Survey Shows Strong Academy Support, Task Force Suggests Building Volunteer Base he Academy is well respected by members and nonmembers alike, but it has the potential to build on its strengths and become even more effective for the profession, according to the Academy Task Force on Membership, which delivered its final report to the Academy Board of Directors in June . The task force was established in May 1995 to strengthen members' ties to the Academy and to encourage all eligible actuaries to join. The task force's members were chosen to broadly represent all aspects of the actuarial profession : Chairperson Bill Bluhm is a health actuary ; Bruce Bassman
tice) and 101 actuaries who are not Academy members February 7-20 . The survey results showed that actuaries view the Academy favorably but typically have limited involvement with the organization :
is a casualty actuary ; Sam Gutterman is a life, health, and casualty actuary and - Overall, the Academy received high marks from members and the president of the Society ofActuaries ; Howard Phillips is an enrolled a d~ nonmembers alike .The Academy's favorability rating was 8 .1 out of 10 from teary and a past president of the American Society of Pension Actuaries ; an members and 7 .3 from nonmembers; according to Wirthlin Worldwide, a Larry
and Academy president-elect .
5 .5 favorability rating is typical for pro-
first meeting, the task force members discussed their charge and narrowed the scope of inquiry to five broad issues, phrased as questions :
-Familiarity breeds approval : The* more familiar actuaries were with the Academy's work, the higher the favorability ratings they gave the Academy. Older, more-experienced actuaries had greater familiarity with the Academy than younger members of the profession .
• Is there really a problem ? Although 81% of eligible US. actuaries are Academy members, there is a general perception that actuaries feel less affinity for the Academy than for their creden-
-Setting and enforcing professional standards was seen as a key Academy activity by 60% of members and 65% of nonmembers, who were asked their top-of-mind perceptions of the Academy's work. (See page 3 .)
tialing associations . However, the task force did not know how actuaries really view the Academy, or why those who are eligible to join have not done so .
• Are there election issues? Anecdotal evidence suggested that some see the Academy leadership selection process as dominated by a closed group of senior leaders . Some on the task force thought alternative election procedures might increase member affinity. • Is there a cost/benefit issue? What are the benefits of Academy membership to the individual actuary versus the profession as a whole? Do members perceive benefits to be commensurate with dues? • Could communications help affinity? Some task force members suggested a more targeted approach to communications to increase member affinity. • Should volunteers be rewarded for service ? Some thought that more systematic acknowledgment of volunteers' efforts might encourage greater participation in the Academy. It quickly became clear that hard data would be needed to answer these questions . The task force concluded that the most effective way to obtain objective data would be through a scientifically designed survey of a selected group of actuaries-both members and nonmembers . The task force contracted with Wirthl n Worldwide, an independent opinion research organization, to conduct such a survey. With assistance from members of the task force and the Academy leadership, Wirthlin Worldwide developed a detailed set of questions to probe actuaries' attitudes toward the Academy's work . Wirthlin Worldwide conducted 20-minute telephone interviews with 202 Academy members (from all areas of prac-
-When asked about important Academy benefits and services for the profession, 55% of members cited professional standards and regulation . Fifty-four percent of members said that the Academy provides information to actuaries; 22% of members said that the Academy provides representation of the profession with elected officials and regulators . -The current level of Academy dues does not appear to be a significant bar to nonmembers' joining . Most think the dues are a good value, and the dues level has little or no effect on 52% of nonmembers' and 87% of members' decision whether to join . Moreover, the vast majority of respondents have some or all their dues paid by their employer. -The Academy's leadership selection process was unfamiliar both to members and nonmembers . However, the process had little impact on respondents' overall opinion of the Academy, very little impact on members' decision to join the Academy, and almost no impact on nonmembers' decision not to join the Academy. More than half of respondents stated that the Academy's process was at least as representative as those of other actuarial organizations . --Current member involvement with the Academy is extremely low due to the nature of the Academy's specialized work on public policy issues. However, 34% of members and 45% of nonmembers stated that they plan to increase their involvement . Continued on page 4
be made as infrequently as possible . When such changes are necessary but would impose additional burdens on plan sponsors, their effective dates should be optional until a suitable period after pertinent regulations have been issued .
