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Want to be an actuary? Odds are, you’ll fail the test

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Re: Want to be an actuary? Odds are, you’ll fail the test

#51

Post by throwawaygh »

d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

> It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates.

This is extraordinarily well understood in the insurance industry. They don't think of it as odd or a dirty secret, at all.

It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable.

> I feel like I’m self insuring when it comes to car and healthcare at least.

This is not at all the case for car insurance! You may be self-insuring the cost of your car, but are you also self-insuring against a lawsuit for damage to the other guy's car?

It's definitely more true than not for healthcare, though. Health insurance is a pretty terrible product.

Re: Want to be an actuary? Odds are, you’ll fail the test

#52

Post by anigbrowl »

908B64B197 wrote: post #19
topkai22 wrote: post #10

Earlier quoted context omitted.

The over use of occupational licensing has some well documented negative effects, see https://www.econlib.org/library/Enc1/OccupationalLicensing.h... for some points about it. However, physical therapists already have an occupational licensing exam. You could argue that it’s not hard enough, as it does have a high pass rate for those who have graduated from a PT university program, but then you start drifting into “n…

> The over use of occupational licensing has some well documented negative effects That's because it's done wrong.

(include your proposal for improvement to get more positive feedback)

Re: Want to be an actuary? Odds are, you’ll fail the test

#54

Post by asdfasgasdgasdg »

d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.

Re: Want to be an actuary? Odds are, you’ll fail the test

#55

Post by gurchik »

d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

> Are there insurance products that people are really satisfied with and trust will pay out in case of event X?

I've always been happy with renter's insurance and have paid it since my first apartment in college. I pay $100/yr for a 50k limit policy. Unlike car insurance I am not required to have this, but I've always considered it to be worth it.

I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it.

Re: Want to be an actuary? Odds are, you’ll fail the test

#56

Post by NikolaNovak »

throwawaygh wrote: post #51
d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

> It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates. This is extraordinarily well understood in the insurance industry. They don't think of it as odd or a dirty secret, at all. It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable. > I fee…

Agreed; but I don't see it as necessarily nefarious (only probably nefarious:)

In a lot of places, most people only wear seatbelt, wear a helmet, don't drink and drive, etc due to laws/regulations (and in others, they'll strongly actively fight these initiatives). We are really really REALLY bad, on average, assessing personal risks. Regulation, in part at least, is us as a society taking look at overall percentages and saying "well let's not do that".

There's a likely apocryphal story about sysadmin who was fired after event he estimated had less than 10% chance of happening, happened. Most of us assume that 50% means it will happen. With most events that insurance covers, most of us are aaaaawful at understanding it can ever happen to us... and we most definitely over-estimate the gracefulness, self-awareness and ownership we'll exhibit if it does help us.

Re: Want to be an actuary? Odds are, you’ll fail the test

#57

Post by romwell »

d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

Side story about how satisfied people can be with the mandated insurance.

I was on coast-to-coast road trip when I got into an accident in TX. Someone was trying to pass me on the left in a turning lane, veered into the incoming lane, and then hit my vehicle's front wheels from the back.

The police ticketed the other driver, and told me that insurance will surely take care of that on my side. "Wow, it's worse than we thought", they said, looking at the footage from the security camera. There were eyewitnesses too.

Now, this was a $6K car (used Fiat 500) that I got specifically for the road trip, intending to resell it in the future. I didn't get comprehensive coverage for it, figuring that if I damage it, welp, it's on me; and if someone else does — that's why we have mandated liability insurance, right?

...I got zero ($0.00, zlich, nada) from the other driver's liability insurance. They informed me that their expertise concluded that the accident was my fault, and, by law, they don't have to abide by the police report.

That's to say, the only way to get any money from them is to sue them, in TX. Figuring that the car is registered in California, and the damage was about $3K, they decided to not pay me anything at all.

Because they can.

Now, if I had comprehensive coverage, they'd be facing my insurance company — because one of those has to pay up. But they're facing me, so I'm welcome to sue or get shafted (with a nice side of gaslighting from the insurance agent, who was very convincing about how I should trust their assessment).

The whole thing is a scam.

Re: Want to be an actuary? Odds are, you’ll fail the test

#58

Post by DwnVoteHoneyPot »

tfehring wrote: post #22
stbtrax wrote: post #3

From experience from a few close friends: Actuarial science is always in the lists of top jobs but it's a terrible career. It's quite limiting and doesn't pay particularly well. The companies are all old and stagnant and the amount of time put in to studying for exams is taxing. It'd be much better ROI to put that time into studying for sw-eng roles. That is, unless you're particularly interested in memorizing math f…

I left the actuarial field for basically the reasons you describe, but the characterization still strikes me as somewhat unfair. Actuaries reliably make significantly above the median US income right out of undergrad, and reliably double that income within a decade, working 40 hours a week, without needing to go to a target school or get an advanced degree. That alone makes it a good career by most objective standard…

A survey I saw said actuaries have high job satisfaction. I had actuary and math colleagues in the risk dept (i was in diff group) and they loved running risk sims, programming, data visualization. In addition to high salary per hour, low stress, no bro-grammer environment or ageism, or shiny new web framework.

Re: Want to be an actuary? Odds are, you’ll fail the test

#59

Post by romwell »

asdfasgasdgasdg wrote: post #54
d136o wrote: post #39

In this [1] interview by Barry Ritholtz, Markel CEO essentially told the origin story of an insurance giant. Basically a family member was a lawmaker, passed a law that drivers of the newly invented cars (maybe horse buggies?) must be insured. They simultaneously started a company that sold insurance. Over time they learned to make money from investing their customers capital. It blew my mind at how candid he was abo…

While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.

Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.

Otherwise, it's just an income-generating scheme for private parties.

Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.

How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.

Re: Want to be an actuary? Odds are, you’ll fail the test

#60

Post by [deleted] »

Cogito wrote: post #44
riskneutral wrote: post #12

Earlier quoted context omitted.

> unless you're particularly interested in memorizing math formulas for insurance calculations Note that the formulas in question are the opposite of interesting formulas. They're just made-up regulatory rules about how much capital an insurance company has to hold in order to sell insurance. Everyone agrees that some amount of capital needs to be held. Everyone, except maybe some of the "actuarial scientists" themse…

A small note, but actuaries do a lot more than capital reserving, and even then the regulatory aspect (while important) is not the only consideration. I am not an actuary, but I have done a lot of actuarial work in a small insurance company, and the work included - pricing (are we under of over charging for this product?) - reinsurance (analysis so we can get a good price, as well as making sure what we sell remains…

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