David K. Sandberg, FSA 2001, MAAA, CERA, FCA
Charles Rivers Associates
Consultant, Risk & Regulatory Consulting Advisor
Brief Description of the type of work you currently do:
Consulting and Expert Witness Work
Primary Area of Practice:
Life and Risk Management
Other Areas of Practice/Interests:
InsurTech, Financial Reporting, International Issues, Research, Regulation of Insurance
Provide a brief description of your professional background and the type of work you have performed and explain how these experiences have prepared you as an Elected Board Member and qualify you in carrying out the strategic direction of the SOA.
I was a vice president at Allianz Life of North America and left there in 2018 after 19 years. I was the Appointed Actuary at LifeUSA, a major writer of deferred and equity indexed annuities, where I worked from 1989 until LifeUSA’s purchase by Allianz Life in 1999. Additional responsibilities at Allianz have included GAAP and statutory reporting, crediting rate and investment strategies, experience analysis, government relations, and reinsurance. From 1983 to 1989 I worked for Lone Star Life Insurance and Southwestern Life Insurance in Dallas, TX, and for Dorth Coombs Insurance Agency in Wichita, KS.
I have been fortunate that my background has included exposure to life, health, and pension practice in corporate settings that have ranged from small and entrepreneurial to a disciplined and growing mid-sized company and finally to a large and diverse organization. Because of this diverse experience, I am familiar with the professional skill sets used in various practice areas and with the varied corporate methods needed to achieve successful outcomes in diverse situations and circumstances. I believe that this background will be useful and necessary due to the expended depth and breadth of the issues being addressed by the SOA Board. We need to both continue traditional services and activities while rethinking new ways to deliver value through our certification and professional development offerings.
Now, as an LLC, I provide consulting services through Charles Rivers Associates and Risk Regulatory Consulting and I am also an advisor to an AI start up, SDRefinery AI. These have been welcome professional opportunities, whether involved in expert witness work, in advising regulators or in helping facilitate the next generation of innovation opportunities for insurance.
Volunteer, Governance and Personal Experience
Describe how your volunteer, governance and personal experiences would strengthen your contributions to the SOA Board, the organization, and strategic plan execution.
My past volunteer experience includes:
- SOA board member
- President of the American Academy of Actuaries
- Member of the Executive Committee of the International Actuarial Association (IAA)
- Trustee for the Actuarial Foundation
- Volunteer committee work for the SOA, Academy, AICPA and IAA.
My extensive experience includes interactions across practice areas, disciplines and international boundaries for 20+ years. My experience has been both as a volunteer as well as with responsibilities to manage volunteer and staff resources on behalf of the profession. I believe this experience will be a great benefit as the SOA continues to assess and inform its strategies to enhance and strengthen our profession. The success of the SOA (and the profession) requires an appropriate and informed governance that engages members, volunteers, staff and leadership of the SOA. And it must also respect and work in parallel with the divergent and convergent goals of our stakeholders and other actuarial and non-actuarial organizations.
Please list your relevant volunteer experience. Please include the name of the organization, your role, and approximate dates.
American Academy of Actuaries
- President Elect, President & Past President - American Academy of Actuaries (Nov 2010-2013)
- Board member of the American Academy of Actuaries (2002-2005)
- Vice-President of Academy’s Life Practice Council and member of its Executive Committee (2005-2007)
- Member of the Data Science & Analytics Committee (2017 – present)
Major individual Academy projects led:
- Unified Valuation System Proposal (1997-2001)
- Academy Presidential Tax Working Group Task Force (2007-2008)
- 2010 Academy Presidential Task Force on Public Pension Plans
International Actuarial Association
- Chair of the Insurance Regulation Committee (2012-2018)
- Member of the IAA Executive Committee (2012-2016)
- Member of Financial Risk Committee (2009 - 2017)
- Member of Systemic Risk Task Force (2009-2011)
- Participated in a joint IAA/ACLI research project on accounting for insurance contracts, including its presentation to the IASB. (Circa 2002-2005)
Other Volunteer Roles
- SOA Board Member (Oct 2014 – present)
- Actuarial Standards Board ERM Committee member (2010 – 2019)
- Member of the Advisory Group (National Institute for Financial Research) that proposed the concept of the Office of Financial Research to be included in the Dodd-Frank Bill
- Advisory Panel for SOA’s 20/20 Initiative on Retirement programs (2009-2010)
- SOA’s Committee on Aging and Longevity (2008 – present)
- Trustee Actuarial Foundation (2012-2015)
Ethics and Transparency
Ethics and transparency are essential to professional practice and service on the board. Discuss ethics and transparency challenges you might expect to face in your role as elected board member, and describe how you would approach these challenges.
