Back when I became chair of the section in October, I set as one of our goals for the year: how to involve more actuaries in the Society's research? It has been an interesting few months—I have learned a lot about the Society's research activities that I did not know.
One observation that readers will probably relate to is that the Society's research activities are like its website: difficult to navigate. One of the first things I requested as chair was a list of all society and section-sponsored research. The results are published in this edition of Expanding Horizons, and they make for interesting reading. It is difficult to put your finger on the exact amount of the Society's annual research project funding, although my rough estimate excluding experience studies is approximately $600,000 annually. This includes section-sponsored research and funding of Ph.D. students. I am inclined to think that, in a membership organization with an annual budget of $30 million, 2% devoted to research is a travesty. I hope that our representative on the Board, Jeremy Gold, will argue for a larger allocation of funds in the future. Because, at the end of the day (as Deep Throat said about Watergate) "follow the money." And if there is no money to follow, research will not be encouraged.
I took time to read the list of research projects that the Society is funding, and I have two reactions. One harks back to the first meeting I ever attended at the Institute of Actuaries in Staple Hall, London, in 1976. We first year actuarial students were addressed by the Secretary of the Institute, who made a point that I have kept with me through my career: every actuary, he said, passes all the same exams. So you can be sure that every actuary with whom you come into contact has a common base of technical knowledge. And in those days, there was no specialization in the Institute's examinations, so I was sure that every actuary with whom I worked had basically the same knowledge as I did of Pensions, Life Insurance and General Insurance. Looking at the list of research projects, I can't say the same thing today, and it troubles me. We have a duty, I believe, as a section, to translate the developing knowledge base into terms that can be conveyed to older actuaries like myself, so we can stay abreast of the profession's knowledge base.
The second reaction to the list is more strategic. The society funds and in some cases publishes a certain volume of research each year. However, it appears to me that there is little thought given to the place of the specific research within the wider community of purchasers and users of actuarial services. For example, if we were to show the average insurer the list of current research projects being sponsored by the SOA, how would they react? Would the reaction be: "that's great—that will really help me solve a business problem" or will it be "that's interesting but I don't see an immediate application of the research." We are a profession that is tied to a particular business—insurance and risk management—so we need to think about the users of the research. A related point is that specific research projects do not appear to have "marketing plans" associated with them, so its hardly surprising if particular research doesn't get used. In addition to increasing the funding available for research I will argue that we need to fund specific marketing plans for the results of our research—possibly diverting some of the Actuarial Image campaign funds. While it is nice to publicize attractive, personable actuaries, wouldn't it be more useful in the long run to publicize some of the ground-breaking research that the society has sponsored, and show our audience how actuaries are solving specific problems?
An exception to research that isn't tied to marketing is the Society's comparative risk adjuster study. This study fills a definite need in the health insurance community, and this year will be released in conjunction with the fourth annual Predictive Modeling and Risk Adjustment Seminar that the SOA will be sponsoring in April. The seminar draws between 100 and 150 practitioners each year to hear what is new in the field, and is a great example of an application of the Hollywood marketing maxim: book-movie-aftermarket.
One thing we can also do immediately is support the Annual Actuarial Research Conference at Robert Morris University in Pittsburgh. A great program, including two international speakers, is planned, and the best of our current research will be on show. As a meeting, it's a bargain ($125 if you book early). Pittsburgh is a delightful city and the planning committee has planned social events that include a boat cruise on the three rivers that meet in Pittsburgh. I urge you all to attend.
Some of the changes discussed above can only be made at the Board of Governors level, but in the meantime, we have the opportunity, as a section to influence the direction of the discussion. I ask you to join me in a debate around how the Society funds, selects and promotes its research. Ultimately, this is the way we can really promote the image of the actuarial profession.