[xeRTRex]

One of the most frustrating aspects of the process is that once outside of insurance/insurance-adjacent industries, the credentials are useless. I have my FSA (fellowship of the SOA) and CERA (chartered enterprise risk analyst) from the SOA. I no longer wanted to work in insurance and left for data science. I felt the need to obtain a graduate degree to feel qualified enough for the data science space. My Master's degree was a cake-walk compared to the actuarial process but that is what my peers care about, and I always feel not quite at the same level as my peers with PhD's.

It's even more constrained than my experience. The U.S has two actuarial governing bodies: the CAS and SOA - the former handles P&C, the latter just about everything else (life, health, retirement). The two organizations hate each other and it's almost impossible to get a respectable job in one industry if you have the wrong credentials. What makes it even more crazy is that the two orgs have the same exact first couple of qualifying exams.

My advice has always been: only consider dedicating your time to these exams if you're highly certain this is the career you want. The pay isn't as great as it once was, you're constrained to legacy industries, the process is as time-consuming as a PhD without getting the respect that comes along with it, and you need to decide early on which area of insurance you'll want to practice.

[civilized]

The exams have two ultimate objectives:

1. Perpetuate the actuarial guild

2. Shovel money from aspiring actuaries and insurance companies into the SOA's coffers

They aren't really, and aren't really meant to be, a marker of general, transferable intellectual skills or achievement outside the insurance industry. So it's not surprising that no one other than the parties involved (the SOA, aspiring actuaries, and insurance companies) recognizes them as a meaningful credential.

[nerdponx]

But are they not actually markers of transferable skills? I have worked in insurance, but not as an actuary, and my impression was that actuaries generally do have skills that are broadly useful in data science. Why shouldn't the actuarial exams count for something on other job applications?

[civilized]

I've also worked with actuaries and my impression has been different. Some of them have some skills, but it's very hit-and-miss, and it's not clear to me that the average actuary would compete with the average Master's in Data Science / Stats / CS in terms of effectiveness as a data scientist.

Their big weakness is computational/programming skills. Many of them are simply unable to function outside of Excel.

The SOA is trying to remedy this with new exams (of course) but my impression is that it's too little too late.

[ActualActuary]

I think it’s an unfair comparison. Of course the average actuary wouldn’t even come close to the average days scientist when it comes to data science skills.

Just like the average doctor wouldn’t, the average lawyer wouldn’t, and the average banker wouldn’t.

The problems they solve require very different skills. The problems I solve on a day to day basis have no need for data science. There are certain areas in my company where we use data science heavily, but in the areas we do need to use it we just use actual data scientists.

The SOA, in my opinion, is going down the wrong path. Actuaries shouldn’t be trying to compete with data scientists. It has such little relevance to the work of most actuaries and in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

I agree with you “hit and miss” observation though.

The exams are a barrier, but they’re not perfect. Plenty of mediocre people slip through the net. My company has roughly 100 actuaries. There are maybe 10-15 people that I’d consider very good at their job. The rest are just “meh”. I suspect this is the same in most fields though. Most companies now seem to have some sort of “data science” function. Unless the company is a tech or “data is the product” company, those data science functions don’t seem to contain the brightest data scientists. A friend of mine is a data science lead at retail company, and he’d be the first to admit he’s fairly mediocre. Most of their challenging work is outsourced to a specialist consultancy and their in house staff barely do any actual “science”.

[civilized]

The question was about whether actuarial credentials should be positive signals in an application to a data science job. And my answer is: all else being equal, having more credentials is arguably good. However, all else is not equal. Having invested in actuarial credentials is a fairly strong signal of very limited computational/programming skills which are critical to a data science career. So the net signaling value of actuarial credentials in data science is actually negative.

I'm well aware that data science is as awash with mediocrity as any other field, but not being able to function outside of Excel makes you mostly useless as a data scientist, not merely mediocre.

I also agree with you that actuaries should not compete with data scientists, and should mostly stick to product, actuarial finance, reserving, etc. unless they desperately want to do data science, in which case they should switch to data science.

> in my opinion it’s just a way for the SOA to try and increase their revenues by jumping on a bandwagon.

It's worth noting that this is exactly what you'd predict if you buy my original thesis about the exams.

[ActualActuary]

I agree completely with your last paragraph. If I wanted to be a data scientist I’d be a data scientist. I don’t want my actuarial organisation wasting time and money trying to market us as “data scientists” when we are not data scientists. It’s a completely different job. It’s almost comparable to the profession deciding that we should now market ourselves as lawyers because we also contribute to writing contracts and treaties.

I would argue though that being an actuary doesn’t automatically make you bad at anything outside of Excel.

I’m not a data scientist, but I’m sure if I decided to go down that route my skill set would put me in a good position.

