Report on CUSP, NAAC Meetings
In April 2016, Judy Miller, Karen Smith and I went to Guanajuato, Mexico to attend a couple of actuarial inter-societal meetings.
First, there was a meeting of the Council of U.S. Presidents (CUSP) meeting. CUSP used to be a committee of the American Academy of Actuaries and is currently an informal group for dialogue and exchange of information. Presidents, presidents-elect and executive directors of four of the five U.S. actuarial organizations attended this meeting.
Here are some highlights from the CUSP meeting:
- The President of the SOA, Craig Reynolds, led a presentation regarding Diversity in the Profession. The numbers show that while women are fairly represented in the profession, some other minorities are not. In addition, the outreach needs to be to these groups before college since many students who enter college and are contemplating math-related fields have already chosen their desired profession by then. The Actuarial Foundation does reach out to high schools and some communication with the Actuarial Foundation might be useful.
- The President of the Casualty Actuarial Society (CAS) led a presentation of the reputational risk associated with price optimization. Airlines, for example, use price optimization to price tickets. This price optimization can result in one customer paying a different price than another for essentially the same level of service depending on when the ticket was purchased, who purchased it, etc. Amazon.com uses price optimization, too, which can result in two customers paying different prices for the same merchandise. This mechanism can be applied to fields of insurance, such as auto insurance. Of course, insurance rates are generally regulated by the state insurance commissioners and must be based on cost, while airline ticket prices are unregulated. There can be reputational risks associated with price optimization. Amazon discovered that the hard way when a valued customer checked the price for an item on his computer and on another computer. The cookies on his computer told Amazon that he was a continuing customer and actually wanted to charge him more than the “new” customer on the other computer. Needless to say, this resulted in bad publicity.
- The organizations have increasingly become more interested in the process of the creation of actuarial standards. This is largely due to the efforts of Lynn Young and Karen Smith with CUSP and the Academy’s Selection Committee over the past two years. Since the Academy did not participate in the meeting, the discussion mostly involved how best to work with the Academy and the ASB so as to gain a better understanding of processes.
Second, we attended the North American Actuarial Council (NAAC) meeting. NAAC includes the five U.S. actuarial organizations, the Canadian Institute of Actuaries (CIA) and three Mexican actuarial organizations. NAAC provides an opportunity to network with other actuarial organizations and some NAAC participants join together to do joint research.
Some of my takeaways from the NAAC meeting were:
- A representative from the Caribbean Actuarial Association presented information about the actuaries practicing in the Caribbean, which includes some islands we would consider more as South American islands than part of the Caribbean. The actuaries tend to be members of the SOA, the CIA, or the Netherlands actuarial society. A significant part of their membership is actuarial students. I found it interesting that most of their members attend their annual conference.
- Tom Wildsmith, the President of the Academy; Rob Stapleford, the President of the CIA; and Alberto Elizarraras, representing the three Mexican actuarial organizations, presented brief presentations of how standards are set in the three countries.
- There was a continuation of previous discussions about the proposed revision to International Actuarial Association (IAA) education standards. The IAA recently has decided to review a proposal that the revised education standards would be mandatory minimums for full membership in the IAA. The Academy strongly shared ACOPA’s concern that the proposed standards were too prescriptive to be mandatory and ignored sovereignty of national governments to define who is an actuary in their country, specifically Enrolled Actuaries in the U.S. There seemed to be other organizations that would welcome standards that would exclude many of our members (and members of the Academy and CCA as well) from full membership in the IAA. This is an issue that our International representative Joe Nichols has been on top of, and he is keeping us abreast of the discussions. The IAA has put off discussion of this from their St. Petersburg meeting in May to the South Africa meeting in November. (Note that currently ACOPA only classifies FSPAs as full members of the IAA.)
- The new Cross-Border Discipline Agreement will be signed at the next meeting in the fall. While ACOPA has few actuaries (if any) who practice in both the U.S. and either Canada or Mexico, it is important to understand that actuaries are subject to the standards and discipline rules of the country in which they practice.
- Karen Smith brought the other organizations up to speed on our new Professionalism Committee and our recent success in clearly defining what an actuary is. As you may already know, this committee, headed by Lynn Young, will coordinate our communications with, comments to, and participation in anything related to standards, discipline and more. Those members interested in contributing in any way should contact Lynn. Karen also informed the other organizations of our success regarding the proposed 401(a)(4) regulations. The other organizations might still be leery of advocacy, but we have learned the hard way that those who don’t advocate end up with a knuckle sandwich whether they ask for one or not.
While many of the issues discussed at CUSP and NAAC do not directly relate to the retirement area, ACOPA’s participation in CUSP and NAAC is crucial. First, participating in CUSP and NAAC allows us a chance to build relationships with the leadership of the other actuarial organizations. These relationships are key for us when we have to interact with these organizations on issues that are important for our members, such as standards.
Second, CUSP provides us a forum to discuss certain issues with other organizations that are not international in nature. Without CUSP, no forum would exist for some issues. And third, it is helpful for ACOPA’s leadership to hear what is happening in the broader actuarial practice areas so that we can reflect upon how those trends may impact ACOPA in the future and make ACOPA a better organization and provide more value for our members.