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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

#61

Post by decafninja »

lumost wrote: post #40
tfehring wrote: post #22

Earlier quoted context omitted.

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…

I suspect that SWE is becoming a bi-modal field. We often talk about SWE salaries pushing mid-> high six figures, but this is only true for experienced professionals working in very successful companies benefiting from large stock appreciations. If the stock market was falling/flat for a few years SWE comp would not be as high. By definition, most SWEs will not work at Netflix. The current situation of stable, well p…

I suspect the average US "Senior SWE" is lucky to retire after decades of work having broken $200,000 compensation.

For every 20-30-40something FAANG engineer making $300-500k+, there are legions upon legions of SWEs working at IT-as-a-cost-center non-tech companies making a fraction of that amount.

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

#62

Post by duckmysick »

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…

> Health insurance is a pretty terrible product.

What's the alternative?

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

#63

Post by extr »

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…

This is a fantastic summary of everything actuarial science can touch on. I started my career as a junior actuary at a small insurance startup and was fortunate to be able to meaningfully contribute to many of these areas because we didn't have many senior actuaries on staff. It was a lot of fun as a 23-24 year old to be involved in making such important strategic decision making, it made me realize that insurance companies are really fascinating financial objects.

There are definitely downsides as many are mentioning. As you specialize your job does get more narrow and "boring" (unless you climb the management ladder). Many major insurance companies are not headquartered in interesting or fun places to live. At some point I realized that life was not for me, and transitioned my skillset to data science/machine learning to give myself a more varied career.

But there are absolutely interesting problems to be solved in the insurance space, particularly for people with strong communication/business skills in addition to the wherewithal needed to deal with the actual nuts and bolts of the math and analysis.

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

#64

Post by wbl »

romwell wrote: post #59
asdfasgasdgasdg wrote: post #54

Earlier quoted context omitted.

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 r…

Depends on the state. Some have no fault allocation systems to avoid these lawsuits.

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

#65

Post by sheriffofpaddys »

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…

Title insurance is only required, to protect the lender, when you purchase a house using a mortgage. If you choose to buy with cash, you have no obligation to purchase title insurance, but imo you’d be wise to do so.

Similarly, you are only required to have auto insurance for the damage you may cause to others. The only time you are required to insure the value of your car is when you have a loan since the lender is putting up the money/risk.

There are many great examples of when to purchase insurance and many terrible examples (phone insurance comes to mind). I would argue that much of the problem stems from people not being educated on exactly what coverage levels they’re buying.

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

#66

Post by tfehring »

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…

Disclosure: used to be an actuary at an insurance company. I think the general rule is that your insurance will reliably cover the things that it explicitly says it covers, but that category may be narrower than you think, so you should read the policy and figure out what your policy does and does not cover.

For example, if you go to a doctor who's not in your health insurer's network, you're probably not covered. In some states, you can buy a "full coverage" (liability + comprehensive + collision) policy with a liability limit of $10k, so if you hit someone with your car and they have more than $10k in medical bills they can sue you for the balance. Your provider network and liability limit will both be spelled out explicitly in your policy documents, and neither concept is really that complicated, but if you don't know about them you could be in for a nasty surprise.

Of course, all of that creates a giant pain in the ass for consumers, and that begs the question, why doesn't anyone just make an insurance policy that covers everything the policyholder thinks is covered? And the answer is that nobody would buy it! It would be more expensive (usually much more expensive) than its competitors, and people are generally very price-sensitive in their insurance purchases, and no one would read the fine print to see what they're actually getting for their money.

P.S. The rabbit hole of stupid insurance regulation runs deep. Texas county mutuals are a fun example. Captive reinsurers are another.

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

#68

Post by gizmo686 »

romwell wrote: post #57
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…

Whats the scam? The insurance company was hired to provide insurance for the other driver. By all accounts they did so. If the other driver had no insurance, your options would have been the same: hope they pay out of good will, or sue them.

The public policy motivation for liability insurance is to protect the lawsuit route. If you sue an uninsured driver and win, you might not be able to collect (getting blood from a stone). But if they have liability insurance you can collect on a judgement.

You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.

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

#69

Post by tfehring »

lumost wrote: post #40
tfehring wrote: post #22

Earlier quoted context omitted.

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…

I suspect that SWE is becoming a bi-modal field. We often talk about SWE salaries pushing mid-> high six figures, but this is only true for experienced professionals working in very successful companies benefiting from large stock appreciations. If the stock market was falling/flat for a few years SWE comp would not be as high. By definition, most SWEs will not work at Netflix. The current situation of stable, well p…

Yeah, that's a factor too. The actuaries had way better salary trajectories than the programmers we worked with when I was at an insurance company in the Midwest.

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

#70

Post by DennisP »

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…

I'm satisfied. I've never had any trouble getting either auto or health insurance to pay out, and I've been a customer for 35 years.

As for title insurance, there's no way I'd buy a house for cash without title insurance to make sure I'll actually own it, and I don't blame the banks for insisting on the same.

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