to sport”. It was well deserved as he was a clever, intelligent man, a leader of men, a contributor who was well liked, respected and admired by all. He was a true gentleman, a man of great kindness and integrity, virtues borne from his upbringing but also from his membership of the Institute.

(Previous text supplied by Judi byrne – Phil’s daughter, and Martin Hession and Ian Ferres who worked for Phil at NM.) Following is a separate contribution from Ron McDonald FFA, FIAA who worked with Phil at NM.

phIl RyAN – REMEMbEREd

It’s hard to think of suitable actuarial material to include in an obituary for Actuaries Magazine. Phil Ryan’s could well be headed ‘A very rare Actuary’. Phil was a highly qualified Accountant and

Secretary. Why he decided to undertake the strenuous and then Correspondence course with the Institute in London is far from clear. I don’t think he ever was involved with actuarial work before joining NM. He never attended meetings or functions of the local Institute or its predecessors. Indeed he always claimed to be an Accountant (actuary) rather than an Actuary (accountant).

For a number of years Phil and I had adjoining offices at 447 Collins St. He was an ideal neighbour. Strange as it may seem in today’s world we had little work-related contact regarding his investment responsibilities and my concerns with Superannuation. It was taken for granted that we could rely on each other’s competence.

We both attended NM executive meetings and Board Room lunches. As always he was great company on such occasions, especially with his insights of the VFL. He insisted on drinking beer, regardless of anything else on offer. He started work very early each day and left early to attend to the pressing demands at Hawthorn Football Club where he was a former player.

In his role as President of Hawthorn he was on first name terms and completely ’at home’ with Governors, Premiers, Judges, Bankers and the captains of business and industry, plus the usual management and players of the then Victorian football world. To office colleagues he seemed completely unaware of such ’celebrity‘ status.

At about the time of his retirement there was an election for President of the VFL. Phil and Alan Aylett of North Melbourne were the candidates and received six votes each. Aylett got the nod by some obscure process. NM people felt strongly that this was a gross miscarriage of justice.

Ron Mcdonald

obituaries

philip James Ryan9/6/1915 –7/1/2014


ACAdEMIC bACkgRoUNdGrowing up in Queensland, Lindsay attended Church of England Grammar School in Brisbane where

he played rugby union in the school seconds and became the stroke of the school rowing eight. He was a strong muscular guy who systematically would do weight training each morning following his own carefully constructed routine.

He completed secondary schooling before moving to Melbourne in 1965, where he completed an economics degree at Monash University. Lindsay was conscripted into the Australian army for National Service and after initial training at Puckapunyal in Victoria was selected for an officers’ course. On completing his training he was posted to Canberra as a lieutenant for the remaining 18 months of his service.

While in Canberra he attended ANU and completed his Master’s degree in economics. Following part-time correspondence studies Lindsay gained the London Institute of Actuaries Certificate in Investments in 1975 and eventually qualified as a Fellow of the Institutes of Actuaries in London and Australia in October 1982. Some years later he completed the necessary requirements to become a Certified Financial Planner and was a member of the Financial Planning Association.

CAREERAfter leaving the army, Lindsay joined National Mutual in 1972 before later switching to Sedgwicks (insurance brokers and superannuation consultants).In 1986 he was to become a partner in Financial Synergy where he was the partner specialising in superannuation administration and investment. There he jointly partnered in the establishment of Top Quartile Investment Trust in 1987 (the year of the stock market crash). That background was to become the seed which later lead him into providing financial advice to individuals, particularly those leaving funds that he was administering.

From 1992 to 1995 Lindsay was the Actuarial Consultant to the Tasmanian Government and the public servants’ Retirement Benefits Fund where he was known to provide sound and innovative advice.

In 1995 he joined Mitchell & Co as a Consulting Actuary and Lynken Investments/Counsellors as a Financial Planner. The latter relationship continued until June 2012 when it became necessary for him to transfer to another AFS license holder.

In his earlier career Lindsay was a respected and well liked leader who was appreciated for his care, concern and assistance in his staff’s work. Later in his career he was involved in face to face advising in which his discretion in keeping the confidentiality of his clients’ affairs combined with his sound advice, earned him great respect with all his clients.

pRIvATE lIfE oUTSIdE ThE pRofESSIoN:familyThe eulogies at Lindsay’s memorial service revealed the importance of family to him and the wider Cutler family. He was recognised as the academic one among the five siblings. Together with his wife Ros, they raised four children, two sons and two daughters and were proud grandparents to four grandchildren. Because at work Lindsay was a private person, those eulogies also gave much information not otherwise known to his actuarial colleagues. Some of that is recorded below.

ScoutingLindsay was deeply involved in the scouting movement where not only did he learn basic skills of life and survival but was recognised for his considerable talents and contributions to the movement. In 1963 he was awarded the highest honour of the scouting movement, the Queen Scout Award which was bestowed by the Governor of Queensland. In subsequent years he went on to provide over 20 years of leadership in his local area of Vermont South which was recognised by his being presented with the highly prized Silver Arrowhead award presented by the Governor of Victoria for his outstanding leadership to the scouting movement.

TrekkingIt was about 2005 when Lindsay had a health issue which brought him to recognise that life cannot be taken for granted.

Subsequently he embarked on the first of numerous overseas treks which included the Kokoda Trail (carrying his own 25 kg pack unassisted to personally experience the Australian soldiers’ trials and difficulties) which was by far his most arduous trek.

Other treks included the Inca Trail in Peru, the Annapurna Circuit in Nepal (with daughter Georgie), the Queen Charlotte track in NZ, Mont Blanc in Europe (with son Ben) and Mount Kilimanjaro. His most recent and final adventure was finished just four weeks before his sudden passing which was an eighteen day coast to coast walk across England (with brother Warren/’Rodge’) from west to east, a distance of around 330 kms.

His brother said that in his trekking, he was a person who was at all times in complete control, who followed his detailed notes and directions meticulously. He was careful when it became difficult, he would assist with directions and help when others got into difficulty. He would carefully use his pole to ensure footing ahead was firm, calling on all the resources he had learnt as both an actuary and a queen scout so many years earlier and keeping conversation interesting with his views on world economic problems and what was needed to fix them.

personal AttributesLindsay was recognised as one who prepared and walked his treks the same way he undertook his life. He was highly organised, was a disciplined character who never undertook anything without appropriate preparation. He was practical in his approach to problem solving, meticulous in paying strict attention to detail, never panicked, but remained calm and carefully considered at all times. His protection of those in his care was paramount in his family, his trekking companions and his actuarial and financial advice clients.

He will be greatly missed by his colleagues as well as his wife and family to whom we extend sincere condolences.

ken dance

lindsay Joseph Cutler 30/1/1947 – 18/10/2013


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[email protected] Ahead

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