"Actuaries are becoming extremely sought-after interlocutors" – Interview with Lutz Wilhelmy, Chairperson AAE
Mr. Wilhelmy, first of all, congratulations on your election as the new chairperson of AAE. In this important office, you will represent the interests of all European actuaries at an international level. What are the goals of the AAE and what topics would you like to focus on during your one-year term of office?
Thank you very much for the good wishes. The AAE was founded to advise European institutions. Over the years, it has developed into an active umbrella organization of European actuaries. Since 2016, we have defined our strategy as having the following objectives:
- the deepening of our relationship with the European institutions,
- the promotion of the profession, and
- the formation of a European community of actuaries.
Regarding the first goal, 2023 is focused on sustainability and the European digital agenda. We do not pick and choose these topics - they are dictated by the EU's priorities. Furthermore, the finalization of the Solvency II review and the EU Insurance Recovery & Resolution directive as well as the IORP II directive will play a role.
On the second objective, we will be looking at the agreement on the mutual recognition of professional qualifications. Challenges arise here because some actuarial associations are facing accusations of unequal treatment. We also want to hold a discussion on requirements and proof of "professional qualifications" ("fit and proper" persons) with the responsible parties concerned at European level. Ultimately, this touches on the question of suitable skills and thus goes beyond purely technical qualifications. However, the latter is an issue that cannot be satisfactorily dealt with within a year and will therefore stay relevant for longer.
For the third goal, we would like to help to make the profession better known in countries where it is not yet prominent in the public eye. To do this, we propose to establish a European brand that stands for compliance with AAE regulations on training, professionalism, and conduct. In addition, with our event and education partner, the European Actuarial Academy (EAA), we plan to host various webinars, round tables, the European Actuarial Day on June 27, and the next European Congress of Actuaries (ECA) in Rome in early summer 2024.
Now that 2022 is over, we would also like to take a look at the past year - from your point of view, what particular challenges did actuaries face across Europe or even worldwide?
The particular challenges in 2022 were clearly the war in Ukraine and the return of inflation after 40 years of comparatively very moderate inflation rates.
Russia's war against Ukraine, which is against international law, has challenged all actuarial associations worldwide and their umbrella organizations, such as the International Association of Actuaries (IAA) and the AAE, to review their statutes to see if they allow or even suggest condemnation of the military action. Since actuarial associations do not usually speak out on non-actuarial issues, this was uncharted territory. I was deeply impressed by the professionalism and prudence with which the bodies and working groups of our actuarial associations addressed this issue: Where the statutes have a sufficient connection to the welfare of their societies, condemnation is possible and proportionate. Thus, it has been possible for both the IAA and the AAE to issue condemnations. In addition to the political dimension, there is the actual help for our colleagues in the region, where the national associations in Europe have been quick and effective. This is a reason to be proud!
With the war and the aftermath of the pandemic, inflation has returned to Europe. For the older people among us, who learned their trade from personalities for whom the challenges of the high inflation of the 1970s were formative, memories of the difficulties of determining reserves in non-life lines, particularly in liability and especially in non-proportional liability reinsurance, but also in business planning in life insurance, came back. Actuaries, with their good memories, are well prepared to meet these challenges.
In addition, the perennial issues of sustainability and digitalization as well as the Solvency II Review have kept us busy. On the topic of sustainability, it is not only the uniform scenarios in the ORSA, but also the quantification, comparability, and delimitation of climate risks for future reporting that are relevant to us. How useful these reports are for investors and the general public will be crucial to the success of reporting. There is a risk here that people will no longer be able to see the wood for the trees. However, our influence on these issues is extremely limited, as this is not an insurance-specific regulation, but a so-called horizontal regulation.
The situation is very similar to the implementation of the European Union's digital agenda. Here, too, the starting point is cross-sectoral - here, too, the AAE's factual influence is severely limited. It so happens that AI systems to be used for risk assessment and pricing in relation to natural persons in the case of life and health insurance are labeled as high-risk in the current draft of the AI Act (November 25, 2022) without any significant factual expert discourse having taken place on this.
What other challenges do you see for the profession in the future?
Actuaries are recently becoming extremely sought-after interlocutors. At European level, this means that we as the AAE must become more vocal and effective in order to meet these growing demands. Therefore, we are striving to increase the support for our volunteers. We have had very good experience with such activities in the area of Solvency II over the past few years.
In addition, developments that go beyond our traditional insurance sector and even beyond the financial sector are increasingly relevant for us: Digitalization and sustainability are just the beginning. This gives us new partners to whom much of what we take for granted seems unclear or even wrong and outlandish. The fact that detailed differentiation of coverage costs in private insurance is one of the main drivers of a performance-based efficient economy is largely unknown outside the insurance sector. Also, the fact that private insurance does not a priori have anything to do with solidarity in the sense of subsidies or value transfer contradicts a widespread prejudice. Actuaries will therefore have to do more groundwork to explain the nature of insurance and the conditions of insurability.
This brings me to a final point. Some of the actuarial associations in AAE are developing frameworks for training called competency frameworks. One example is the SAI Competency Framework of the Society of Actuaries in Ireland. Such frameworks can be understood as an extension of the domain of knowledge to include the domains of skills and attributes such as resilience, accountability, or professionalism. While we acquire knowledge through education according to our syllabi as well as through continuing education and can validate it through exams, skills and attributes are more likely to be gained through professional experience. They are therefore less obviously objectifiable and demonstrable in detail. Nevertheless, they are crucial when it comes to demonstrating suitability for a particular position or task. Our fast-growing profession could aim here at a uniform European framework and try to make the skills and attributes acquired through experience, education or otherwise at least partially accountable.