I have a very good grounding in statistics and probability.

I use R/Python quite heavily, regularly building models from scratch. I work with GLMs, Copulas, Monte Carlo simulation etc.

I deal with big volumes of data and have to write efficient algorithms to deal with it.

Most of my skills didn’t come from the exam path, but doing the exams also didn’t make me bad at all those other things.

Just being an actuary obviously doesn’t mean you have those skills though, which is what I was getting at with my “hit and miss” comment.

[solumos]

this is true — as an analyst, I was severely reprimanded for writing data cleanup scripts since they couldn't be reviewed in vanilla Excel

[civilized]

Incredibly depressing. I hope you got out.

[zeckalpha]

Seems like the association should do a, you know, risk analysis on what will happen if these trends continue.

[newyankee]

In India, I feel the same about Chartered accountants and Lawyers. Not trying to dismiss their knowledge and expertise, but it is crazy the amount of stuff you can do yourself in this day and age but still need their signature. Low key I feel the same about some of the lower skilled Doctors too, although it is a very different ball game risk wise.

[seibelj]

This is the same model of all licenses, which is inherited from the guild system common throughout all of human history (the government (monarchs, oligarchies, democracies) protect favored industries from competition).

I put them on a spectrum:

- Licenses that anyone can obtain by showing the requisite skills. This is the least nefarious, and the clearest example would be driver's licenses. In a perfect world anyone can apply for and receive a driver's license. It gets corrupted by requiring training from other state-approved schools, but in its purest form it achieves, "If you can pass the driver's test, you get a license." Interestingly enough even advanced degrees sometimes achieve this goal - in California anyone can take the bar exam and get licensed to practice law without ever attending an accredited law school. Every other state requires you to attend law school (and the required cost / debt) before getting licensed.

- Licenses that you can obtain only after attending approved schools. This would be doctors, dentists, accountants, and nearly every lawyer (see above). The filter for the guild is getting into the approved school. If you manage to get accepted into and complete the program, you will succeed in getting licensed based on raw intelligence (meritocracy). The primary filter that protects the guild is getting into the approved schools (although there exists a subset of people who make it into school and fail the license exam, most commonly in law).

- Licenses that anyone can get, but require some absurd amount of hours of training, which usually costs absurd amounts of money that achieves nothing and are government mandated because of various entities that lobby politicians. These would be all of the blue-collar guilds like hair stylists, interior decorators, and being a florist in Louisiana (seriously - https://www.kplctv.com/story/37848470/requirements-for-louis...). You can learn the basics of hygiene and sweeping hair in a 60 minute youtube video, but the 1000 hour requirement in a for-profit cosmetology school in Massachusetts (https://www.mass.gov/service-details/how-can-i-become-a-cosm...) is absolutely absurd, especially considering becoming an EMT - someone that literally saves lives and gets dying people to hospitals - is a $950 six-month part time program (https://www.boston.gov/departments/emergency-medical-service...). Even worse, very rarely these licenses are transferrable between states, making the blue collar employee both indebted and chained to a particular area.

- Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade on an absurdly difficult curve to make them essentially random, and then take only the top scorers to preserve their scarcity. The process to get the license is to cram test exams ad infinitum and continue to take the test until you randomly get the top score. They ultimately mean nothing, at least compared to the amount of people who deserve the license vs. those that have them.

In summation, licenses are an atrocious relic of a bygone era, but because of economic incentives they live on in a variety of forms and have little chance of ever being eliminated.

Addendum - occasionally I will see an HN poster asking why there isn't some sort of certification or license for software engineers (perhaps in some countries these exist, but not in the USA where software engineers are the top-tier of salaries across all industries). My argument against this is that the lack of licenses is exactly why US tech companies dominate the world - anyone can succeed whether they are an ethnic or sexual minority, autistic / neuroatypical, paraplegic, etc. can learn to code and make an impact - and at any age! Licenses mean nothing to technology, and the moment they appear is a signal that something significant has changed and the industry in that country will collapse when compared to all the other countries that don't artificially restrict talent.

[namdnay]

> Licenses that anyone can get, but are purely graded on a curve in order to protect existing members. Finally we get to the actuarial licenses! Similar licenses would be Michelin star restaurants and wine sommeliers. Only a very small community appreciates these licenses, but the value to those that have them is high via the artificial scarcity. In order to keep them fair they offer the test(s) to anyone, but grade on an absurdly difficult curve to make them essentially random, and then take only the top scorers to preserve their scarcity. The process to get the license is to cram test exams ad infinitum and continue to take the test until you randomly get the top score. They ultimately mean nothing, at least compared to the amount of people who deserve the license vs. those that have them.

If I follow you correctly, this last category is basically all "competitive examinations"? I wouldn't be so quick to dismiss them (maybe that's because I live in France, where competitive examinations are the third national pastime, just behind moaning and striking).

