Practitioners Debate Research at ARC

Practitioners Debate Research at ARC

By Ian Duncan

A distinguished panel of practitioners gathered at the 42nd Actuarial Research Conference (ARC) at Robert Morris University (RMU), Pittsburgh PA on Aug. 10th to discuss actuarial research and the role of the practitioner.

The panel consisted of Steve Craighead (life insurance), Jeremy Gold (pensions), Jeff Beckley (life insurance) Jim Toole (health) and Tom Edwalds (life and reinsurance). I moderated the panel.

To start the discussion I made the following observation about actuarial research: in my area of practice (health), non–actuaries are extremely active in research. Doctors, even those that see patients on a regular basis, often conduct research. Other professionals within health care companies (epidemiologists, pharmacists, and others) often conduct and publish research. Sometimes this research is funded by companies. Why is it, I asked, that actuaries are not represented within health care research? The audience suggested some of the usual reasons, such as the desire by companies to maintain their intellectual property, the difficulty finding time to conduct research, and lack of funding. There were some new suggestions, such as the tendency for business to produce new, stimulating challenges continuously (making it difficult to write–up and publish findings).

What then, made our panel different? All are published researchers who are also full–time practitioners. What makes them different? A couple of common themes emerged as the practitioners described their experiences:

  • Passion. Almost without exception, the members of the panel are passionate about their research. They want to know the answers to questions, or to solve an actuarial problem.
  • A role model. Many of our panel have either followed a role model who was a researcher, or have acted as role models for colleagues and students whom they have tried to interest in performing research.
  • For some of our practitioners, research has proven to be a way to "re–invent" themselves after a career change.

During the open discussion some other ideas emerged.

  • Asking bigger questions and changing the paradigm. I was particularly moved by Jeremy's passionate advocacy for the new financial economics in pensions. Jeremy's presentation deserves its own article, but the themes I took away included the need to add to the traditional (mathematical) focus of actuarial education and research the insights of economics and markets.
  • The SOA often publishes requests for proposals that draw few responses. This may be because the amount of funding is viewed as inadequate, or it may be that the SOA's RFP's are too narrowly–written to allow researchers methodological flexibility.
  • Excluding Experience Studies, the SOA's research budget is approximately $435,000 in 2007 and is expected to exceed $500,000 in 2008. The research budget had not increased for many years prior to 2007. And, although the Board of Governors has recently increased the research budget allocation, it stands at only 2 percent of the SOA's total budget. For a professional organization that is responsible for the profession's Education and Research to spend only 2 percent of its budget on research is a clear failure in its mission. Increasing the funding alone will not guarantee success, however, as the panel and audience discussion showed.
  • As Jeff Beckley (chair of Committee on Life Insurance Research) indicated, even when funds exist, it appears that the communication of research opportunities to potentially interested parties is imperfect.

The panel ran out of time before we could address the challenging questions: how do we foster passion among actuaries for research, and how do those of us who could be role models for potential researchers connect with interested actuaries? Forums such as ARC help, but traditionally practitioner representation at ARC is low.

These are small steps toward tackling a significant issue for the profession. At a time when the profession is concerned enough about its future to invest in a public relations campaign to burnish its "image," investment in something with real potential value (research) is to be encouraged by us all.