actuarial work

[buckr02]

Hey all,

Being a math major, I’m trying to figure out what to do when I graduate. One option is to be an actuary, which is, for anyone who might not know, someone who figures out insurance rates according to probabilities and the like.

I have wondered lately, however, how moral some actuarial work is. Actuaries can deal with life insurance, and so it is my understanding that their job is basically to calculate when someone will die.

I really like the idea of being an actuary because of the challenges involved and because of the amount of math that I would be able to use, but I’m not sure how comfortable I’d feel going to work every day to figure out when I think people will die. Am I correct in thinking that a job like this is immoral?

 

[1ke]

No, I do not believe you are correct in your assessment of the morality of the actuarial field.

Which of the ten commandments do you believe it violates?

Regarding potential fields for mathematics majors-- well, the sky is the limit. I majored in math in college with an emphasis on education. I taught high school and am now in a corporate environment. My fellow math majors have gone on into teaching at the high school level and college leve, and one works for the FBI.

Since you have an eye to statistics, perhaps in addition to actuarial work you might look at business intelligence and web analytics, maybe even a graduate degree in statistics. We have a great stat. guy who does lots of data modeling, business analysis, and analytics for our company.

 

[jrabs]

I have wondered lately, however, how moral some actuarial work is. Actuaries can deal with life insurance, and so it is my understanding that their job is basically to calculate when someone will die.

quote]

There is nothing immoral about it.
Life insurance is about crunching numbers - every one dies - that is no mystery. Life insurance is also a source of goodness and relief for those families that receive it. Not all bad.

 

[Joe_Kelley]

I started out to be an actuary some 60 years ago. At that time one had to pass a series of exams to become, and to advance, as an actuary. For life insurance the exams were from England. To pass them you had to have studied from specific texts from which they were derived.

I took a couple of courses, but never got around to the exams. Decided graduate school was better than working; so became a physicist. The knowledge of statistics was always useful in calculating error.

 

[LilyM]

If my understanding is correct, there’s nothing wrong with being an actuary who may draw up statistics for how long someone is likely to live.

Heck, there’s nothing wrong with being an mortician, undertaker or forensic examiner who ACTUALLY deals with dead bodies!

 

[psychemusic]

Hey all,
I have wondered lately, however, how moral some actuarial work is. Actuaries can deal with life insurance, and so it is my understanding that their job is basically to calculate when someone will die.

I really like the idea of being an actuary because of the challenges involved and because of the amount of math that I would be able to use, but I’m not sure how comfortable I’d feel going to work every day to figure out when I think people will die. Am I correct in thinking that a job like this is immoral?

As an actuary-in-training (I’ve passed 4 exams so far) and devoted Catholic, I have not yet seen any conflict between performing actuarial work and moral law.

First of all, no actuary can predict when any particular person is going to die. It’s not like predicting the future. We can’t predict; we can only make the best guess we can given the information available to us. In the case of mortality statistics, that means calculating probabilities of death based on experience within an overall population, given certain factors (age, gender, smoking status etc).

Your question reminds me a little of the quandary I had when I worked for a funeral home while I was in college. Having to transport corpses made me a little uneasy at first, but it never posed a moral problem per se.

Life insurance itself does touch upon morality in this sense: it provides a means of financial support for your dependents upon your death. I believe on this basis that it would be irresponsible not to have it if, in the event of your death, your family would be left destitute.

Mortality statistics are a necessary component in the development of a life insurance product, nothing more. I don’t believe it is in any way disrespectful toward the deceased to use mortality statistics.

Also keep in mind that actuaries are needed in many different fields, not just life. There’s also health, pensions, and property/casualty. Maybe you can think of it not as figuring the probability of death, but probability of survival. That would put you into dealing with annuities as opposed to traditional life insurance.

 

[Matt_Collins]

My son is majoring in Actuarial Science at St. Joseph’s University in Philadelphia. There is nothing immoral about applying statistical methods to populations of people. In fact, by doing so, you are contributing to the general body of knowledge about the effect of various influences on people’s health, thereby contributing to the general welfare. It is akin to the study of epidemiology.

 

[surfinpure]

buckr02,

I wonder if you wouldn’t mind clarifying for us the moral concern of actuarial mathematics. I cannot find any moral conflict with the profession, and I am married to the actuary who posted below.

In addition, life actuaries provide a great service, since without them there could be no life insurance, and many families would be left uncared for. I would think you would be doing your community a favor by filling this role. There are relatively few math-minded folks out there, and even fewer who could stand to make it their profession. I thank God there are people who love to do it, because I know I never could!

 

[Joe_Kelley]

Note that one of Father McGivney’s primary reasons for founding the Knights of Columbus was to provide Life Insurance for its members.

