The Actuary Magazine - Society of Actuaries

48 Pages·2010·7.1 MB·English

August/september 2010
Volume 7 Issue 4
Challenging
the herd
developing a practical
implementation strategy
From FaCt to

responsIble
FiCtion
interview with fiction
HeAltH CAre
writing actuary
reform
the Full SpeCtrum
oF riSk attitude
Part 4: Funding/Financing
is ErM siloed?
SOA
2O1O
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Sudha Shenoy, FSA, CERA, MAAA
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August/September 2010
issue of The Actuary
‘
12
CoVer story DepArtments
16 Responsible HealtH 06 editoRial
CaRe RefoRm paRt 4: 08 letteR fRom tHe
funding/finanCing
pResident
The final part of the series
10 letteR to tHe
on what actuaries see as the
editoR
ultimate health care reform
package with a focus on 15 VolunteeR
funding/financing management
b y mac mcCarthy, barbara
pRogRam
niehus and Jay Ripps
34 inteRView: niCk
blitteRswyk
feAtures
37 inteRView:
12 CHallenging tHe a. HaewoRtH
HeRd RobeRtson
Are you prepared for
40 eduCation
emerging risks?
44 tHe soa at woRk
b y max Rudolph
46 soa 2010
26 t He full speCtRum eleCtions
of Risk attitude
For ERM to avoid falling
out of favor it needs to
broaden its scope.
b y alice underwood and
dave ingram
26
editorial
Untapped OppOrtUnities
fOr HealtH actUaries
by suDHA sHenoy
I HAD my own IDeAs as to what communication (both written and oral), orative studies with academia, think tanks
“untapped opportunities for health actu- adaptability, in-depth clinical knowledge, and other industry experts. There is great,
aries” might involve, but wished to learn familiarity with study design and knowledge untapped value for health actuaries in
what research had found. In May 2010, I of policy and regulations. initiating dialogue with other health indus-
listened to a webcast, supported by the try experts. Grappling jointly with tough
SOA Board, about a market research study I delved further into the last three of issues would foster respect and mutual
on the topic. The research study focused these valuable skills, as I believe them learning between academics, medical and
on understanding current actuarial roles, to be technical barriers that actuaries health care professionals, industry experts
matching potential roles with actuarial must overcome in order to gain access to and actuaries. Best practices would be
skills, looking at future needs and explor- untapped opportunities. I discussed my shared and different approaches tested
ing new roles. The study included a survey thoughts with friends in the industry and and modified as needed. I believe that
that gathered input from health industry would now like to share them with you. this approach would be very energizing
executives, health plans, health manage- If I needed to gain technical knowledge, I to all parties involved, serve as a catalyst
ment consultants, hospitals, health sys- would prefer to begin the learning process for new learning, and prove more expedi-
tems, and pharmaceutical and disease sooner than later, with the curriculum ent than constructing a formal curriculum
management companies. modified as necessary along the way. I at the SOA level. Perhaps the SOA could
would be extremely receptive to pilot proj- provide guidelines around which these
The study found that there are many ects conducted at local actuarial clubs, opportunities could be constructed.
untapped opportunities in several segments where members would have easy access
of the industry for those it deemed “ridicu- to knowledge without incurring a lot of Another way in which we actuaries could
lously intelligent” actuaries. There is a strong expense—perhaps through a partnership explore untapped opportunities would be
need for analytical and data expertise in clin- with local universities or through tailoring to seek these opportunities ourselves by
ical research settings as well as in wellness/ a seminar in order to receive continuing raising awareness about what we, as actu-
disease management companies, health credit on these topics. This would be a aries, bring to the table. I would like to
plans (analytics departments), health care good bridge-building technique with local share with you a personal experience from
management consultancies and pharmacy medical schools and industry experts and the last Super Bowl party at my house.
benefit management organizations. Highly would help to strengthen the actuarial When I entered the room where my guests
valued business skills for these opportuni- brand in the health care arena. Such enter- were seated, I quickly realized that their
ties include strategic/“big picture” thinking, prises would also open the door to collab- ongoing debate centered on the recent
06 | tHe ACtuAry | august/sEPtEMbEr 2010
individual health premium increase that This made me aware of an opportunity we just need to par-
was making headlines. In my own home, for us to influence others and raise aware- ticipate in and chan-
amongst my own friends, I felt as if I were ness about our profession. I think we miss nel the discussions.
