By Carlos Fuentes
Shiraz Jetha, FSA, CERA, MAAA, is an actuary at the Washington State Office of the Insurance Commissioner. He has been professionally active in a variety of ways: serving as a board member for the Society of Actuaries, chairing the Actuaries Without Borders section of the International Actuarial Association, and speaking at the university of Alberta in Canada and the University of Almaty in Kazakhstan to promote the profession. Shiraz has been session speaker/moderator in Society of Actuaries meetings and has written articles for Contingencies and The Actuary. He served on AAA committees, including enterprise risk management (ERM) and individual and small group health. Shiraz has worked in the U.S., Canada, the U.K. and Kenya. His career includes roles in life, health and nontraditional areas.
Shiraz, thank you for taking the time to speak with us today.
- You have lived and worked in different countries for different companies and in a variety of roles. Can you give us an overview of your career?
There are several facets one could think of in terms of one’s career as an actuary. My view would be these include geography, area of practice, sub-area of practice, employer type—among possibly others. Of the ones I have listed, here is where my background has taken me: Geography: U.K., Canada, U.S., Kenya. Area/sub-area of practice: life insurance, defined benefits pension plans, disability income, health care, enterprise risk management, nontraditional. Sub-areas include product development and pricing, financial reporting and management, risk management, exploring in-depth “risk-scenarios” to enable strategic decisions, microfinance. Employer type: insurance companies, consulting actuary—both employed and self-employed—and regulator.
The different components of each of these facets have shaped me in some form or other. I am grateful for this breadth.
- It is frequently said that diversity of cultures and diversity of points of view enrich our perspective and make us more valuable employees and entrepreneurs. What are your views about the subject? How has your broad experience benefited you as an actuary?
Let me start with my views on diversity. I think it is totally underestimated. I say this because I believe that with proper combination of diverse elements, the “wow” effect of the outcomes is something to behold. It’s like color is suddenly added to an otherwise uncolored analysis. On the other hand, if the elements brought together are “not the right blend,” the effect would be at best neutral and disappointing at worst!
Experiencing diversity is a game changer—so much so that I actively seek to incorporate it in my work, especially projects. The very first time I witnessed the power of diversity was in a product development project in Canada shortly after I become an FSA. My role had top- and bottom-line responsibilities in the individual disability income product line. I found myself working on a high-profile product development project with a team that included actuaries, reinsurers, underwriters, marketing professionals, and internal and external sales executives. Like most actuaries, I had misgivings about the judgment and knowledge of nonactuarial professionals and especially those from the marketing and sales side.
But as the actuaries and sales group worked together, we found ways to build a product with features that the sales group thought were critical to its success but that actuaries felt were too risky for profitability. The end product was way better than what a group of actuaries would have delivered without external input. The memory of that experience (which my boss described as exhilarating!) has stayed with me to this day.
Over time, in every subsequent facet of my career, I look to explore the breadth of my profession by moving to diverse areas of practice (e.g., moving from pension plan work to life to DI to health care, ERM, etc. I find that the types of projects I relish are those that require problem-solving skills in multidisciplinary environments that incorporate several disciplines, such as actuarial science, economics, health care, etc. It is in this type of environment that true personal growth takes place.
- Your background and interests combine the specialized knowledge of the profession with a broad business view, particularly about social welfare and economics. What areas of economics do you find attractive and why?
The areas of economics that interest me, in no particular order, include economic history, monetary theory, macro-econ (around government finance, interest rates, exchange rates and employment dynamics), and behavioral economics. I will try to touch on these, starting with monetary theory. Money is the central aspect of our lives; it is both an essential ingredient in firing up creativity and wonderful progress and at the same time also a cause of abject misery. What is its nature?
I wonder, since money is “the lens” in which financial choices are evaluated, does it oftentimes act as a shackle instead of freeing us up to do more good? This question connects with another of my areas of interest: macro-economics—in particular, trade, exchange rates, interest rates, reserve currency and deficits.
Why economic history? I seem to have a newfound interest in planned economies. As we head into an age of technological disruption in a period of abundance, and depending on how severe the disruption is, I feel the strengths and weaknesses of planned economies may become more and more relevant, assuming we allow our “better nature” to guide us forward.
Lastly, behavioral economics. With more and more data about our consumption “behaviors,” we should be able to model complex economic systems. For example, my sense is that the impact of tariffs on the economy has not been thoroughly explored. Nor have the trade-offs in free trade. In health care, my impression is that we only understand the “disincentive” effects of cost sharing at broad levels. I hope that in time—through understanding behavioral impacts and, consequently, by better modeling outcomes—predictive abilities will become stronger and hence better for decision-making.
- What areas of economics do you believe can be useful to actuaries and why?
I sometimes wonder if the actuarial profession, with all its brainpower and emphasis on evidence, can help to facilitate in-depth conversations on important societal issues, such as inequality. For example, what would a world with extreme inequality look like—or what have they looked like in the not-so-distant past? Why is it good (or is it?) to reduce inequality?
The focus in the profession to contribute only when you are “qualified to” is perhaps limiting. It may be the reason why as a profession we are relatively small and largely unknown.
I would suggest that perhaps there is a way to participate in the intellectual development of areas in which we are not “qualified,” even if only as thought facilitators.
- How do you see social insurance (Medicaid, Social Security, etc.) evolving in the U.S.?
Unfortunately, I am not optimistic; I hope I am wrong.
- Are there any lessons to be learned from other counties?
Certainly! In the area of national health systems. I feel the U.S. actuarial profession could take a bigger role in discussing national health systems while retaining its “neutrality.”
For example, if the U.S. reportedly spends 18 percent of its GDP on health and the next country spends 12 percent, first, do we know whether these spending comparisons are consistent in what is included as health care in both countries? Is the government subsidization of employer-sponsored health care correctly accounted for (e.g., through deductibility of contributions)? What type of services are included in these figures (e.g., mental health, drugs, long-term care)? Is there a way to set our system up so that health care spending could reach 15 percent without compromising quality (which raises the question: What is “quality”?) The country could benefit from a fact-based analysis of the type actuaries can produce.
Carlos Fuentes, FSA, MAAA, is president at Axiom Actuarial Consulting. He can be reached at carlos-fuentes@axiom-actuarial.com.