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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

#231

Post by pyuser583 »

xeRTRex wrote: post #118

One of the most frustrating aspects of the process is that once outside of insurance/insurance-adjacent industries, the credentials are useless. I have my FSA (fellowship of the SOA) and CERA (chartered enterprise risk analyst) from the SOA. I no longer wanted to work in insurance and left for data science. I felt the need to obtain a graduate degree to feel qualified enough for the data science space. My Master's de…

I’ve hear actual certification held out as a decent alternative to requiring a degree for everything.

I’ve also seen similar complaints from lawyers: you’re basically stuck in whatever state you passed the bar exam in.

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

#232

Post by zeckalpha »

civilized wrote: post #173
xeRTRex wrote: post #118

One of the most frustrating aspects of the process is that once outside of insurance/insurance-adjacent industries, the credentials are useless. I have my FSA (fellowship of the SOA) and CERA (chartered enterprise risk analyst) from the SOA. I no longer wanted to work in insurance and left for data science. I felt the need to obtain a graduate degree to feel qualified enough for the data science space. My Master's de…

The exams have two ultimate objectives: 1. Perpetuate the actuarial guild 2. Shovel money from aspiring actuaries and insurance companies into the SOA's coffers They aren't really, and aren't really meant to be, a marker of general, transferable intellectual skills or achievement outside the insurance industry. So it's not surprising that no one other than the parties involved (the SOA, aspiring actuaries, and insura…

Seems like the association should do a, you know, risk analysis on what will happen if these trends continue.

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

#233

Post by mleonhard »

civilized wrote: post #182
aqualinux wrote: post #172

Earlier quoted context omitted.

The incumbent insurance companies maintain their position in the market through having large amounts of capital which lets them ultimately offer lower premiums than a new competitor entering the market which may have less capital. This means the legacy insurance companies don't need to prioritise investing in innovation to maintain their position, hence the old companies stay around.

Also, insurance just doesn't have much interesting space for innovation. In life insurance, for example, products other than simple term insurance really shouldn't exist. They're mostly just Rube Goldberg tax sheltered savings accounts for the wealthy. In theory there ought to be some opportunity in the area of incentivizing people to improve their health behaviors. But carriers have been much slower to move on that…

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts.

One agent told me that most customers drop their policy after a few years. The companies earn most of their income from the initial periods of policies, when payouts are rare.

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

#234

Post by zeckalpha »

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…

Mutual companies like State Farm where policy holders receive dividends in the form of discounts make this less of an issue.

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

#235

Post by zeckalpha »

sjy wrote: post #161
poulsbohemian wrote: post #125

Earlier quoted context omitted.

Yeah, that's exactly it. I know I've certainly spent spare brain cycles considering it, and there seem to be a number of startups trying to create cheaper title insurance, but it's not clear to me how to really solve the issue. Basically it's a human behavior and record keeping problem. You have to have perfect records, and you hope some estranged cousin doesn't magically popup with a deed someday claiming to own you…

Most other countries solved the issue a century ago with Torrens title.

Both Torrens and Abstract are in play in the US, sometimes even within the same state.

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

#236

Post by ak217 »

poulsbohemian wrote: post #227
ak217 wrote: post #219

Earlier quoted context omitted.

The state of that industry is absolutely incredible to me. Throughout the whole home purchase process all I can see is people trying to cover their ass and do the absolute minimum amount of work possible. I understand that they want to avoid getting sued, but the whole process (sell side agency, brokerage, buy side agency, title, home insurance, financing, escrow, whatever) is just agonizing every step of the way. I…

It's actually a much "safer" process for buyers and sellers today...there actually used to be greater integration in the past, but a lot of that went away in order to protect consumers. Regarding fees - when you actually break down the cost of a home sale, the fees really aren't much. On the sell side in particular, that commission should be irrelevant if the listing agent was doing their job, IE: marketing your prop…

> a lot of that went away in order to protect consumers

As I and the parent poster were discussing, the consumers are not being protected. Every single player is just compartmentalizing the areas in which they cover their ass. As a customer I am not being protected - I'm on the hook if anything goes wrong, and nobody actually goes out of their way to check if anything is wrong, as long as the documents look generally like what they are used to.

I will respectfully disagree with you about the fees. I understand the value prop of everyone in the value chain; in HCOL markets their prices are not justifiable and are ripe for disruption (and to be fair in LCOL markets there's no problem with the pricing). This is where vertical integration has a lot of potential.

I expected Zillow to come up. Zillow made a pretty fundamental mistake of introducing a house flipping business on top of their services business; even if they had perfect models that made their flipping business a success, I don't think the two could coexist for long because holding property is so fundamentally different from services. As far as their original business, I think they and Redfin and others "understand the realities of real estate" perfectly well; they are just up against a cartel that would be illegal in most other industries.

Happy to chat - my email can be reached from my profile

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

#238

Post by thaumasiotes »

khuey wrote: post #229
thaumasiotes wrote: post #209

Earlier quoted context omitted.

> The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.

No, it's not. The premise of an insurance pool is that the lucky subsidize the unlucky. Differences in premiums are supposed to account for good vs bad.

> Differences in premiums are supposed to account for good vs bad.

This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible.

Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.

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

#239

Post by trakter »

_t4za wrote: post #157
d136o wrote: post #120

Earlier quoted context omitted.

Thank you for the positive example! Have you had to get anything paid out from renters insurance? Pet insurance seems like a great business to be in… is there anything that requires you to actually have pet insurance? Would it cover costs from your pet hurting someone else? Or is it more to cover pet health costs? Really curious to know the ways it’s similar or not to US human health insurance hah

I've never made a renter's insurance claim. Pet insurance is only for emergency and/or life-threatening injuries and conditions, and surgeries and other costs related to them. Think getting hit by a car or getting cancer. It doesn't cover vaccinations, annual visits, and tests done for preventative measures. This is the main difference between pet insurance and US human health insurance since if I understand correctl…

10x is right. We didn’t have pet insurance. My dog got hit by a car in September. Everything is good now, but the incident broke his leg and popped his eye out of socket. Between emergency surgery for his eye and orthopedic surgery to put a plate in his leg (the other two options were amputation or putting him down) we ended up spending just shy of $9,000 for all the procedures and follow ups. I also feel very similarly about having a responsibility to my pets health. We’re lucky we could afford the procedures, because it would have been very hard to put him down.

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

#240

Post by zaphirplane »

aqualinux wrote: post #166
xeRTRex wrote: post #118

One of the most frustrating aspects of the process is that once outside of insurance/insurance-adjacent industries, the credentials are useless. I have my FSA (fellowship of the SOA) and CERA (chartered enterprise risk analyst) from the SOA. I no longer wanted to work in insurance and left for data science. I felt the need to obtain a graduate degree to feel qualified enough for the data science space. My Master's de…

Qualified actuary here also from UK. You're right about insurance being a legacy industry. In terms of the exams, if you can pass A-level maths, you can pass the actuarial exams. I found the main reason they were considered hard is not because of the subject matter, but due to the amount of content that had to be learned in a short space of time.

> Insurance is legacy

why it’s hardly getting superseded at least for car, home, medical, life, injury , income and travel

Actuarial ppl shouldn’t really care if it’s run on mainframe not k8s (if that’s the reason)

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