I distinguish clear cut issues of right and wrong (such as fraud or deceit) which are different from ethics. Ethics includes the discipline of a transparent, thoughtful, and reasoned approach when an issue involves deciding between two worthwhile and/or imperfect objectives which are in conflict with each other. Proper transparency includes being willing to consider and note that each position has value as well as costs (and/or risks) for its adoption. Ethics combined with transparency means that when issues are not black and right, it is more important that the right process has been followed—that is, determining if diverse views have been actively sought out and to ensure that the rationale for the ultimate decision is communicated (or documented) to express how the decider legitimately heard and considered the alternatives. This also creates accountability and transparency for the key assumptions that went into the decision.
I have followed this ethics guideline in leading or working on public policy projects and in managing professional committees. As the SOA continues to lead and make decisions on issues important to the future and relevance of our profession, it is essential the board and leadership apply this in our communications and deliberations.
As you review the responsibilities of the President-Elect job description, the 2017-2021 strategic plan and 2019 initiatives, describe how you will work together with the officers, board members, committee chairs, volunteers, executive director, and staff to fulfill your presidential responsibilities and advance the direction of SOA.
Background – The Challenge
The initiatives in the 2017-2021 strategic plan require interdependent solutions to ensure the profession is prepared for a future that will change more quickly and dramatically than it has historically, and in ways that may be hard to anticipate. Both individuals and the SOA itself will need to adapt new tools and approaches in order to respond appropriately to changing social and economic environments. To position actuaries to remain relevant and to take advantage of new opportunities will require enhancing our ability to communicate and apply the thinking of others who are not actuaries and who may be the “smartest in the room” It also means that our major initiatives cannot be pursued in a silo fashion.
The Way Forward
I will support and encourage the current dynamic and forward-looking engagement of the Board and staff. I will also continue my personal engagement to assess how to use AI and big data to manage uncertainty through actuarial leadership. We already have good and sound processes in place and we have a staff that are intellectually engaged and leading in a collaborative and transparent effort to assess and inform as to our options and opportunities. Given that we have a multi-dimensional Rubik’s cube challenge to align Professional Development, Long Term Growth, Certification/Credentialing and the International scope of our members we will need to enhance the input and discussion between the Board, Section Leaders, Committee Chairs and their members so all can appreciate the window for change that is before us. A window which, due to Co-Vid, is already in a reactive mode. But thanks to our prior and continued proactive efforts may well be folded into and help accelerate our agility to move forward.
Describe a recent situation where you have facilitated a diverse group of people in moving a significant project to the next stage of completion.
I will share two experiences. The first one is not so recent, but is far more complex and extensive. Back in 1998 or 99, while still an ASA, I was asked to chair an interdisciplinary Academy Committee to propose a Unified Valuation System to the NAIC. This was a controversial project eliciting concerns from P&C actuaries, mutual companies, small companies and regulators. Step one was to define an ideal set of principles which we recommended to the NAIC and which they politely declined. At that point, we “rebranded” the project as the Principle Based Reserve effort led by the Life Practice Council. Over a 10-year period, that effort, with the engagement of over one hundred committed volunteers, was able to address all the major objections and led to the core of what became accepted and legally adopted in the last few years as PBR. The issues resolved included the use of company experience, updated mortality tables, IRS tax requirements, minimum floors and many others.
The second project occurred at the IAA when I chaired the Insurance Regulation Committee. It started as a brainstorm on how to supplement the IAA “Blue Book” (published 2004). Over time it developed into a comprehensive effort to compile high quality content on the diverse tools used to manage insurance risk beyond just the capital assessment approach defined in the Blue Book. We were able to recruit, not only expert authors, but high-quality reviewers of the papers and to lay the groundwork for a sustainable staff and volunteer process to maintain and update the content of the Risk Book, work which is still ongoing. (https://www.actuaries.org/iaa/IAA/Publications/iaa_riskbook/IAA/Publications/risk_book.aspx?hkey=1bb7bce0-2c43-41df-9956-98d68ca45ce4.)
