FEBRUARY/MARCH 2012 VOLUME 9 ISSUE 1 ACTUARIES ON BOARDS Could you fill the position? THE EVOLUTION ANALYTICS IN OF THINKING See what’s best: clinical BASEBALL AND or actuarial thinking. BUSINESS A story of bats, stats and a task force. JW Marriott L.A. Live LIFE&ANNUITY Los Angeles, CA 2012 SYMPOSIUM May 21–22, 2012 LA NOW STANDS FOR LIFE & ANNUITY On May 21–22, 2012 the leading life and product development meeting will happen in sunny Los Angeles! Past participants have called it: “interesting and informative,” “truly excellent,” and “attention keeping.” • Over 50 sessions of the latest expertise in life and product development • Practical tools and techniques • Network with the experts • Additional “hot-topic” seminars after the symposium Learn more at SOA.org/LAS The Actuary is published bi-monthly (February, Contributing Editors April, June, August, October, December) by the Corin Chapman, FSA, MAAA Society of Actuaries, 475 N. Martingale Rd., Suite [email protected] 600, Schaumburg, IL 60173-2226. Periodicals post- age paid at Schaumburg, IL, and additional mailing Peter Hayes, FSA, FCIA offices. USPS #022-627. [email protected] This publication is provided for informational David Ingram, FSA, CERA, MAAA and educational purposes only. The Society of [email protected] Actuaries makes no endorsement, representa- tion or guarantee with regard to any content, Cathy Lyn, FSA, FIA and disclaims any liability in connection with [email protected] the use or misuse of any information provided 12 Tom A. Phillips, FSA, MAAA herein. This publication should not be construed as professional or financial advice. Statements of [email protected] fact and opinions expressed herein are those of James Ramenda, FSA, CERA the individual authors and are not necessarily [email protected] those of the Society of Actuaries. Sue Sames, FSA, MAAA The Actuary is free to members of the Society of [email protected] Actuaries. Nonmember subscriptions: students, $22; North American $43; Int’l $64.50. Please send Ross Winkelman, FSA, MAAA subscription requests to: Society of Actuaries, P.O. [email protected] Box 95600, Chicago, IL 60694-5600. Ruth Ann Woodley, FSA, MAAA The Actuary welcomes both solicited and unso- [email protected] licited submissions. The editors reserve the right to accept, reject or request changes to solic- soA PrEsidEnt ited and unsolicited submissions, as well as edit Bradley M. Smith, FSA, MAAA articles for length, basic syntax, grammar, spell- [email protected] ing and punctuation. The Actuary is copyedited ACTUARIES according to Associated Press (AP) style. soA stAff ContACts Patrick Gould For more information about submitting an article, Managing Director of Marketing ON BOARDS please contact Sam Phillips, magazine staff editor, & Communications at (847) 706-3521, [email protected] or Society [email protected] of Actuaries, 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. Lisamarie Lukas Director of Communications ©2012 Society of Actuaries. All rights reserved. [email protected] No part of this publication may be reproduced in any form without the express written permission Karen Perry of the Society of Actuaries. Publications Manager POSTMASTER: Send address changes [email protected] to the SOA, c/o Communications Jacque Kirkwood Department, 475 N. Martingale Rd., Suite Senior Communications Associate 600, Schaumburg, IL 60173-2226. [email protected] Sam Phillips Magazine Staff Editor [email protected] Erin Pierce XX% Graphic Designer Cert no. XXX-XXX-XXX [email protected] February/March 2012 issue of The Actuary ‘ 24 COVER STORY 12 ACTUARIES ON BOARDS This article is the first in a series meant to highlight and explore the skills and knowledge actuaries have to offer as members of a board of directors, as well as what it takes to get there. By John G. Turner and Sarah J. Hamblin FEATURE 18 ANALYTICS IN BASEBALL AND BUSINESS One actuary’s tale about her experiences with business analytics is recounted in this story of bats, stats and a task force. By Lisa F. Tourville 24 THE EVOLUTION OF THINKING DEPARTMENTS You might be surprised to learn that actuarial methods have been in the middle of a heated 06 LETTER TO THE EDITOR: RESPONSE TO debate for more than 60 years. See what’s best: CONSUMER DATA DISCUSSION clinical or actuarial thinking. 