Kennedy Seeks Academy Advice en Health Care Bill Faced with last-minute conference committee negotiations on the Kassebaum--Kennedy health care bill, chief sponsor Sen . Edward Kennedy (D-Mass.) turned to the Academy for technical assistance . At issue were differences in group--to-individual portability provisions between the House and Senate versions of
informed the Subcommittee on Employer-Employee Relations of the House Committee on Economic and Educational Opportunities in written testimony on June 26 . Gebhardtsbauer urged Congress to recognize the inherent advantages of today's system. "The tax incentives contained in the current tax code serve as a primary motivator for employers in setting up and maintaining pension plans for their employees;" he wrote. Gebhardtsbauer also noted that private pensions eased the
the legislation. demand on governThe Senatement social services passed bill required for the elderly and insurers to offer all that pension plan sur available plans to pluses were an imqualifying individu- Bill Bluhm prepares for his July portant source of 18 meeting with Sen. Edward als, while under the Kennedy. capital. House version only However, needless one plan had to be available . regulatory complexity impedes the Kennedy supported the Senate repension system, Gebhardtsbauer wrote . While the Academy welquirement but was willing to conpromise to obtain conference comcomes some of the proposals under mittee approval if he could be assured that plans offered under the House provisioi&uld offer adequate coverage . At the senator's request,Academy members Bill Bluhm and Ed Hustead met w nnedy on July 18. The actuarx cussed the two approaches to portability with the senator and assured him that access to affordable health care offered by the House bill was not significantly less than under the Senate version . Bluhm and Hustead also briefed Kennedy on ways to prevent insurance company gaming by state regulation and individual health plan provisions. Under the final agreement, subsequently passed by both houses of Congress, individual-market insurers must offer new enrollees : their entire portfolio of individual policies; a choice of high- and low-deductible plan, with actuarially equivalent benefits; or their two most widely sold individual polices. This last option was suggested in a May 10 Academy comment paper, "Actuarial Equivalence Provisions in H .R . 3103 ;" authored by David Balm, Cecil Bykerk, Richard Niemiec, Donna Novak, Tom Stoiber, and PeterThexton. Stoiber also consulted extensively with Kennedy's staff in the weeks before passage of the bill.
Retirement Policy Criteria Outlined Pension legislation should be developed within the framework of a comprehensive national retirement income policy, Academy Senior Pension Fellow Ron Gebhatdtsbauer
subcommittee consideration, such as a streamlined definition of highly compensated employee and the repeal of rules on combined plan limit and family aggregation, such simplification measures are only a first step, he continued. In an appendix to his testimony, Gebhardtsbauer submitted the Academy Pension Committee's Criteria for Retirement Plan Legislation and Regulation . The criteria were drafted to guide elected officials in developing pension legislation that will strengthen the private pension system and further national retirement income goals. The criteria consist of three broad goals for retirement plans and eight policy guidelines . Under the goals, retirement plans shoulde Encourage savings • Allow older workers to retire with economic security, thus providing job opportunities for younger workers • Reduce dependency on Social Security and welfare programs . The guidelines, meant to help create a favorable environment for the establishment and growth of retirement plans, are : • Pension legislation should encourage the formation and growth of both defined benefit and defined contribution plans . Additionally, neither plan should be placed at a disadvantage to the other. • Pension legislation should be developed in the context of a national retirement income policy, including Social Security. • Pension legislation should not be driven by short-term revenue considerations . • Changes in pension law should
• Pension funding rules should be structured to provide benefit security, including security for benefit levels that can reasonably be anticipated within the plan's current benefit structure (e .g., cost-of-living adjustments to IRC §415 benefit limits and collective bargaining agreement increases) . In addition, the rules should be sufficiently flexible so as to create predictable, stable contribution requirements . • Regulations should not impose requirements beyond those anticipated in the law, and should be formulated to allow the greatest possible flexibility and administrative simplicity consistent with the law • Pension legislation or regulations designed to restrict perceived abuses
should be carefully evaluated on a cost/benefit basis ; restrictions should apply only to situations where abuse has occurred or is likely to occur ; additional information should be required only in situations where abuse is likely to occur or has occurred. • The principles supporting any federal pension program or agency should be based on sound actuarial principles .
