Consulting actuaries need to step out of our comfort zones. We have to explore and develop our soft skills, focusing not only on figures and calculations but also, for instance, on listening to our clients.
I call it the Actuary ABC. A stands for Alpha, the soft skills. B stands for Beta, meaning we have to better develop our skills in order to understand the strengths and weaknesses of the models. And the C stands for Communication. We have to communicate much better than we have done until recently.
If you sit in a room and close all the windows, nobody will ever know you have the best or most practical solutions in the world—they don’t matter. Practical solutions only matter if the people we work for understand what we do. We have to listen more and communicate better.
Actuaries are involved in everyday life, in calculating premiums for car or homeowners insurance, for example. But most people don’t realize this. Actuarial associations around the world are beginning to address this problem. How will our work develop in the coming years and what will we be doing in 10 years? Will we simply be doing calculations? I don’t think so. I think we will be doing more consulting and, in doing so, helping to solve other kinds of problems.
Pension funds in the Netherlands are facing three huge problems. The first is governance. The governance is changing rapidly and the country needs to decide how it will structure it. The second is risk management. Pension funds in the Netherlands are beginning to manage risk better. The third is communication. How can we better communicate with all the stakeholders of those pension funds? The number of pension funds is decreasing rapidly. How many will stay in the game and how can they perform better?
In the Netherlands, there are two types of pension plans, defined benefit and defined contribution plans. And until two to three years ago, everybody in the Netherlands thought that their accrued benefits were 100% guaranteed, but that is not true. Milliman is in a good position to help our clients in the pension sector in the Netherlands because of our innovative, high-quality services and practical solutions.
We are a very lean and mean organization. We are a decentralized U.S.-based actuarial global firm with quality, integrity, and innovation as core values. We try to learn from similar issues in other countries, so we can help our clients with their risk management, governance, and communication issues.
Clients in the Netherlands are focused on a good balance between quality and price. They are very critical of high fees. And that’s why our image there is one of high quality, lean but with a global reach. We rely on our local management in the Netherlands to make policy because they understand the market and the clients’ needs best.
Actuaries can learn about risk from other professions like surgeons. Surgeons are trained to implement risk management every day. They may never get down to zero risk, but they try to, every day. And as actuaries, we should, too. It should be part of our daily thought process.
Actuaries should be working on the highest levels of business, as CEOs or sitting on the boards, because all the skills you need for those jobs are the skills that actuaries basically possess. Still, there is enough room for improvement (see Actuary ABC above).