A Chat With Fred

Fred has been a great contributor to not only the life insurance industry but to the actuarial profession for over 40 years. He was recognised by his peers as President of the Australian Institute in 2007; granted an honorary fellowship of the Faculty of Actuaries in Scotland in 2009; named as ‘Actuary of the Year’ in Australia and given the Society of Actuaries (SOA) Presidential Award in 2010; and will be President of the International Actuarial Association (IAA) in 2015.

Fred is currently the Chief Actuary and Appointed Actuary of TAL Life Ltd. It was a great pleasure for me to spend time with Fred and hear his account of life as an actuary.

HOW HAS THE INDUSTRY CHANGED?

At the commencement of Fred’s career, as one of the few graduates who had programmed a computer, he was dismayed to find himself neck deep in tedious weeks of long manual calculations. Thankfully, it wasn’t long before rapidly increasing computer power enabled more efficiencies. The life insurance business was a different beast at that time – investment-linked products were in their infancy, capital adequacy and solvency controls were largely intuitive rather than scientific and consumer rights were still developing.

Fast forward to now and perhaps one of the biggest changes Fred observes has been the increased emphasis on the consumer, rather than the insurer.

“There has been a big shift in what you can sell, what you can say about a contract and in a company’s duty of care,” he says, noting, however, that in part it took legislation to bring this about.

With an evolved respect for the consumer, the enormous enabler of technology and increasing levels of innovation, there are a whole range of new industries in which actuaries can be involved.

“There is a noticeable shift away from insurance as a main stay towards a much broader base of commercial activities for actuaries,” says Fred.

Although he dwells little on the challenges of the past, Fred does lament the fact that while technology has rocketed ahead, in the life insurance industry at least, there appears to have been almost no improvement in data quality in the industry since the first time he undertook a Group Life quote in 1978. He believes that APRA’s continued focus on data quality and risk management are vital to building a sustainable industry.

HOW WOULD YOU DESCRIBE THE ACTUARIAL BRAND?

“Going back in time there was a more remote view of the actuary. Actuaries were people who were locked away doing something secret and mysterious. This culture lived inside the profession, with senior actuaries having some sort of mystique about them with no-one really knowing what others were doing. There was very little swapping of information,” says Fred.

This view has now been completely reversed, according to Fred. There is an enormous openness within the profession, with a collegiate focus on sharing knowledge about the most modern and the best techniques. This sort of team work was not emphasised in the 1970s. The impetus for this reflects the way society has evolved towards broader multi-disciplinary teams which have de-mystified some of the things that actuaries do.

“As actuaries, we are very well positioned to see the events that might affect companies and we haven’t in the past always been the ones to come forward first and explain it. Now companies’ management and regulators are looking for that information flow to include considered observations and detailed insights into what is going on and that is something where we can really add value,” says Fred.

Being able to fulfil this role goes further than simply having good technical skills. Fred goes on to describe some of the important personal qualities that support the actuarial brand.

“Actuaries exist to give you advice that you can use as a basis for financial decision-making. This advice needs to include insight and should be authoritative and reliable. Personal accountability is also very important – stand up and voice your opinion. But at the root of what we are about is ethics – protecting the public good and the stability of financial institutions. The only way you can do this is to be there and change the world every now and then,” he says.

WHAT CHALLENGES AND OPPORTUNITIES DO YOU SEE AHEAD FOR THE ACTUARIAL PROFESSION?

One of the key challenges Fred speaks about relates to the competition with other developing professions for new roles. He cites data analytics and risk management as examples of new and competitive roles and says Actuaries need to justify their success in these areas.

Fred was instrumental in creating the global CERA qualification. The reason he put so much time and energy into the project was to ensure the profession could remain competitive and not ‘miss the boat’. He proudly acknowledges that there are now over 2,500 people with CERA qualifications globally and adds that the ERM course in the UK has now overtaken GI as the most popular subject. In relation to analytics, Fred believes the profession should think more broadly. He is an advocate for recognising the changing landscape and moving to take advantage of opportunities that arise. On analytics, he proffers that the Institute could offer the benefits of a professional body to sponsor, support and educate a generation of data scientists.

“Being part of a profession inspires sharing so you can learn through others and gain a richer education throughout your career,” he says.

An area of great opportunity, Fred states, lies in Asia where there is substantial economic growth, especially in the insurance industry. There is considerable scope here for the Australian profession to use our consultancy skills and build on the Institute’s reputation as one of the leading actuarial bodies in the world.

ARE WE POSITIONED TO TAKE ADVANTAGE OF THE FUTURE OPPORTUNITIES?

Here our conversation quickly turns to the current education syllabus, something which Fred is clearly passionate about. He acknowledges that the Institute is currently reviewing the education program to reflect the needs of the ‘actuary of the future’.

“We have an international syllabus which has basically stayed static (apart from a few add-ons) for a long time,” he says.

“The Institute is now looking to help the IAA to redefine its syllabus to a whole new depth which will lift the standard for everyone.”

Internationally, Fred believes that along with South Africa and the UK, Australia is ‘ahead of the curve’ but he stresses the importance of consistency with the international syllabus, not just the Australian syllabus. He points out that universities are exporting their courses into Asia and this drives a need for international consistency. Fred sees the Australian Institute having a high level of influence in the direction of international education standards, which is vital to its continuing success.

WHO IS THE FUTURE ACTUARY?

Fred asks, “Would we expect anyone these days to work in the same industry throughout their career? In fact, do we expect the industries themselves to be the same in 40 years’ time?” The answer is of course, no.

There is a sense of rigour in the way actuaries work. Fred believes our skill is to think about the true causes of why things happen, not just to observe that they have.

“You learn a lot after becoming a fellow – it’s a lifelong process. The point about the fellowship is to prove that you can put together a sufficiently substantial body of knowledge that is really worthwhile in a particular application. After that, you can replicate the function, but in a different field.”

What is also important, according to Fred, is the process by which entrants are drawn into the profession. He suggests a higher level of engagement is required in the messages that go out to school students, teachers and career professionals.

“If we were more active in this area, it would give entrants into the profession better expectations of what they need to be and how they should behave,” he says, referring specifically to a set of qualification criteria that universities don’t necessarily train for: communication, influencing and leadership skills.

“We should be selecting for adaptability, self-confidence, self- reliance and have an expectation that the young new entrants into the profession will be inquisitive, innovative, problem solvers and good communicators,” he says.

The hour I spent with Fred was uplifting and energising as I listened to how he described the value of not only the Institute, but also that of the role of the Actuary. He left me with a sense of excitement about the direction of our profession in a time where change is all around.

Watch highlights from Fred’s interview.

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