 

[sodak]

I’ve been in Health Insurance for a dozen years or so, and got about a third of the way through the exams, then moved around. I’m re-starting the exams pretty soon.

I can’t think of anything in Life or Casualty that would be immoral. Health is a minefield, IMO. I want to contribute and hopefully maximize the insurance that people can buy, and try and make it as affordable as possible.

For example, if you add a series of related benefits to a health insurance policy, it is often called a rider. Transplants, Mental Health benefits, things like this, are sometimes (but not always) riders that you can purchase separately for this coverage and add to your policy. Actuaries price these riders, among other things. What if you were asked to price an abortion rider? Or a rider for women’s health and wellness that included abortion?

See what I mean? I haven’t been put in this position, I’m still struggling with whether or not I should work for a health insurance company that pays for abortion (they all do).

What do you think?

 

[bobzills]

Hey all,

Being a math major, I’m trying to figure out what to do when I graduate. One option is to be an actuary, which is, for anyone who might not know, someone who figures out insurance rates according to probabilities and the like.

I have wondered lately, however, how moral some actuarial work is. Actuaries can deal with life insurance, and so it is my understanding that their job is basically to calculate when someone will die.

I really like the idea of being an actuary because of the challenges involved and because of the amount of math that I would be able to use, but I’m not sure how comfortable I’d feel going to work every day to figure out when I think people will die. Am I correct in thinking that a job like this is immoral?

Perhaps you can elaborate on this a bit as to what aspect of actuarial work you would consider to be immoral. It seems like to the contrary, this type of work would help people plan for the future and therefore could be considered to have an element of charity in it.

 

[buckr02]

Hey everyone,

Thanks for the replies. Some people have asked me to elaborate, so I will do so.

Basically, the reason I have thought it might be immoral is because I would think a large part of the job would be taking certain cases and having to say, “well, this person is probably going to die in a year, so we shouldn’t give them life insurance.” I have a feeling some people thought I meant I have a problem with life insurance, which I don’t. But I feel like very often I would have to be the bad guy and say that some people should be charged a lot of money or not get insurance at all because the stats say they’re going to die.

 

[LilyM]

Hey everyone,

Thanks for the replies. Some people have asked me to elaborate, so I will do so.

Basically, the reason I have thought it might be immoral is because I would think a large part of the job would be taking certain cases and having to say, “well, this person is probably going to die in a year, so we shouldn’t give them life insurance.” I have a feeling some people thought I meant I have a problem with life insurance, which I don’t. But I feel like very often I would have to be the bad guy and say that some people should be charged a lot of money or not get insurance at all because the stats say they’re going to die.

Well, insurance companies don’t have any moral obligation to give insurance to high-risk people, and they don’t have a moral obligation to charge everyone the same rate regardless of risk. They’re not charities, they’re businesses, that for a price provide a service, it’s perfectly reasonable for them to ensure that the business runs at a profit, which it doesn’t when they take on too many high-risk policyholders at too low a premium.

Any moral obligation is more likely to be to the contrary - they may have a moral obligation to shareholders, policyholders (whose premiums otherwise go up), partners, employees and what have you to run in a financially efficient manner, while not of course breaking the law or doing anything manifestly immoral or unfair.

 

[psychemusic]

Hey everyone,

Thanks for the replies. Some people have asked me to elaborate, so I will do so.

Basically, the reason I have thought it might be immoral is because I would think a large part of the job would be taking certain cases and having to say, “well, this person is probably going to die in a year, so we shouldn’t give them life insurance.” I have a feeling some people thought I meant I have a problem with life insurance, which I don’t. But I feel like very often I would have to be the bad guy and say that some people should be charged a lot of money or not get insurance at all because the stats say they’re going to die.

I wanted to add to the comments by LilyM as well – two things: one, making the sorts of decisions you describe actually is the responsibility of the underwriting department, not the actuarial department. So you personally wouldn’t have to be the bearer of bad news as an actuary (at least not that kind of bad news!).

Secondly, charging premium commensurate with the risk that the insurer takes by issuing an insurance contract to somebody prevents what we call “moral hazard”. For example, if somebody knew that a family member was going to die in the next year, they might consider buying life insurance on his/her life hoping to profit from their death. If the insurance company charges a high enough premium to compensate for that risk (if they don’t decline coverage entirely), the potential policyholder would be discouraged from attempting this sort of scheme. That’s just one simplified example of any number of situations that can arise due to moral hazard, but it makes the point I hope. You can get a pretty good idea of the different kinds of moral hazard that can arise by reading any standard life insurance contract.

If the insurer doesn’t make these hard decisions, in a worst-case situation they will attract a lot of bad risks, which can threaten solvency and therefore the financial well-being of all of their other policyholders.

Does that help?