In your presidential role you will act as an ambassador for SOA, its members, and the profession. Provide examples of how you would fulfill this responsibility during your term of office and describe a recent situation in which you have successfully acted as an ambassador for an organization or institution.
I intend to extend, as possible and appropriate, the ambassador role to the members of the SOA Board and other key volunteers, whether in our internal interactions or how we present to a broader public. We are a diverse profession that is strengthened as we see and hear of the diversity of our members whether it be by age, gender, race, geography or career path. Success as an ambassador means the ability to express your priorities clearly and to bridge gaps that can resonate with others and that you are able to appreciate and understand their views, challenges and their own sense of mission. Too often I see people view diversity (and competition) as threats that can lead to an either/or, defensive, approach instead of an inclusive both/and approach.
My two trips to India for the SOA board the last two years led me to see new and innovative ways we can contribute to the growth of the SOA, while respecting and benefiting from the local actuarial engagement already there - whether it be with universities, students, employers, regulators or the Indian actuaries and their organization.
We need to consider that with our increased identity as an international organization, our major strategic external relationships include national (and the other international) organizations – I am quite familiar with the Executive Directors at the Academy, the CIA, CAS, IAA and well acquainted over many years with many of their leaders. My hope would be to use that perspective to enhance and broaden those relationships across a broader group of our members, volunteers and staff.
What do you see as the future of the profession and the SOA, especially in terms of long-term growth.
20+ years ago actuaries began discussing needed changes in accounting and solvency now just being partially or fully implemented (PBR, Long Duration Contracts, IFRS 17, ORSA, Solvency 2). The core ideas and framework for these originated from within the profession as it digested and included the perspectives of financial economics, risk management and product innovation.
Today the “new kids on the block” are Model Validation, Big Data, Big Picture ERM, Artificial Intelligence and Co-Vid. We will not have the luxury of a 20 year back and forth to assess and adapt to these changes on how risk is pooled, managed and packaged.
Of any profession, actuaries are well suited to take advantage of the changing environment. There are two separate issues. One is the nature of assessing and managing risk whether due to big data, AI, or systemic risk(s). The other major issue is how and if the SOA methods will be impacted to 1) certify actuaries and 2) provide professional development. While I see significant growth opportunities for the profession, they may well require enhancing the flexibility and breadth of our credentialing and ongoing education processes. The current pandemic has already accelerated the Board and staff’s need to innovate and prepare for a possible regime change in how we preform and provide our core functions in the short run. The longer-term questions we will still need to address include:
- As practical engineers, can we ensure safe application of the “asset” of big data and wise extraction of its meaning? And can we do it in a way that extends beyond just insurance?
- Building on our first-class ability to assess qualifications, how much can (or should) we also be providers of training?
- How to energetically and productively engage our growing membership outside of North America?
Collaborative working relationships are essential to the governance function of the SOA Board of Directors, especially as board members work with each other, volunteers, and staff to advance the direction of the SOA. We need both leaders and team members. Describe a situation from either your professional or volunteer experiences that demonstrated where you can be effective in each of these roles.
Successful leaders and team players build productive collaboration as described in the concepts of ethics and transparency I discussed earlier. Three examples of this productive collaboration include:
- Almost 15 years ago I chaired a Task Force at the Academy to assess if Principle Based Reserves could be compatible with US Tax Policy. Until that point many felt they were not. Thanks to the work of this diverse Task Force of actuaries and tax lawyers, the PBR effort was able to proceed with solutions that did not raise unmanageable tax complications.
- Over ten years ago, due to growing concerns and controversy over reporting requirements for public pension plans, I was asked by the American Academy of Actuaries to chair a Task Force on ways to improve the reporting of public pension plans. The Task Force was deliberately chosen to represent practitioners with diverse views and backgrounds. Over the course of the 18 months or so we worked on this project, we ended up with a work product where all participants were able to sign their names to it. Its content raised and outlined many of the same issues and recommendations later also made by the SOA’s Blue Ribbon Task Force.
- One of my early assignments on the SOA Board was to be part of the committee reviewing relations with other organizations. As someone new to the board, I arrived with a different background and perspective from those who had been previously involved at the SOA. To the credit of the group and its leadership, everyone’s views and insights were respected and solicited so we could make recommendations on how to move from a difficult professional working environment to one that is now more productive. I was grateful to be part of such a process.