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The SOA: A Place for Research - Answer to All your Questions About the Research Done by the SOA

The SOA: A Place for Research

Answer to All your Questions About the Research Done by the SOA

By: Bruce Iverson, Jack Luff, Steven Siegel and Ronora Stryker

What springs to mind when you think of places where research is conducted? A sterile laboratory with white coats and mice running around cages? An excavation in an exotic location? Or, perhaps, tens of thousands of miles above Earth on the space shuttle? But, how about 475 North Martingale Road in Schaumburg, Illinois? You might be familiar with that address if you've ever anxiously ripped open an envelope with exam results or paid annual SOA membership dues. Yet, that address, is indeed home to a prodigious amount of research that takes place continually to advance the actuarial profession. After all, the SOA is known as an education and research organization.

The objective of this article is to provide you with an overview of the research mission of the SOA, its inner workings, major efforts, funding and its unique qualities. We hope, once you've finished reading this article, you'll not only equate the SOA with exams, but also research. And most importantly, you'll realize that SOA research is by, for and all about you.


Research has been a cornerstone of the SOA since its inception with early research primarily focused on mortality and morbidity studies. In the early 1990s, activity expanded with the establishment of a dedicated budget for research to support the primary areas of practice.

With this budget, the topics to be explored were intended to cover the wide gamut of actuarial practice, all with the mission to expand knowledge and broaden opportunities for the field. Funding from the dedicated budget was allocated in equal shares to the life, health, finance and retirement systems areas of practice as well as to a special committee dedicated to extending actuarial knowledge through an annual grants competition. Since then, research activities have evolved to support new areas of practice such as Enterprise Risk Management and ideas championed by various SOA sections.

Today's SOA research supports a dynamic research agenda, extending across a wide range of topics and industry needs. Critical to its success is the strong partnership between volunteers and staff to ensure high quality experience studies and projects.

Experience Studies

An experience study is the process whereby data is collected from a number of sources and a report is produced that represents the aggregate of that experience. The data sources are usually insurance companies, or public and private pension plans. Actuarial organizations have been producing experience studies for quite a number of years. In fact, one of the key elements that led to the creation of the Actuarial Society of America in 1889 was the need for an independent body to collect and report upon experience.

Experience studies have been undertaken with respect to the major product lines of insurance companies, as well as for more specialized products and subsidiary benefits. Many studies have been conducted on a recurring basis over an extended period of time. There also have been continuing studies of the experience of public and private pension plans. These studies were published in the printed Transactions, Reports of the Society from 1949 through the mid–1990s. Recent studies have been published in electronic form on the Society's Web site.

Intercompany reports of experience are considered a proxy for the state of the industry with companies using these results to benchmark their own experience. To facilitate this process and to serve as a benchmark for future studies, experience basic tables are created from time to time. These tables smooth out the irregularities within the experience reports, but still emphasize the inherent fit to the underlying experience. The 1975–80 Basic Tables for individual life insurance and the 1975–79 Group Life tables served this purpose for quite a number of years and have only recently been replaced.

In conjunction with the American Academy of Actuaries, the data associated with an experience study periodically serves as the basis for the creation of more formal tables at the request of various government regulatory bodies. The CSO tables for individual life insurance are a prime example of this purpose. They were created at the request of the National Association of Insurance Commissioners (NAIC) and the association of state insurance department officials. Similarly, a series of pension tables have been created to serve the needs of primarily federal government regulators of pension plans. Tables based on the individual and group annuity experience of insurance companies have also been created and used for both purposes.

A similar process has motivated the most significant current experience study of the Society, the Preferred Mortality Study. This represents one of the largest studies ever undertaken by the Society. A motivating factor for the study is that in recent years insurance companies have extended their risk selection paradigm to include the classification of applicants into one or more preferred classes. The 2001 CSO Table does not include this distinction, but insurance regulators are interested in extending the reserve process to include it. The most recent Individual Life experience study was expanded to collect data regarding risk classes. This data is being used to create a set of Preferred Mortality tables for valuation purposes.

A relatively recent experience related activity is that of mortality and underwriting surveys. In a survey, insurance company practice with respect to a particular activity is collected and a report is produced that reflects the variations in company practice. These surveys are quite focused and address different facets of insurance company operations. Two recent surveys addressed mortality table construction and older age underwriting practices.

Since the 1920s, the Society of Actuaries has worked with an association of medical directors on experience studies relating to various medical conditions. The Build and Blood Pressure studies are probably the most well–known of these efforts. This work has been continued by a joint committee of actuaries, medical directors and underwriters. It primarily addresses experience on life insurance policies when an impairment was identified in the underwriting process.

Older experience studies requested companies to submit their data in a specific summarized form. More recent experience studies have requested the data in a more elemental form, usually representing a coverage unit (policy, certificate, etc.). This has allowed companies more flexibility in their contributions. However, it has added significantly to the work involved in processing data for a study, both in terms of validating the data and of summarizing the data for a report. From a data volume perspective, it has resulted in tens of millions of data records for major studies as well as data records in the millions for most minor studies.

Traditionally, within experience study reports, committees always presented exhibits summarizing experience by appropriate major categories as well as cross tabs anticipated to be of interest. In recent years, product variations have become more significant, making this presentation more difficult, both in terms of identification of cross tabs of interest and keeping the report to a reasonable size. As a result, committees are now including Excel pivot tables with most reports. These allow readers to examine the experience in much more detail than had been previously possible.