Michelin stars for example are supposed to distinguish the best restaurants, so of course they're going to be competitive! Would you complain that we only give three Olympic medals per event?

These competitions can be useful in case of limited availability (e.g. number of places every year in an elite engineering college), but also just as a signal that you're dealing with the best of the best. For example, if you go to a Boulangerie held by a "Meilleur Ouvrier de France", you know you're going to get some of the best croissants in the world.

[civilized]

> These competitions can be useful in case of limited availability (e.g. number of places every year in an elite engineering college), but also just as a signal that you're dealing with the best of the best.

When you're dealing with actuaries, you're definitely not dealing with the collective "best of the best" (although individuals may happen to be excellent). You're dealing with people who were willing to memorize and practice and grind a very specific set of exams because they had no other options or didn't want to do anything else.

[seibelj]

I would argue that there should be way more Michelin-star restaurants than exist, but they artificially cap the supply to keep them rare. It's a form of the same thing.

[civilized]

I think there's an incentive system at work that I'm not sure I've seen articulated before. If the people controlling a rating system want the best ratings to be rare, they will often have to resort to a combination of opacity, arbitrariness, and fine distinctions that are largely meaningless to the consumers of the ratings. Because True Quality can't be reliably recognized by some ratings committee... and yet, they must rate.

[nradov]

A Michelin star rating is not a license. It has no legal force. It's simply a restaurant review, like you can read in any newspaper. Some consumers choose to trust Michelin reviews more than other sources.

[namdnay]

Indeed, just like an olympic medal. The MOF is a better example IMHO

[actuary]

Actuarial credentials aren't licenses. In the United States, they confer no privileges aside from the ability to sign a particular statement on the condition of a company's loss reserves. This is something that few actuaries will ever need to do.

Actuarial credentials are instead a market-based signaling mechanism, akin to a specialized technical degree. All signaling mechanisms are imperfectly correlated to whatever it is they're signaling for, but in my own experience, it's usually a good bet that an actuary who holds a credential will be more capable than one who doesn't. The market agrees and pays credentialed actuaries a premium. If credentials stopped being an excellent predictor of ability, there would be nothing stopping the market from disfavoring them. Note that there's one highly successful insurance company (Progressive) that has made this call and hires very few actuaries. Most companies wouldn't be able to follow their operating model, but that's a different conversation.

And if the actuarial societies and insurance companies are trying to preserve scarcity of actuarial credentials, they're doing a poor job of it. The test-taking process continue to be well-supported by insurance companies. Junior actuaries typically have all exam expenses paid and are given an additional 25 to 30 extra days off per year to study for exams. The number of credentialed actuaries has exploded (I think more than doubled) in the past decade. There are no quotas and no economic barriers after you get your first job.

I do like your comparison with Michelin-star restaurants. Michelin stars are a signifier of quality. The letters after my name are too.

[mch82]

Licenses actually mean a lot and are integral to many industries. Software isn’t traditionally regulated because society still doesn’t understand the danger of defective software.

Buildings, electronics, phones/radios, vehicles, food, medicine, and serious industries are all licensed.

[seibelj]

Some software is dangerous, like airplanes and medical software that aids in live surgeries. But the majority of software is not dangerous. You shouldn't need to be licensed to make a video game or browser extension.

[buck4roo]

Nominate parent for best of HN2021 award

[noxvilleza]

When I left high school I loved maths and stats, so I started a degree in Actuarial Science. Was totally bored by it by the end of first year - could not be motivated at all by it. There was no semblance of problem solving, it was primarily just applying a few types of formulae to a situation. Sometimes normalizing some input, sometimes adjusting something in a tiny way - but essentially the same stuff over and over again. Looked at past-papers for years 2 and 3, and it didn't any more interesting. I realized towards the end of first year that the idea of doing an entire degree and then 4-10 years doing board exams just seemed a sort of narrow path to take - few alternatives to swap to once you go too far. Ended up changing to Computer Science.

[aqualinux]

Qualified actuary here also from UK. You're right about insurance being a legacy industry. In terms of the exams, if you can pass A-level maths, you can pass the actuarial exams. I found the main reason they were considered hard is not because of the subject matter, but due to the amount of content that had to be learned in a short space of time.

[pfortuny]

The fact that its day-to-day application it is “legacy” is probably a good thing, as reinforced concrete is already “legacy” in tha sense or stailess steel.

[zaphirplane]

> Insurance is legacy

why it’s hardly getting superseded at least for car, home, medical, life, injury , income and travel

Actuarial ppl shouldn’t really care if it’s run on mainframe not k8s (if that’s the reason)

[xeRTRex]

And the esoteric notation!

