Gail Ross Presentation

University of Illinois Finance 230 – Intro to Insurance A Career as a Property/Casualty Actuary Presentation by Gail M Ross, FCAS, MAAA September 14, 2007 Agenda Background The Role of the Actuary Challenges for the P/C Actuary Exciting Assignments Useful Sites Q&A Insurance / Actuarial Career Began with Travelers Insurance Co.-1976 Got into Consulting Upon Becoming an FCAS - 1985 Became active in the CAS upon becoming an FCAS Actuaries – “Risk is Opportunity” Actuaries are experts in:    evaluating risk, designing creative ways to reduce risk potential, decreasing the impact of undesirable events that occur Actuaries evaluate the financial impact of current economic, legal, and social trends on future events We focus on accurate and responsible matching of risk to price Challenges for the P/C Actuary Setting the Price to Charge for the Insurance Product Non-Insurance Pricing Insurance Pricing Challenges for the P/C Actuary Determining the appropriate level of reserves to set – varies by exposure:     Short “Tail”– Property , Physical Damage Medium “Tail” – Auto Liability Long “Tail” – Workers Compensation What Will the Lawyers Dream Up Next “Tail” – Asbestos, Pollution, Tobacco, Firearms, Mold Challenges for the P/C Actuary Enterprise Risk Management – Helping businesses manage all risks facing the organization:     Hazard Risk Financial Risk Operational Risk Strategic Risk Enterprise Risk Management Example Coldhard Steel Company (CSC) manufactures steel products It’s a family owned business operating in the Midwestern US and has a unionized labor force Enterprise Risk Management Example Types of Risk  Hazard Risk 1st Party – Loss to building & equipment due to fire, tornadoes, etc 2nd Party – Injury or illness to employees included work related injuries 3rd Party – Slip/falls, product recalls, product lawsuits Enterprise Risk Management Example Types of Risk  Financial Risk Foreign exchange risk - CSC has large volumes of sales in Latin America Commodity risk – changes in prices of raw materials Credit risk – CSC has a large accounts receivable Enterprise Risk Management Example Types of Risk  Operational Risk Labor relations Family succession planning Assessment of the reliability of machinery and processes Enterprise Risk Management Example Types of Risk  Strategic Risk Competition Regulatory/political issues Technological advances that could leave CSC obsolete Enterprise Risk Management Example The Casualty Actuary will:    Assess the hazard risk Work with others to assess the financial, operational and strategic risks Develop models that will integrate all of the potential risk outcomes/probabilities so that an overall impact on CSC’s results can be understood and managed Actuarial Career Why Consulting ?       Diverse Challenging Projects Completed in Short Timeframe Deal w/ Senior Management Global Opportunities Very Good Compensation Actuarial Career Why Not Consulting ?    Long Hours Often Unpredictable Actuaries in the “Hot Seat” Exciting Assignments M&A Due Diligence Assignments Operational Reviews Reserve Reviews Captive Insurance Assignments Web-Sites and Contact Info Good web-sites to learn more about an actuarial career:    www.BeAnActuary.org www.casact.org www.actuarialfoundation.org Actuarial jokes:  http://users.aol.com/fcas/jokes.html My contact info:  gail.ross@milliman.com Questions Thank You ! ... Sites Q&A Insurance / Actuarial Career Began with Travelers Insurance Co .-1 976 Got into Consulting Upon Becoming an FCAS - 1985 Became active in the CAS upon becoming an FCAS Actuaries – “Risk... Assignments Operational Reviews Reserve Reviews Captive Insurance Assignments Web-Sites and Contact Info Good web-sites to learn more about an actuarial career:    www.BeAnActuary.org www.casact.org... www.actuarialfoundation.org Actuarial jokes:  http://users.aol.com/fcas/jokes.html My contact info:  gail. ross@ milliman.com Questions Thank You !