Teaching Actuarial Science - Professor Talk

Some have unfairly said that those who can, do and those who can't, teach. In Ian Duncan's case, he had already done so much that it was time to teach. "By the time I sold my company, I’d probably published, I don’t know, 15 or 20 different papers and written a couple of books," Duncan, an adjunct associate professor at the University of California at Santa Barbara's Department of Statistics and Applied Probability, told ValuePenguin. "Just coincidentally — I wasn’t looking to retire or to go into teaching — but I just happened to find that this university in California has an actuarial program, and they did not have any actuaries on staff. So I approached them and said, "How about it?” We asked the England-born Duncan about actuarial science education in America.

“Duncan

How was your transition into teaching?

It wasn’t all that easy, for the simple reason that I passed my exams in the 1970s. Subject matter has changed a lot since then. And because I’d become a health actuary — and I’ve practiced as a health actuary for my whole career, pretty much — I had to sort of relearn a lot to do with life and pensions that I’d maybe last done in 1980. The profession itself has become more intensely mathematical, particularly with regards to mathematics of finance, in the last 20 or so years. I’d say we demand a lot more from our students than we did in my day. Just as a student, we demand that they have a higher level of knowledge of both mathematics and of finance generally.

This is because finance itself has expanded so enormously since the 1970s and 80s, and actuaries have had to keep up with this and learn all these new techniques, a lot of which are much more mathematical.

How does this figure into UCSB's actuarial program?

One of the things you need to know about actuarial programs around the country is that there’s a group of us that are called Centers of Actuarial Excellence. So we are one of the CAE schools. That’s an acknowledgement of the fact that we do both teach a very comprehensive actuarial education and we also do a lot of actuarial research. There are, I think, somewhere between 150 and 200 colleges in North America that have actuarial classes of some kind or other, but there are only about 28 that have that designation. And it recognizes the fact that we give a more complete education.

When I came here, the actuarial program, as a major, was new. It had started the year before I started. We had, I think, about 40 students in my first year. We now have around 300, which obviously is a significant increase. The actuarial faculty has expanded; we now have three qualified actuaries on staff. The number of courses continues to expand. We teach all of the programs required by the CAE, so we teach probability and statistics, we teach introduction to finance, we teach financial mathematics, we teach long-term insurance and we teach short-term insurance. I think we’re probably as comprehensive as anybody else, in terms of what we offer.

The other thing that we do, which is actually unique here, is I run a course that is an introduction to actuarial research. Because I’m a health actuary, the projects that we do, or the research that we do, tends to be healthcare-focused. This has been running for about five years. So far, two projects from this course have resulted in peer-reviewed publications, and we have another one under review. So it’s both a fairly intense introduction for the students, but it’s also serious research. If the research leads to a publication, it’s serious research. And it’s important, because I did research because I was interested in it and my clients needed it, but I’d say that the majority of actuaries, one they qualify, never get involved in research. That’s a shortcoming of the profession, in my opinion: one of the reasons we do the course.

What other courses do you teach?

I teach the first class in financial math that they take. That class is offered four times a year, because we are on a quarter system. The biggest class I had was 150 people. It’s not limited to actuarial students; it’s also taken by economics students, by statistics and financial math students as well. Our department — I forgot to mention this, but it’s important — we’re unusual in the United States, in that the program is part of the statistics department. Mostly, I think, if you were to look around at most programs, at least in the US -- it’s a little different in Canada -- most courses are located either in mathematics or business. You don’t encounter a lot that are in statistics. Being in statistics has its advantages, because our statistics department includes both pure statistics as well as financial mathematics. We actually have a research center here for financial mathematics as well. I’d say, in that respect, it’s pretty comprehensive. So I teach introduction to statistics, and I also teach long-term actuarial statistics -- the actuarial statistical underpinning of life insurance and pension, essentially.

The introduction to financial math, I teach twice a year. The actuarial statistics, as it’s called, the long-term stuff, is a two-quarter course. And the research class is a two-quarter course. So I have six classes. I’m not full-time, because I still do some consulting, and I have a fairly heavy load of research, various projects, that I’m engaged on at any time. So I’m not idle.

What about your students? Some are studying to be actuaries and others are not?

If you want to go into the actuarial major, you have to do the first two years doing the necessary statistics, probability and mathematics courses. So there’s a fairly big load of things that you wouldn’t consider to be actuarial in nature; just more general courses. The statistics and probability prepares them for "Exam P," which is the first Society of Actuaries exam that most of them take. By the time they get to sophomore or junior year -- it depends on the courses, and whether they came to us with AP or transfer courses completed -- they take the financial math course. But the long-term insurance course, the actuarial statistics course, they either take that in their junior year or their senior year.

And we try -- and I think we’ve been reasonably successful -- at getting the good students placed in an internship during the summer… usually the summer between sophomore and junior, or junior and senior year. We have a career fair here in the fall every year, and I think we’ve had close to 30 employers represented. Which probably, if you were to compare it to other schools around the country, is not that high of a number. I understand that, in California, there’s not all that much insurance. So some of the students do struggle when they graduate, because as I said, except for the big health insurance companies — Anthem, Blue Shield, Kaiser and so forth — there just aren’t a lot of insurance companies in California.

Given that fact -- and your own expertise in the health field -- do many of your students focus on that specialization?

No. Interestingly enough, I think the biggest single employer of our students is a consultant pension practice. More students go to that than go to any other single employer. And then, a number of them find positions within health insurance, particularly those that have been through the research class, because they’ve been exposed to so much health data and health practice coming from the research class. But still, the biggest single employer is pensions. And then, there’s also a number of property casualty companies in California. So some of our students go into property casualty as well.