[starwind]

> The pay isn't as great as it once was

Not to mention there aren't that many entry-level openings so you don't get much choice on where you live after college

[Aeolun]

Based on the question in the article the skills you get from this would carry over.

[xeRTRex]

The fundamentals of actuarial science: probability, time-value of money, and tail-risk have absolutely benefited me. I do gripe that much of the material is out-dated. I sat for all my exams within the past 15 years and (for example) we had a lot of option pricing models that have been archaic since the 90's and no machine learning (material has been updated with ML, but it constantly feels a couple decades behind).

[aqualinux]

The ML skills update was a very basic update. Proper ML skills take a long time to learn and can't be taught through an exam, the material for which gets forgotten very quickly afterwards.

[pyuser583]

I’ve hear actual certification held out as a decent alternative to requiring a degree for everything.

I’ve also seen similar complaints from lawyers: you’re basically stuck in whatever state you passed the bar exam in.

[erik998]

I liked watching these videos from Ostaszewski

https://www.youtube.com/watch?v=Jc335qIQZgg

https://math.illinoisstate.edu/actuary/faculty_staff/

https://math.illinoisstate.edu/krzysio/pass.html?_url=%2Fpas...

[sjg007]

You came to the right place if you want to disrupt things with a startup.

[throwawaygh]

I'm not sure there's much to disrupt in that industry.

[tzs]

> you're constrained to legacy industries

Is insurance really a legacy industry?

[MattGaiser]

They are a strong candidate for greatest technological backwater.

[aqualinux]

The incumbent insurance companies maintain their position in the market through having large amounts of capital which lets them ultimately offer lower premiums than a new competitor entering the market which may have less capital. This means the legacy insurance companies don't need to prioritise investing in innovation to maintain their position, hence the old companies stay around.

[civilized]

Also, insurance just doesn't have much interesting space for innovation.

In life insurance, for example, products other than simple term insurance really shouldn't exist. They're mostly just Rube Goldberg tax sheltered savings accounts for the wealthy.

In theory there ought to be some opportunity in the area of incentivizing people to improve their health behaviors. But carriers have been much slower to move on that than to futz around with the latest financial engineering and tax avoidance techniques.

[mleonhard]

I tried to buy decreasing term life insurance, where the benefit decreases continuously over 20 years, matching the needs of my family. I consulted with several agents and none of them could sell it to me. The best they could do was to divide the term into three time periods with different benefit amounts.

One agent told me that most customers drop their policy after a few years. The companies earn most of their income from the initial periods of policies, when payouts are rare.

[lotsofpulp]

I applied for term life insurance at 3 or 4 life insurance companies, and they all allowed you to reduce the benefit amount a few times over the term.

Not every year, but they said it was no problem if you wanted to halve the benefit halfway through or even a second time after that (and they would lower the premiums commensurately of course).

I have Principal and Protective in the US.

[mleonhard]

Your comment is essentially "me too". That's not interesting.

[civilized]

There's a startup that will do this but I don't know if you'd want a policy with a startup.

[mleonhard]

Please share a link. And in the future, try to share links or at least names of things you tell people about. If you can't find the link or name, then say so. I think saying only "the thing you want exists" is a little rude.

[m00n]

Regarding life insurance product offerings: disability insurance is often advised by consumer protection groups for young professionals, who crucially depend on future income.

Regarding savings products, nothing wrong IMO, with tax subsidizing a "consume later" mentality, if the products are cost-effective.

[User23]

Term life insurance is basically just a put option on your life with an expiration a couple decades out.

Whole life on the other hand is actually buying equity in your presumptive future earnings. It's considerably more capital intensive, but less expensive overall in most cases.

[civilized]

I don't know anyone outside of a heavily commissioned life insurance agent who thinks whole life is a good deal. You're flushing massive amounts of money down the toilet in the form of agent commissions and other fees. It's just another tax shelter for the wealthy, after they max out more attractive alternatives.

This article sums it up for me: https://www.nerdwallet.com/article/insurance/is-whole-life-i...

[User23]

You're not wrong, but from the very good article you linked:

> I think only the top 20% of income earners should consider whole life. Term insurance is cheaper and is almost always the best type of insurance for 80% of the nation.

Many of the readers of this site fall into that 20%. If you're working at SV rates and aren't maxing out your 401(k) you're assuredly doing it wrong. If you are and want to save more, then whole life is an option worth researching.

[boppo1]

Could this be one of the few cases where a DAO actually has a real world application?

[aqualinux]

Maybe, the insurer would still needs a claims-handling staff overhead to verify a claim made is valid. And perhaps also an underwriting team to assess the risk before the start of a policy. The DAO could replace the paperwork/emails, but I imagine that is only a small expense.

[monkeybutton]

The incumbent companies in that space are.