The president of the Canadian Institute of Actuaries acknowledges that the actuarial profession needs to improve if it wants to retain the enviable position that it occupies. According to the Institute’s new President, Jim Christie, actuaries must also learn to manage risk and convince insurers to do the same.Despite her criticism, Mr. Christie said he welcomed superintendent Julie Dickson’s recent speech.”We must adjust our priorities accordingly,” he says, and notes that while the Canadian Institute of Actuaries (CIA) and the Office of the Superintendent of Financial Institutions (OSFI) have a long history, their priorities are not the same. Mr. Christie says that the CIA will put some of Ms. Dickson’s priorities at the top of the agenda, but that the others will have to wait.
Mr. Christie also says his organization will make an effort to deal with compliance, as requested by Ms. Dickson. He emphasises, however, that some mindsets will have to be changed in order for this to come about.
Although actuaries are being asked to become risk managers, he points out that insurers do not see their role in the same way. As a result, actuaries must work to convince insurers, and prove that they are able to carry out the role. Mr. Christie adds that not all the problems outlined by Ms. Dickson will materialize in the next twelve months, so a way must be found to prevent them. Actuaries will have more credibility if they can identify five or six. “We are working on that,” he says.
He believes that the actuaries’ problems are more at the individual level. Each actuary must convince the insurer that employs him to be more proactive in risk management.
Mr. Christie notes that not all insurers are the same. Some are at the forefront, producing annual reports for their boards to detail risks that threaten the company. However, he notes that there are still a few companies that only do so because it is required by the regulators. “For some it’s embedded in the company. For others, they will do it if OSFI says they need one.”
He acknowledges that there are other professional bodies trying to do what actuaries are doing. He admits that it is a concern, and suggests that actuaries must prove that they are able to clearly identify risks. He points out that this is something actuaries have done for years. Now that they are in competition with statisticians and other professionals, he believes that the Institute must continue to ensure proper training of actuaries and to prove that they have the skills to produce added value. No profession is immune from these responsibilities, he notes, and says that actuaries cannot rest on their laurels.
According to Mr. Christie, the actuarial profession does not need to improve on a technical level, but rather in terms of communication. Actuaries need to better communicate the results of their work, he comments, as it is something they do not do well at the moment. Although there is no single answer to this problem, he believes actuaries need to come together and communicate what they do to a larger audience.
The fact that Ms. Dickson also had some criticisms for insurers did not surprise Mr. Christie. He notes that, given the way the regulatory system works in Canada, opposing views are to be expected. The regulator believes that it is better that the insurers retain more capital, while, for their part, insurers prefer to retain less capital in order to have more leverage.
Points of disagreement
There are some points where Mr. Christie does not agree with Ms. Dickson. First, there is the role of actuaries in the implementation of International Financial Reporting Standards (IFRS). The superintendent stated that the actuaries seem to want to allow OSFI to take the lead in this matter, but Mr. Christie says that they have a different viewpoint on the matter.
Actuaries have done a great deal of work in this area, and he points out that Canada already has a set of uniform accounting rules, accompanied by uniform financial statements, which is rare in the world. He says that actuaries, like OSFI, would like to keep that uniformity and suggests that they not move too quickly. At the end of the day, the solution needs to work for everyone. He also recommends that people remember that Canadian actuaries are only one voice among many in this discussion around the world.
Mr. Christie did not appreciate Ms. Dickson’s calling Canadian actuaries’ objectivity into question. She expressed her regret that the major insurers entrust “volunteers” to represent them. Mr. Christie agreed that members of the Institute are working on a volunteer basis, but he said he had a different view on the matter.
He notes that actuaries chose to operate in this manner and says the CIA is proud to be an organization that has always relied on volunteers. He does not believe that this affects its objectivity.