So students have the resources during their two years of being within the major to get on the path toward an actuarial profession?

I suppose theoretically that could be true. Practically, they’re just glad to get a job, and they’re not terribly fussy. The very good students get multiple offers, and they can pick which direction they want to go in. But that’s true of only a handful of students out of the graduating class. The rest are just happy to have a job. As was the case I when I graduated. I was happy to have a job; I was not fussy.

Besides performing well in class and securing internships, how do the outstanding students separate themselves from the pack?

Number one on that list is communication. You can tell who the good students are because they’re outgoing, communicate well and clearly, have a good command of English and produce good written work. They present themselves very professionally, and I think employers understand what they are getting. They also show initiative; we have an actuarial club on campus that’s very active. We have a lot of speakers, they do game nights, they do resume workshops, they do Excel training. It's all organized by the students, for the students. Employers like to see that the students have taken some kind of leadership role, either in the actuarial club or on some other campus activity.

And I always suggest this to students -- and it seems to be increasingly of interest, at least to the ones on campus -- to do research. It doesn’t need to be serious research, but something where it’s your work, you’ve written it, there’s outlets for you to get published. The Society of Actuaries has plenty of outlets and will take things from students if they’re reasonably good. If you want to get something on your resume that distinguishes you, I’d say here’s a way to do it: write something. Study something, write about it, get it published if you can. If you don’t come out of an actuarial program, there’s not a lot of ways that you can get yourself distinguished, but if you can just show that you are committed to the profession, that will help.

Sounds like these students are also good self-educators. Do you have any tricks for keeping up with the field?

When you’re doing as much research as I do, you’re always studying and finding out about new things. So that’s one thing. Here in the department, there are constantly seminars, so you’re exposed to a lot of new techniques and ideas that people are researching as well. The Society of Actuaries to which I belong has constant continuing education offerings as well, and I do a fair amount of speaking on behalf of the Society of Actuaries; I’m on a number of committees. So I sort of keep my hand in with it that way. But I’d say the most critical -- or the most cutting-edge stuff that I do -- I do because I have some research that I’m doing and I need to understand a particular technique or idea.

What is the pathway from graduation to employment for your average student?

When I came to the profession I had zero exams; no exposure. I just started studying in my spare time, because it was a self-study course, and you could pass the Society of Actuary exams in your own time, with employer support, of course. I started in London and worked with a number of actuaries, qualified actuaries, who had come directly from high school, passed their exams and never went to college. It was possible to do that in those days. It was not rare, but it was somewhat unusual, to find an actuary who had gone through a university course in mathematics and then qualified. All of that changed in the late 1970s and early 80s with actuarial courses such as ours.

What that’s done is it’s driven specialization at an earlier age. And that has both positives and negatives. So you get students who come here intending to study actuarial science, passing all the courses here on campus, being plugged into the profession, passing two or three actuarial exams while they’re students, and if they have those other qualities of leadership and communication and so forth, employers snap them up. And that’s great. But what do you do about someone like me, who didn’t even consider the profession until after graduate school and graduated in some other field? It’s still possible to get a job as an actuarial student in those circumstances, and it is certainly possible to study and pass the exams on your own, but it is much, much more difficult, I would submit, than it used to be, because of the specialization in actuarial courses.

It is OK because even if you don’t get an actuarial job, you’re very well trained in a number of in-demand fields, such as statistics, probability, financial math and so on. You can probably get a very good or decent job outside of the actuarial profession. But I do have some concerns, because I think it’s forcing young people to make decisions and choices about their careers sooner than at least I had to. And that might not be the right thing for every young person.

Are there misconceptions about actuaries as professionals?

Oh, gee, there are a bunch of very feeble actuarial jokes, including the old joke about the outgoing actuary looking at your shoes instead of his own. Those sort of stereotypes abound. And to some degree, I think, they’re in a way warranted, because being an actuary is an inside profession, in the sense that you do your work inside a company, you advise, say, marketing, or sales, or designing products; you’re not out there on the front line — at least in an insurance company — dealing with the customers. It tends to change as you move up in the company, but a lot of actuaries will tend to have a job that is inside, as it were, and focused on internal customers more than it’s focused on external customers.

One of the reasons I became an actuary, by the way, was because it was a way I could work with my math skills and didn’t have to sell. But later on, I started a company, and what did I end up doing? No math, and a lot of selling. What I said is sort of more true, probably, of people in insurance companies as opposed to consultants, because consultants are dealing with customers all the time. It is a profession that appeals to people who want a little bit more of a technical career, perhaps less dealing with people.

What else would you explain to students who are considering one day joining the actuarial profession?

I think the thing that appealed to me — and it’s certainly been true throughout my career — has been that there aren’t a lot of jobs where you can actually apply mathematics. If you like mathematics -- and its close neighbor, statistics -- then the actuarial career is a great one because you get to apply it, you get paid well for doing it. You’re dealing with real problems of finance and risk all the time, and it’s a big business so there’s a fair amount of job security.

But if you’re the kind of person who likes people, and you want more of a sales, outgoing, client-facing kind of role, you can do that too. You still have to pass the exams first so you learn the technical stuff. But there are great opportunities — in fact, probably more opportunities — for actuaries who are willing to sell, to deal with clients, and that sort of thing, because there are fewer actuaries who are interested in that or good at that. So if you can master the technical side of it and you want the more hand-holding client-facing job, it’s a great area to be in, because you can then translate technical things for the more general user.