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Falco Valkenburg |
Actuaries of the 5th kind are data driven, critical, socially responsible financial decision makers. Professor emeritus Paul Embrechts, expert in the field of extreme value theory, suggested this in his key note address opening the third congress of actuaries in Lisbon on 6 June 2019. I immediately liked this. I see so many discussions in society where it seems to be all and foremost about opinions and less or not at all about facts. Actuaries have, in my view, the duty to provide as much as possible facts. Given our professional background we are perfectly positioned to analyse data. We have also proven to be able to translate the results of those analyses into meaningful conclusions leading to concrete suggestions on the meaning of the issue that is looked at and what can be done in a very practical way. When we do our analyses unbiased, using our scientific background, we can be of great added value to society as we are bringing facts to the table. In fields of big uncertainty we can provide useful insights in likelihoods of events. What we sometimes need to do better, again in my view, is speaking out loud and strong. Sometimes the message might not be seen as the desired one. That could make us only whispering or sometimes even softening our message. Embrechts calls on us to dare to be critical. He also calls on us to engage in socially responsible matters. This goes wider than insurance and pensions. This touches all fields in society where data analysis plays a role and where there are big issues to solve.
On the next day Gabriel Bernardino, chairperson of the European Insurance and Occupational Pensions Authority (EIOPA), called on all actuaries to be relevant to and be visible in society. He referred to several fields where actuaries could (and, my addition, should) play a role such as the measurement of costs and past performance in insurance contracts, especially those in the field of unit-linked and with-profit contracts. He called for help and advice in these areas. He also asked to actuarial profession to provide insights for the development of a Key Information Document (KID) for the Pan European Personal Pension product. Such a KID needs to contain relevant information for the consumer and at the same time needs to be kept as short as possible and be written in clear layman language. Towards the end of his talk, Bernardino, discussed the importance of environmental, social and governance issues. Again he called for actuaries to play a leading role. Although he hastened to say that he was not a gambler, he confessed that he would put a bet on that the climate discussion would not go away and would remain a key topic in society and thus amongst politicians. He liked very much and advised everybody to read it, the recent position paper “The heat is on” as issued by the CRO Forum.
I agree very much with both Embrechts and Bernardino that we, with our professional background, have the responsibility to engage with the big societal issues. This links directly to our vision statement, where it reads “… contributing to the well-being of society …”. When we focus on the social relevance of issues and engage in the discussion providing meaningful facts, we have the potential to play an important role in how we as society will deal with these big issues. I am happy to see that there is a lot of interest in the actuarial community to engage in these big societal issues. As an example, and just an example as there are many more, I see with great pleasure that we have recently set up a working group to assess what is needed to develop a European Actuarial Climate Index. Following our North American and Australian colleagues I would hope we can also develop such an index for Europe. Another example is that we are investigating what good approaches can be in the assessment of costs and past performance for with profit insurance contracts. We do this on the request of EIOPA and we will do this as experts in our field, unbiased and for the best of society. I am convinced that doing things like this, we will gain further relevance in the political field and both national and European institutions.
This blog is written in a personal capacity.
July 2019