being cornered. My friends expressed out on opportunities because employers I have no doubt that
much concern over the so-called “irra- remain unaware of our analytical training we “ridiculously
tional increase.” I took that opportunity and our unique ability to solve problems intelligent” actuar- sudha shenoy
to explain to my friends how rates are in many different and new contexts. Efforts ies will find a way to gain the technical
set and reviewed as well as approved by are currently underway to understand the and business knowledge we need to help
the Department of Insurance (for certain ramifications of health care reform and shape our futures and capture both cur-
health products). None of them realized bending the cost curve. During the cur- rent and untapped opportunities in the
that there was a logical process for rate rent health care debate, we ought to use health care industry. A
filing, review and approval. I answered every opportunity to educate the public.
many questions on how we go about col- Volunteering at the SOA, the Academy sudha shenoy, fsA, CerA, mAAA, is a health actu-
lecting the data from our prior experience or other organizations or work groups to ary. She can be contacted at [email protected].
and applying trend, etc. Following that learn more about these issues and then
discussion, many of my friends have come sharing our knowledge and expertise with
back to me with questions on other health the public is another way in which we can
care, as well as general risk management, showcase our talents and abilities. The
issues that they face in their professions. context is there; the dialogue is ongoing—
letter from the president
sOa cOmmUnicatiOns:
empHasis On emplOyers
by mIke mClAugHlIn
2010 HAs been A yeAr of ImproV- The Employers Council was established in on the work of the SOA. After a year of dis-
Ing how the SOA communicates with mem- 2009 to create a solid communications chan- covery and engagement, council members
bers. This has led to exciting new communi- nel with the employer community, and offers have told us that they want to do more.
cation channels, better dialogue and some the SOA perspective on business trends and
great ideas! challenges facing insurance, benefits consult- One of the goals the Council has set for itself
ing and broader financial services firms (the is to get to the heart of the SOA’s vision (for
We have also extended this emphasis actuarial profession’s current target markets). actuaries to be the leading professionals
on communication to another important The Council meets three times annually— in the measurement and management of
group—those who employ actuaries. twice in person and once by conference call. risk) to establish a true understanding of
the risk management field and the needs
Employers are responsible to their cus- Council members are senior leaders at their of key thought leaders in risk management.
tomers, the public and, in many cases, respective entities, and include a combina- To help achieve this goal, the Council has
shareholders, for the health and growth tion of some of the largest actuarial employ- undertaken a project to better understand
of their business. They are on the front ers, non-actuaries with expertise in financial employers’ labor needs in an evolving
lines when it comes to business and the services, enterprise risk management and business climate. This includes current
economy, which is why employer per- executive/recruitment search. and future talent needs of firms, trends in
spectives are important to the work of professional development and possible
the SOA. Establishing solid relationships The Council gives us information on hiring risks to the talent pool, and will be an
with employers offers the SOA additional and staff development needs, preferences important step in developing the profes-
viewpoints in providing members with the and practices. They provide insight on busi- sion’s strategy in the years to come.
tools needed to stay on the cutting-edge ness needs for research and other forms of
of actuarial science and risk management. intellectual capital development in risk-relat- The SOA Board and staff are very grateful
ed areas, as well as feedback on the market to the members of the Employers Council
Let me tell you about a few of the ways we relevance of various products and services who volunteer a few days of their time
are working with employers. the SOA offers. per year to benefit our profession. We are
fortunate to have such an enthusiastic,
employers CounCIl In 2009, (the year the Employers Council involved team with which to share an
The most visible way we are working with was established) the meetings were largely ongoing dialogue. The most recent meet-
employers is through our Employers Council. focused on bringing employers up to speed ing (held in June) was the best ever, in my
08 | tHe ACtuAry | august/sEPtEMbEr 2010
opinion! The members of the Employers VolunteerIsm benefIts members In addition, technol-
Council are lively, very engaged and AnD employers ogy products require
through a number of dynamic discussions As a member-driven organization, volun- sophisticated pric-
have given us a lot to think about! teers drive the work of the SOA, which is ing and management
why it is an important topic to discuss with techniques. If we can
employer CommunIty VIsIts employers. Those of you who volunteer demonstrate the value mike mclaughlin
As an extension of the Employers Council, know that it helps you build new skills, of our skills, employers
the SOA also conducts employer com- make new contacts and can help you stay will require a greater supply of actuaries to
munity visits as part of our outreach to up to date in technical areas, differentiat- fill those roles. If we are successful in this,
employers. On these visits, we learn about ing you from others. job opportunities for actuaries will expand
the employer’s core business, challenges
they may be facing, and their needs for the work we do with employers is really
talent and professional development.
about creating more opportunities for
These visits also create the opportunity actuaries. ...