Topical Research Studies

With experience studies providing the original foundation for Society of Actuaries research, activity later expanded to address emerging needs and the latest developments impacting the profession through what are known as "topical research studies." Topical research studies are initiated on a project–by–project basis and are primarily intended to advance knowledge in a particular area of practice as well as produce tools such as special software that can help practitioners in their daily responsibilities. In addition to their primary mission, a number of these research studies have interest beyond the actuarial profession, providing important information for the public at large. Oftentimes, these studies will be showcased in leading mainstream media such as The Wall Street Journal and CNN.

Topical research studies differ from experience studies in that they are normally conducted on a one–time basis as opposed to periodically. However, there is an important relationship between topical research and experience studies in that many eventual experience studies were originally established through an idea explored in a topical research study.

As can be inferred from the above description, topical research studies can be roughly categorized into those studies that have primarily actuarial interest and those that have interest beyond the profession. Among recently completed studies that appeal to an actuarial audience, some significant ones include:

  • A company survey on post level premium period "shock lapse" for individual level premium term life insurance products.
  • A report on the possible effects of a flu pandemic on the life insurance industry including development of a software tool to help life insurers quantify its potential claim exposure.
  • A series of tables measuring the impact of Medicare Part D on the long–term retiree pharmacy costs for plan sponsors.
  • An analysis of the impact of reversion taxes on pension plan funding.

Besides efforts that were specifically targeted for actuaries, it is not uncommon for a topical research study with interest beyond the profession, as previously noted, to be featured in the local morning newspaper or network evening newscast. Several noteworthy recent examples include:

  • A landmark study that estimated the medical costs, value of lost wages and other expenses associated with environmental tobacco smoke exposure. Since its release in 2005, this study has garnered a significant amount of press coverage and continues to be a resource for municipalities and others trying to address this potential risk.
  • The third in a series of surveys exploring areas of deficient worker and retiree knowledge of retirement financial risks. This series continues to draw attention to this ever–increasing actuarial and societal concern with survey results reported in The Wall Street Journal, on CNN and in other mainstream media.
  • A number of studies exploring aspects of Enterprise Risk Management (ERM) to propel forward this strategically important initiative of the profession. A highlight was the first ever ERM Symposium Call for Research Papers that resulted in over 20 papers.

In terms of studies currently underway, the SOA has, at any one time, approximately 40 topical research studies in process. The studies in process range all the way from original initiation of an idea to final preparation for publication. Some notable studies currently in process include an analysis of the impact of the International Accounting Standards Board's discussion paper on accounting for insurance liabilities and an evaluation of the accuracy of commonly used methods for estimating IBNR for medical insurance.

Quality Enhancements to Research Efforts

As mentioned elsewhere in this article, during the process towards completion, a study is conducted and overseen through a synergistic partnership of volunteer experts, hired researchers and SOA staff. In the midst of the process, it is often difficult to provide a precise estimate of how long it will take to complete a particular research project. There is a good reason for this. A typical project may take time because the SOA uses a careful approach that purposefully involves topic experts representing a diverse mix of practitioners. Care is taken in assembling a well–suited team of leading experts to oversee the study and challenge the researchers to produce as high quality work as possible. The recruitment for team members to oversee the study is not limited to just experts within the actuarial profession. Based on the subject matter, professionals from other disciplines such as underwriters, physicians, economists and scientists, to name a few, may be needed to ensure the best end–product. Of course, this also results in a more time–consuming process. But, it is well–worth the additional time to produce high quality, more meaningful research.

Research Selection Process and Funding

Knowing the mission of SOA research and the framework in which it is conducted, it is reasonable to ask how exactly projects are considered for initiation and awarding of funding. Primarily, the selection process involves a number of research committees that are dedicated to the investigation and selection of appropriate projects. The research committees seek out ideas that identify the developing needs of the actuarial profession. Research ideas can originate from an SOA Section, an individual member, the Board of Governors, an outside entity such as the AAA, NAIC, LIMRA, ACLI, Treasury Department or other research stakeholder that would benefit from the knowledge that would be gained from the results of the effort.

Overall, the amount available for the SOA to spend on research is determined by an annual budget. In addition to the amounts the SOA contributes, research funding is supplemented by SOA Sections, the Actuarial Foundation, insurance industry groups and other entities that are interested in research. Specifically, funding for a particular project begins with research committee consensus around the worthiness of an idea and an estimate of its cost. Once this estimate is determined, a Request for Proposal (RFP) is developed and issued with potential researchers bidding for the project. Another approach for selecting research projects is through the annual Individual Grants Competition sponsored by the Committee on Knowledge Extension Research (CKER) and the AERF Committee of the Actuarial Foundation. Research grants are awarded for the best ideas submitted each year.

Funding for topical research projects typically ranges from $5,000–$50,000, while an experience study may cost $75,000–$300,000. Experience studies are more expensive because they usually involve a great deal of labor to process the voluminous data that serves as the basis for the final report.


As mentioned in the introduction to this article, SOA research is really by, for and all about you–whether as a volunteer helping to oversee a project, as the researcher hired to conduct a project, as the champion of an idea or even just as a reader of the final report. We hope this article has piqued your interest and you will consider becoming involved in any way you're comfortable–feel free to contact any of the authors of this article.

Bruce Iverson is managing director of actuarial research at the SOA.

Jack Luff is experience studies actuary at the SOA.

Steven Siegel is research actuary at the SOA.

Ronora Stryker is research actuary at the SOA.