Tradecraft AnGie WAcHHoLZ and mAriAnne WestPHAL
market update: risk managers
Actuaries have always been
involved in corporate risk management. As risk management strategies
and operations expand, actuaries
are assuming more dominant
roles in those positions on both
the domestic and international
levels. Rating agencies, brokers, and insurers are all hiring
actuaries to help mitigate and understand their risk.
GIven The TUMULTUoUS eConoMy, managing risk has become
a valuable tool for companies interested in both controlling financial
strains and understanding their impact on the global marketplace.
Life insurance
The life insurance industry was affected by the economic downturn,
with a consequent contraction
in employment opportunities in
both insurance and consulting.
As a result, many consulting firms
experienced layoffs as insurance
companies moved more of their
needs in-house. Now that the market is starting to recover, insurance
companies are turning again to consulting firms. Insurance companies know
that they need a broad understanding of
risk to examine and put the needed tools
in place for long-term and effective risk
management. Furthermore, it’s often the
big-picture view that a consultant can
bring to the table that will allow insurance companies to rebound.
One of the most aggressive rebounds
we’ve seen is in the creation of annuity roles on the insurance side. This
could be viewed as a way for insurance
companies to get back in the game.
Certainly, insurance companies seem
to view annuity work as a catalyst for
moving into a more carefully balanced
focus on risk management.
In addition, there’s been an increase
in the number of nontraditional positions in life insurance in which an
actuarial/risk background is an asset,
including positions that deal with credit,
capital market risk mitigation, and new
product risk. The reason for this is that
an actuarial skill set offers a broad understanding of both business trends and
comprehensive risk. The integration of
actuarial and business strategy can be
further seen in risk management initiatives within insurance companies, the
financial services industry, and rating
agencies, to name a few.
Pensions
In the wake of the passage of the 2006
Pension Protection Act (PPA), the role
of the pension actuary began to change
dramatically. According to Salman Hami-dani, most recently the associate director
72 continGencies JUL | AUG. 10
and asset liability strategist at UBS in
Chicago, PPA reflects a fundamental shift
in the way that risk relates to pensions.
This has manifested itself in a decrease in traditional pension consulting
positions and an increase in pension
roles that are more closely linked
with investment banks. Because
traditional pension plans are disappearing at private employers,
there’s less of a reason for companies to build a pipeline of junior-level
actuaries with this set of skills.
health insurance
Given the recent passage of health
care reform, the need to manage risk
on the health side has grown. Many
future trends in health risk management will be dependent on political
decisions that are still being made.
But there seems to be a general consensus that health care costs are
unsustainable. Actuaries can play a
significant role in solving this issue
by finding new ways to manage and
price health risk.
In terms of hiring, many companies employing health actuaries in
traditional roles are waiting to see what
happens with reform before they commit to their hiring strategies. But many
of these same companies believe that reform could elicit a heightened demand
for actuarial work as actuaries become
more involved in areas, such as provider reimbursement, that historically have
fallen outside of the direct responsibility of actuarial departments. Real reform
clearly can’t take place without actuarial
analysis and opinion.
Another growth area for actuaries
on the health side is medical economics
and analytics. According to April Choi,
principal and consulting actuary at KAC
Group LLC in Los Angeles, actuaries
can add value by working with health
economists and health care providers
anSon LIa W / IMaGeS.CoM