for us to hear not just from senior leaders
(who may be either actuaries and non-
actuaries), but also teams of employees These skills not only benefit you, but these greatly, and the profession will provide
and even candidates—it’s a broad spec- are skills that you take back and can use at more valuable service to the community.
trum of people that make up an enterprise, the office or in the field on daily basis, which There’s work to be done to get there, but
and we want to ensure that we hear a benefits your employer as well! With the the prize makes it worthwhile.
variety of perspectives. contacts you make through volunteering,
you may be able to gain new clients and ConClusIon
There is no substitute for face-to-face con- even get on the phone with a competitor! As members of the SOA, we all benefit
versations, and these visits go a long way from the conversations and resulting ideas
toward building rapport with employers. Volunteers make our profession stronger, we gain from employers. The effect is cir-
and the strength of the profession is impor- cular—employers’ feedback allows us to
ImproVIng proDuCts AnD tant to the viability of the firms that we develop products and services that benefit
serVICes work for. members, strengthening the profession as
The feedback that we have received from a whole, boosting the public’s knowledge
employers helps us develop products future employers of ACtuArIes of actuaries, and increasing demand for
and services (for example, Continuing The work we do with employers is real- actuarial services. It’s an exciting time to
Professional Development (CPD) offer- ly about creating more opportunities for be an actuary! A
ings) that help prepare, and even give actuaries, and for those in our profession,
members an edge, in the job market. Both our horizons are expanding. We can take mike mclaughlin, fsA, CerA, mAAA, fIA, is president
members and employers have asked for cues from other countries—for example, of the SOA. He can be contacted at [email protected].
CPD in a variety of formats to help meet in Australia and South Africa, actuaries
budget requirements and time restrictions. are working for banks and asset manag-
ers, with financial product pricing and
In addition, we are using employer feed- management. We should also look at how
back to develop new CPD offerings—one we can apply actuarial skills to solve
example could be partnering with others problems in other areas such as manu-
to develop a leadership training program. facturing, technology and transportation.
august/sEPtEMbEr 2010 | tHe ACtuAry | 09
letter to the editor
less tHan ideal
eDItor of tHe ACtuAry,
I would like to address a statement made in the captioned article would have likely avoided what I believe is a financially catastrophic reform
“Responsible Health Care Reform Part 2: Access to Care,” found in in access to health insurance that is now the law of the land. Thank you for
the April/May 2010 issue of The Actuary. the opportunity to comment (vent?).
The article states that “Because of HIPAA, any person who is Best Regards,
covered for at least 18 months under a group or individual Jim galasso, fsA, mAAA, CerA, president & Consulting Actuary
health care plan has a right to maintain continuous cov- Actuarial Modeling, [email protected]
erage without ever again being required to undergo
assessment of health status (underwriting) or facing new reply from AutHors of tHe ArtICle:
limit on pre-existing conditions.” (emphasis added) The statement in the article is accurate, but as Mr. Galasso points out,
there is no doubt that the current situation is less than ideal. The way the
It is my understanding that HIPAA and most (but not all) states do right can be exercised varies by state from the extreme of being guarantee
not prohibit health insurers from requiring health status assessments issue by any carrier writing individual health insurance in the state, to
(underwriting) for all individual and small group health insurance only accessing the state high risk pool as the insurer of last resort. The
applicants—even individuals and small groups applying for alter- individual can purchase insurance without a new pre-ex and without
native health care policies from their current insurer. While the 18 exclusionary waivers through the appropriate mechanism in his/her state,
months provision will provide guarantee issue rights, there is no pro- but, as stated in the article, coverage may well be unaffordable. A useful
tection against a health insurer’s requirement that individuals submit guide to understanding the options by state can be found at: http://www.
to health status assessments for the purpose of rate setting and for healthinsuranceinfo.net/.
substantial policy exclusions with respect to individual health insur-
ance plans. It has been my premise and contention that precisely Our article was written prior to passage of PPACA. PPACA will change the
because of this lack of underwriting protection, the health insurance rules significantly, certainly beginning in 2014 when guarantee issue
industry has been successfully (justifiably?) vilified and our already becomes the law of the land. In the short run, funds allocated under
overly debt-laden government passed health care reform that further PPACA to support high risk pools will also provide another option to some
expands government intrusion, threatens the insurance industry people seeking to purchase insurance.
itself, and imposes requirements that further threaten our nation’s
financial condition. If the health insurance industry would have pro- barbara niehus, fsA , mAAA, president,
actively addressed this substantial defect in insurance protection, we Niehus Actuarial Services, Inc., [email protected]. A
10 | tHe ACtuAry | august/sEPtEMbEr 2010