Working Conditions: Integrity an Asset?

[hafgan]

I am a mid-life career-changer with a background in mathematics, data analysis, military intelligence. The actuarial profession seems like a good fit for me, but I have a serious concern:

I have worked in higher ed administration for almost a quarter century. Over the last few years it has become clear to me that higher ed (at least in my experience) has become mostly a game of appearance over substance. The paper world of official documents is mostly a facade, and my employer sees my job to be maintaining the illusion.

I'm sure that increasing (and sometimes nonsensical) government regulation in every industry has had the unintended consequence of encouraging businesses to create a protective illusion--smoke & mirrors instead of transparency. Most "professionals" here do not consider it fraud unless someone is lining their own pockets and justify the con accordingly. I suppose similar justifications supported the mortgage fraud scandals. Such things have always existed in the shadows, but in our topsy-turvy world, such things seem to be widespread.

As you may imagine, It is very difficult (though not impossible) to maintain one's integrity in this corrosive environment. Integrity is a liability, not an asset. Generally only those willing to actively participate in the game are promoted above a certain level. It would be wonderful to work in a profession where quality and substance came first and integrity was actually rewarded.

So...for you established actuaries...
How badly is your industry affected by these corrosive influences?
In particular, do you feel that the quality and substance of your work matter to your employer?
Or do you feel that your work is primarily an extension of the marketing department?

[Irish Blues]

How badly is your industry affected by these corrosive influences? Of course, if you ask the public insurance companies are making massive profits and '''''ing over everyone ... but in reality, insurers are simply doing a better job of identifying risks and pricing accordingly. Now ... if we end up in a price war [as seems to happen every so often] where insurers start fighting over market share and not worrying about rates, it won't matter how well anyone is identifying risks - but thus far, I haven't seen proof that there's some nefarious scheme for insurers to collude and make massive profits.

If anything, I've seen insurers bury their heads in the sand when faced with real problems and/or make overly optimistic assumptions about the future. "Sure, loss ratios have been terrible the last 3-4 years ... but it's not going to last!" "If we start writing this kind of business, we can start writing profitably from the get-go and be able to double the size of the company in 5 years!" It's those kinds of decisions that can lead to trouble really quickly if [when?] those unduly optimistic expectations fail to materialize.

In particular, do you feel that the quality and substance of your work matter to your employer? If it didn't matter, I wouldn't be working here. I left one place because it was apparent my contributions weren't valued or even looked at - and if you're just churning out reports and filling in numbers on a spreadsheet and any analysis you actually do is never passed on [for whatever reason], you're not being valued for the job you're supposed to be doing.

Or do you feel that your work is primarily an extension of the marketing department? This is a great question, and it's a scenario that plays out in many insurers. They have an actuarial department, and want input from the actuaries, but then ask marketing "what should we do" or decide "no, we can't do that, we'll lose business" instead of realizing that writing more lousy business doesn't make the book more profitable. In my current job, I'm working on making sure our voice is heard in the discussions and that we don't just roll over and go with whatever popular opinion wants - that we communicate our message clearly and effectively, so that management fully understands the potential impact of the decisions it makes.

[alekhine4149]

Regarding government regulation, I haven't noticed it creating an environment of secrecy. The departments of insurance get what they want, they usually promote transparency, and some of them are very effective. Some are awful to work with, true, but for most states I'd say government interference is fair and cooperative - a net positive.

Paperwork and bureaucracy can be so frustrating in insurance, but I don't think it's designed to create a facade. I think it's just a natural byproduct of large corporate offices. Overall, I'm happy to work somewhere that behaves pretty ethically.

I don't always feel the quality or substance of my work matter to my employer, but I think they try to value these things. I just may not always agree what defines quality, and their definition is far more relevant than mine!

I am uncomfortable with what seems like the assumption of your last question. I think marketing concerns should be quite important to the actuary. I have witnessed the other extreme where actuaries arrogantly ignore marketing concerns, and it is a huge mistake. The modern actuary models marketing concerns as well as losses, premium, and inflation. If you can't market well, you will write bad risks and lose a lot of money. So I wouldn't enter the industry expecting to be frustrated whenever the indication is positive for some coverage but marketing says its rates are too high, resulting in a conflict. This is an important discussion that can't be oversimplified. (I am not an established actuary by the way as you requested - only 2+ years experience, so please weigh my response accordingly.)