February 2013

Entrepreneurial Actuaries in Action -- A Global Perspective of the Health Insurance Market

ind-con-frank-michaelby Michael L. Frank

Genesis of the Journey
While serving as president of the Actuarial Society of Greater New York, a student at Bard College contacted me to request an information session at her school about the actuarial profession. This request triggered visits to five college campuses including Bard, Columbia, St. John’s, SUNY-Albany and Vassar.

Columbia University, one of the largest actuarial programs in the group, offered my business partner, Don Rusconi, and me the opportunity to develop and teach a course that gives a flavor of what is like to work as a health actuary or a health insurance professional (e.g., chief financial officer, insurance broker, venture capitalist), and that is relevant to resumes as well as future careers.

Course “Blueprint”
In January 2012, we developed a course called “A Global Perspective of the Health Insurance Market” to provide an overview of the industry. The course covered broad topics such as insurance products, delivery systems (domestic and international), health care reform, reinsurance and capital markets, and specific subjects like how publicly traded HMOs manage business, how rating agencies evaluate companies, the role of insurance/reinsurance brokers, consulting on international health care systems, politics and its relationship to local health insurance, actuarial standards of practice, traditional health actuarial projects and professionalism. Health care reform was addressed globally, covering topics relevant to the United States and 12 additional countries. The course was designed to increase the students’ chances of reaching C-Suite roles (e.g., CEO, CFO, COO).

The instructors developed some of the teaching material as the classes progressed, while observing how much students could absorb over a short period of time (2.5 hours per week for 14 weeks). Rather than relying on a traditional textbook, the course was based on a PowerPoint presentation and 200-plus recent health industry articles, but without losing sight of topics in other actuarial areas of practice. The objective was to help students hit the ground running on their first job. Students also strengthened their resumes with research projects and experience, which is critical in a difficult job market.

Students Contributed to the Course
Columbia’s multicultural class of 42 graduate students, 39 of which were international, provided a unique learning opportunity. Many students contributed to the course design by asking questions that became the focal points of future lessons and by conducting research projects. For example, students coordinated a survey on health care reform, which not only was used for teaching the course but it also served as a resource to several insurance industry task forces. (Click here for details).

Many students published research documents. They worked in teams and made presentations that often took them out of their comfort zones, exposing them to public speaking, project management and team building. Students were given homework assignments, asked to analyze and criticize reading materials, and required to give reasoned opinions on the topics they found relevant. This effort ultimately became the framework for future research projects and class assignments. Students also participated in traditional actuarial projects such as pricing, reserving and underwriting.

International Health Care Systems
For the final examination, teams of three to four students researched the health care system of different countries, wrote papers (many of which were published), and gave 20-30 minute presentations. The 11 countries selected were Australia, Brazil, Canada, France, Germany, India, Japan, Singapore, South Korea, Sweden, and the United Kingdom. Students reached out to their fellow students in other teams for feedback and peer review. Based on their own critiques, they developed the guidelines and framework for research presentations. Students used videos, humor, graphics, foreign language and social media to teach the class.

Students contacted international actuaries as part of their research project. For example, the Brazil team contacted Ronald Poon-Affat, FSA, a practicing actuary at RGA Re in Brazil. We encouraged this activity to expand the students’ knowledge and to provide networking opportunities. The international research project was a success. Although the research done by the students has limitations (they are not experienced practitioners), their enthusiasm and interest to contribute to the profession was positive and a lot was learned. To access the students’ work, click here.

At the end of the course, students learned the day-to-day role of a health care actuary (technical aspects of the job) and a health care executive (e.g., CFO). The experience was positive for both students and instructors. Several students volunteered to become future teacher assistants, while others secured internships or full-time employment through the networking that took place during the course.

Students learned first-hand about relevant aspects of local health insurance, knowledge that many actuaries gain only after years of experience. They also studied how government and health care systems interact. Some students observed that although other countries are ranked higher than the U.S. system in controlling costs, they also had longer waiting periods and more restricted access to care than the U.S. system.

The Road Ahead
This course continued in January 2013. It covered the extremely important topic of health insurance exchanges but its scope remained international. The instructors (Michael Frank and Donald Rusconi) taught a similar course in the Dominican Republic in October 2012 and they will teach courses in China and Puerto Rico during 2013. We hope that more actuarial practitioners will mentors future actuaries.

Following this course, Columbia University piloted an internship program in the summer of 2012, where practicing actuaries developed projects designed to expose students to relevant experience and research. The impact was positive based on student evaluations, practitioner feedback, and the successful transition into the workforce.

A special thanks to Noor Rajah, program director & actuary at Columbia University, for his assistance in getting this course off the ground and for trusting us with the test pilot. Thanks to Donald Rusconi, VP & CFO at Aquarius Capital for his work in this joint effort. We also want to thank Ronald Poon-Affat for assisting students on the international project and his encouragement to write this article. His participation was very valuable for the course and we hope other actuaries will participate in the future.

Most importantly, a special thanks to the Columbia University graduate students that went on this unchartered course called a “Global Perspective of the Health Insurance Market,” since they made the program go. Visit http://ce.columbia.edu/Actuarial-Science/Student-Work for a full list of student names. Thanks to Weiying Liu, a college student at Bard College, for her email that set this ride in motion.

Michael L. Frank, ASA, FCA, MAAA, is president & actuary, Aquarius Capital and adjunct professor at Columbia University. He may be reached at Michael.Frank@AquariusCapital.com.