Ask an Actuary

"The joy and the challenge of my job are the variety of activities involved. There is no 'typical' day for me."

Every installment a different actuary will be asked to describe the path that led him/her to an actuarial career. Our featured actuary is Dan Clapp of Shelter Insurance Companies.

Q: When did you first decide to become an actuary?

A: Actuarial work is actually my second career, though my first career only lasted a few years. I had considered taking actuarial exams when I was in graduate school, but never did (a mistake which eventually came back to haunt me). After graduate school, I worked as a marketing representative for a large computer manufacturer for five years. One day, my wife, who has worked at Shelter Insurance Companies several years longer than me, told me about a job opportunity in the companies' actuarial department. It was a great opportunity to get back to my analytical roots. I have now been at Shelter for a very enjoyable 8 years.

Q: Who or what influenced your decision?

A: The opportunity to move into an analytical field without uprooting my family was too good to pass up.

Q: What is your educational background? Where did you attend college and what was your major?

A: I received a BS in Mathematics from Murray State University in 1985 and an MS in Statistics from the University of Missouri in 1987.

Q: What classes did you take in college that helped prepare you for the career? What class was most helpful? What classes outside of math and statistics (such as communications) were helpful?

A: Many of the classes that have been most helpful were the ones where I questioned myself why I was taking them when I was taking them! Business courses, particularly in the areas of accounting, finance, and management, have turned out to be time well spent, as have the computer programming courses I took.

There is no question that an actuary needs to have specific analytical skills that are developed through the study of mathematics and statistics, but from practically Day 1 of their careers, most actuaries will also need a basic level of skill in computer programming and data manipulation. And as an actuary moves into a management role, which many do, a basic knowledge of how an entire business operates is most useful.

Q: What was your first job in the profession? How did you get the job? Did you start as an intern or in an actuarial training program? What type of work did you perform in you first actuarial job?

A: My first job in the profession was as an Actuarial Analyst for Shelter, beginning January 1, 1992. As mentioned above, my wife alerted me to the opportunity, and I decided to make a fairly drastic career change. Shelter has a fairly small actuarial department, and I was expected to be fully productive right away. So I did a lot of 'learning by doing', which worked great for me. I did personal lines rate reviews and rate filings and spent a considerable amount of time automating steps in the review process that had previously been done manually.

Q: When did you take your first exam? How long did it take for you to get through the exam process?

A: I took my first actuarial exam in May 1992, 5 months after starting at Shelter and 5 years after leaving college. I do not recommend this strategy to anyone! If a college student is considering actuarial work as a career possibility, I urge them to take the first couple of exams while still in school. Relearning calculus, linear algebra, probability, and statistics after being out of school 5 years was not a lot of fun.

I achieved ACAS in May 1997. As I have moved up in company management, finding the time to study for the fellowship exams has been difficult, but one of these days I'm going to reach the finish line.

Q: What was your career path from your first job to your current position?

A: After 3 years as an Actuarial Analyst, I was given the opportunity to become Planning & Research Coordinator for our companies. In that position, I was allowed to do research and analysis in areas throughout our companies, ranging from benchmarking our expense levels vs. the competition to analysis of how the baby boom bubble will affect our employee benefit programs over time. The time I spent in that position was invaluable in broadening my view of our companies' operations and preparing me for a management role.

After 2.5 years as Planning & Research Coordinator, I returned to our actuarial department as Property & Casualty Actuary. In that position, I was responsible for the 'technical' aspects of our pricing activities, including explanation of our rate filings to state insurance departments, introduction of new actuarial techniques into our rate review processes, and training and development of our actuarial analysts.

A year later, I became Director of Pricing, my current position.

I have been fortunate to have had all of these opportunities in 8 years with our companies. Being 'lucky' enough to be in the right place at the right time has definitely played a part, but I also believe you have to put yourself in a position to be 'lucky' through preparation and hard work.

Q: What type of work do you do on a day-to-day basis in your current position?

A: As Director of Pricing, I have responsibility for all of our pricing activities, including development and implementation of our pricing strategy and monitoring of our major competitors' pricing strategies.

The joy and the challenge of my job are the variety of activities involved. There is no 'typical' day for me. One day, I may be presenting a new rating structure for a line of business to upper management. The next day, I may be representing the companies at a state insurance department rate hearing. On another day, I may be digging through a mountain of data to research why our results for a line of business are not up to par.

I view my role as attempting to solve a huge multi-dimensional pricing puzzle, where competition is constantly changing the sizes and shapes of the pieces. If I do my job well, our actuarial department will have played a key role in ensuring the protection we provide our policyholders remains solid and our companies continue to be profitable.

Q: How long have you been in the profession?

A: I have been doing actuarial work for 8 years.

Q: What advice would you give to someone first starting out?

A: As I mentioned earlier, if you are still in school and are considering an actuarial career, take the first couple of actuarial exams now! I believe the amount of study required for those exams increases the longer you have been out of school. Plus, taking the first couple of exams will give you a good idea of the dedication and commitment it takes to achieve ACAS and FCAS.

But if you begin an actuarial career, try to keep the exams in perspective. This will admittedly be hard to do at some companies where passing exams is essentially a condition of employment. But, in my opinion, the most successful actuaries are those who can keep sight of the forest (the overall company operations) while in the middle of the trees (the technical actuarial details). Try to learn about and get involved in as many areas of your company as you can. Actuaries are paid to make reasonable predictions about unknown future events. Individuals who can do that will be in demand throughout companies, not just in actuarial departments.