08 EDITORIAL: THE POTENTIAL TO IMPACT ACTUARIES By Dave Ingram EVERYDAY LIVES ON BOARDS 10 LETTER FROM THE PRESIDENT: THE NATURE OF RISK 30 EDUCATION: FSA EDUCATION RESTRUCTURING IS COMING SOON! 34 SECTION HIGHLIGHTS: FOCUS ON INTERNATIONAL, FORECASTING AND FUTURISM, PRODUCT DEVELOPMENT, AND REINSURANCE SECTIONS 36 OUT OF THE OFFICE: ACTUARIES ON THEIR OWN TIME 40 THE SOA AT WORK: SOA MOBILE SHOWCASE 18 42 RECOMMENDED READINGS Letter To The Editor Response to ConsumeR Data DisCussion The December 2011/January 2012 profitable. The point of this article was to showcase how this con- issue of The Actuary contained two let- sumer data can be used constructively and in accordance with ters to the editor discussing the article, the law. “Predictive Modeling with Consumer Data,” by Ksenia Draaghtel, ASA, MAAA. Follows I understand that unscrupulous individuals and companies is Draaghtel’s response to those letters. may twist the use of consumer data into circumvention of the Affordable Care Act, and I do not condone it. However, consumer DEAR EDITOR, data also has the potential to unlock new business approaches The Affordable Care Act clearly and that allow competition based on quality and efficacy. Actuaries unequivocally prohibits underwrit- are well suited to explore this potential. ing based on health status, as part of the law’s larger goal to transform the Ksenia Draaghtel American health care system into one Ksenia Draaghtel, ASA, MAAA, is an associate actuary with that competes not on risk selection, but rather on quality and Milliman, Inc. She can be contacted at ksenia.draaghtel@ efficacy. My article, “Predictive Modeling with Consumer Data,” milliman.com. shows how insurers that are better at managing the care of less- healthy people can use consumer data to identify customers who To read the letters Draaghtel is responding to, please scan are, under the reform calculus, less healthy and potentially more the QR code or visit www.soa.org/consumerdataletters. A 06 | THE ACTUARY | FEBRUARY/MARCH 2012 Editorial t he potential to impaCt eveRyDay lives BY ROSS WINKELMAN AT A CONFERENCE I ATTENDED several or estimating financial results. In my mind, involved in the profession and in shaping the years ago, the speaker asked an auditorium full actuaries were not big thinkers with the ability nation’s most important financial programs by of actuaries how many of them wanted to be to influence public policy. getting them involved earlier in their careers. an actuary when they were little kids. All but one or two hands stayed down, including mine. What didn’t occur to me then, but does The Health Section research committee, of However, I knew relatively early I wanted to be now, is the potential for actuaries to impact which I am a member, has issued several calls an actuary. I think this may have had something people’s everyday lives by shaping our for papers that included significant monetary to do with my much older brother still living at nation’s most important financial programs. prizes. One of the prizes was for the best home. You see, my father was pretty focused My awareness of the important impact the paper from an actuary with five or less years on making sure I had a stable profession when actuarial profession has did not start forming of experience. Although we didn’t get a lot of I graduated from college. Therefore, in my until I started volunteering with the SOA. Like papers from qualifying younger actuaries, these senior year of high school as I was deciding on many actuaries, my volunteer efforts started types of efforts send an important message: a college and major, my dad told me I should with grading exams, which led to work on the “The profession values volunteerism and become an actuary since I was good at math Health Section newsletter, to the Health Section contributions from actuarial professionals no and it was the number one job in America. I Council and so forth. In my various roles, I’ve matter their experience level.” did some research and found out that being an seen firsthand the impact actuaries have had at actuary paid well and was low stress (they got a national level. Smart, energetic and dedicated The SOA has made tremendous strides in one out of two right!). At that age, I tended not actuaries have become go-to resources for attracting top-tier talent by creating Centers to think things through for too long so that was the U.S. Department of Health and Human of Actuarial Excellence, and continuing enough for me and I signed up. Services (HHS), the National Association of to enforce strict professional standards that Insurance Commissioners (NAIC), states and make the actuarial designation one of the most As a young actuary, I kept my head down and other influential organizations. A number valuable around. However, we are missing an tried to accomplish whatever task was put in of actuarial workgroups assembled by the opportunity (not to mention some horsepower) front of me. I’d hear about committees and American Academy of Actuaries have worked if we only seek contributions from fully casually listen to the health care reform debates directly with HHS on the Affordable Care Act in credentialed actuaries. All too often, we see during the Clinton administration. However, I its genesis and as it has evolved. the same group of super volunteers speaking thought of myself and the actuaries I reported at SOA meetings, leading committees, doing to as technicians—we answered technical “Well,” you might ask, “what’s your point?” research and representing the profession on questions related to accurately pricing products My point is that we need to get actuaries more Capitol Hill.