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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

#281

Post by morgante »

gurchik wrote: post #55
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…

Agreed. Renter's insurance is a great consumer purchase in my experience, since it also doubles as insurance for your property outside the home. Not having to worry about your stuff getting stolen (for example, your laptop in a cafe) is great peace of mind.

Rental insurance paid me $3k when I had my backpack stolen in Belgium. This easily paid for 3 decades of insurance and, realistically, I think most people are likely to be the victims of theft at some point over a three decade period.

My theory is that the way they make this work economically is that many people aren't willing to go through the hassle of record-keeping and filing a police report to get payouts. (In practice, this took less than 1 hour of my time total.)

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

#282

Post by nwiswell »

Bootvis wrote: post #278
nwiswell wrote: post #248

Earlier quoted context omitted.

Does this work? https://www.nolo.com/legal-encyclopedia/fiduciary-responsibi... .

No, that paragraph describes the duty of officers of the company to put the interests of the company before their own. It doesn’t claim that these officers need to behave unethically. You could even argue that displaying unethical behavior is not in the best interests of the company in the long run but this is of course hard to prove in any direction.

You asked for a citation of fiduciary duty. I already explained why that precludes moral action in this case

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

#283

Post by [deleted] »

alphabettsy wrote: post #195
romwell wrote: post #57

Earlier quoted context omitted.

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…

I think you mean collision coverage. Comprehensive covers non-collision accidents like theft or a tree falling on your car and is generally cheaper than full coverage which includes collision. It seems like you may have been screwed over, but also don’t completely understand how auto insurance works in most places which might be partly intentional for the industry. In most places damages to your vehicle are covered b…

[deleted]

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

#285

Post by igitur »

I'm a student at the Actuarial Society of South Africa. I have been for the past 20 years. This demo question, while not easy for a non-technical person, should be a piece of cake for someone who has completed the initial few technical subjects of the curriculum, the core technical series of subjects. I actually think any numerical calculation isn't a very good example or benchmark of what a good actuary should know or be.

Most students who start Actuarial Science here are mathematically strong and getting through the technical subjects just needs dedication to study and know the numerical theories and proofs.

It's the latter subjects that are the really difficult ones. They are wordy questions and answers. The exams don't necessarily exclude numerical calculations, but if calculations occur, it will be relatively simple (compared to the initial subjects). Exams of the final subjects require you to think out of the box and questions often involve areas that weren't included in the subject's literature. You are expected to apply your knowledge of earlier subjects to a novel scenario and propose solutions that you can't study for ahead of the exam. You can practise using past exam papers, but your exam is guaranteed to throw you a real curveball.

Example: F202 LIFE INSURANCE SPECIALIST APPLICATIONS

November 2021 Exam [1]

November 2021 Examiner's Report [2]

And this is the test of a true actuary. Is he/she a problem solver and not just a number cruncher? (It's also why I haven't been able to qualified yet.)

I remember in my first year at university a professor claimed that the actuarial science curriculum is like initially learning the basics of the decimal number system. 10 digits, 0 to 9, carry over or borrow digits from the neighbouring power of 10. 0 is a placeholder, etc. Then, in your final exam, you see a question: Design an abacus. You have all the knowledge, but now you have to apply it.

We all thought he was exaggerating to scare us. 20 years later, I'm totally on board with him. It was a realistic analogy.

[1] https://www.actuarialsociety.org.za/download/f202-november-2...

[2] https://www.actuarialsociety.org.za/download/f202-november-2...

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

#288

Post by HighChaparral »

ogogmad wrote: post #132
grp000 wrote: post #85

Earlier quoted context omitted.

Did you reverse the likelihoods? P(pc) = 2 * P(pd), probability of purchasing C is twice as likely to probability of purchasing D.

In 3 steps: I. P(C) = 2 P(D) II. 0.15 = P(C and D) = P(C) P(D) {by independence} = 2 P(D)^2 {by I} implies P(D) = 0.27 III. P(~C and ~D) = P(~C) P(~D) {by independence} = (1 - P(C))(1 - P(D)) = 0.33 {by I and II}

Nicely laid out.

I goofed on the last bit by assuming the final answer was:

1 - P(C) - P(D) which gives 0.178 ~ 0.18 or answer (A)

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

#289

Post by HWR_14 »

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…

You aren't required to get car insurance for your benefit, you are required to get insurance to pay off the people you hit. Look at areas with low insurance rates (like Philadelphia) and tell me that's the situation you want.

Meanwhile, title insurance isn't legally required. It's required by your mortgage company to protect their money.

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

#290

Post by civilized »

User23 wrote: post #246
civilized wrote: post #182

Earlier quoted context omitted.

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…

Term life insurance is basically just a put option on your life with an expiration a couple decades out. Whole life on the other hand is actually buying equity in your presumptive future earnings. It's considerably more capital intensive, but less expensive overall in most cases.

I don't know anyone outside of a heavily commissioned life insurance agent who thinks whole life is a good deal. You're flushing massive amounts of money down the toilet in the form of agent commissions and other fees. It's just another tax shelter for the wealthy, after they max out more attractive alternatives.

This article sums it up for me: https://www.nerdwallet.com/article/insurance/is-whole-life-i...

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