Cassidy, Hendricks, Dhillon in New Academy Posts Christine Cassidy has been promoted to director of public policy for the Academy by Executive Director Wilson Wyatt. In related moves,Wyatt also appointed Gary Hendricks as senior policy adviser and Neil Dhillon as special assistant to the executive director .
In announcing the changes on July 24, Wyatt said, "Christine has proven ability in managing complex projects and providing federal and state officials useful information on the actuarial profession's key public policy issues . In her new role, she will direct all the Academy's public policy activities and committees. As senior policy adviser, Hendricks will devote his time to developing new projects related to the profession's key issues . Dhillon will assist me in achieving greater public identity with elected officials and will continue to handle media relations as he has since joining the Academy in November." Cassidy has been at the Academy since 1992. Her work has included managing the development of a risk-based capital formula for health organizations for the National Association of Insurance Commissioners and serving as staff liaison on issues related to pension simplification, Medicaid managed care, and tax reform.
Surveying the Profession : Results Support Academy Direction he work of science is to substitute facts r appearances and demonstrations for impressions ." That -quote- John uskin, which sums up the actuary's role and is so important to the profession , also describes the process undertaken by the Academy Task Force on Membership .
Wilson W. Wyatt Jr.
The task force was charged by the Board of Directors to examine ways to strengthen the loyalty of our members and encourage nonmembers to join the Academy. Each member came to the project motivated by enthusiasm for the Academy, but with their own impressions about the nature of the challenge and ways to meet it . After an initial discussion that identified questions to be answered, the task force decided the only way to efficiently gauge the views of our members was to commission a professionally conducted survey . In other words, change the impressions into facts . For help, the task force interviewed the best . The selected survey firm, Wirthlin Worldwide, enjoys an outstanding reputation for effective corporate strategic surveys, and has long been an important player on the Washington policy scene. (Richard Wirthlin, founder and chairman of the company, was chief White House pollster for President Reagan.) The Wirthlin team, with the help of the task force and Academy staff, put together a comprehensive survey instrument designed to reveal member opinion with a high degree of accuracy on the full range of Academy activities. The Wirthlin survey results were very positive and showed that members generally understand and support the Academy's work . Especially encouraging was the direct correlation between familiarity and approval : The better our members know the Academy, the higher they rate our work . Public policy, communications, and professionalism are the pillars of the Academy's mission, and the survey indicates that members approve of our efforts in these areas . When asked about the Academy's role in strengthening actuarial professionalism, 94% of members agree that the Academy supports professionalism through the Actuarial Standards Board and the Actuarial Board for Counseling and Discipline . Ninety-two percent of members believe that the Academy addresses major public policy issues important to actuaries, and 84% agree that the Academy's work improves elected officials' and regulators' attitudes toward the profession . The media and the general public also are important audiences for actuaries ; 76% of members agree the Academy is making a difference in how the media and public view the profession . (These findings are explained in greater detail in the chart on page 3 .) In its report to the Academy Board, the task force suggests the Academy establish a Membership Committee to carry out the report's suggestions and develop further recommendations . I look forward to working with that committee to increase volunteer opportunities and implement a volunteer recognition system, foster a more open leadership selection process, and enhance the effectiveness of our communications . The Academy is achieving success for the entire profession-thanks to the talent and commitment of you, its members . Armed with the recommendations of the task force and working closely with the leaders of the other actuarial organizations, we have the opportunity to take the Academy to a new level of effectiveness . We are totally committed to that goal . To the members who helped us measure our strengths and challenges by participating in the Wirthlin survey : