Contingencies Online - January/February 2013

Inside Track lInDa Mallon
Voice of the Profession

tHat sonIC booM You MaY Have HearD in late november was another actuarial 15 minutes of
fame. In response to his article, “From the office of Franz kafka,” which appeared in the november/December
issue of Contingencies, Dan skwire was interviewed on public radio about the interface between insurance
and literature.

Faithful readers of Contingencies will not be surprised by the juxtaposition, as it is a theme that Dan has explored for our benefit for years. Apparently, the rest of the world finally is catching up.

During his segment on American Public Media’s “The Story,”
Dan told interviewer Dick Gordon that he found insurance to be
an endlessly fascinating topic. “I think it’s perceived sometimes
as the most dreary of businesses. But insurance is really about
all of the things that are most important to us in life,” Dan said.
“To me, insurance is about love and life and death and money
and health and all these interesting kinds of things. I think it’s a
natural topic for literature.”
Dan is preaching to the choir as far as I’m concerned, but
that perception of the insurance business as, well, kind of dull
is common. (As is its corollary: Those who work in insurance—
actuaries, for example—are, by extension, uninteresting.)

Dan, with his enthusiasm for discovering the many ways that his avocation as a discerning reader intersects with his vocation as an actuary, is the perfect counterweight to the stereotype. So is Jeff Schuh, who beginning on Page 26 details the results of his New Year’s resolution to whittle down his burgeoning book collection by reading two books a month for a year. Jeff’s list of the books he read throughout 2011 speaks to his eclectic interests but also reveals an intellect that is curious, wide ranging, and receptive to previously unsuspected connections. Imagine, if you will, works by Albert Camus, Anton Chekhov, and Ken Follett jostling for space on the bedside table with Gaston Rebuffat’s Men and the Matterhorn and Bülent Atalay’s Math and the Mona Lisa: The Art and Science of Leonardo da Vinci. Schuh may be an actuary, but he’s not just a bean counter with an eyeshade—or a predictable functionary in a gray flannel suit.

Actuarial creativity can take many forms. As the result of a
December vote by the National Association of Insurance Com-
missioners (NAIC), the prospect for life actuaries to move
beyond standard formulas when calculating risks and reserves
for products has brightened considerably. As Doug Abrahms de-
tails on Page 20, the NAIC’s adoption of the Valuation Manual
is a step toward the establishment of a principle-based reserves
system for calculating insurance company reserves. (It’s also the
culmination of decades of effort by Academy volunteers, work-
ing hand in hand with regulators, to build a better regulatory
mousetrap.)
With the adoption of the Valuation Manual and prior ap-
proval of revisions to the NAIC’s Standard Valuation Law, it is
now up to state legislatures to move the ball forward. Before
principle-based reserving can take effect, it must be approved by
42 jurisdictions that represent states in which at least 75 percent
of direct premiums are written.
As Abrahms writes, state lawmakers and regulators will have
to become comfortable with principle-based reserving before
they approve it. And that will take time and creative energy
on the part of those groups, like the Academy, that have been
leaders in making the case for change. It’s a challenge that the
Academy has embraced and one that you’ll be hearing a lot more
about as we move forward into 2013.
In the meantime, take a few minutes to listen to Dan Skwire
as he talks about Franz Kafka, Jane Austen, insurance, and life.
You may discover, as I did, that in addition to his many other
gifts, Dan has the perfect voice for public radio (he’s about 25
minutes in): http://thestory.org/archive/20121130_The_Story__
The_Bowmaker.mp3/view.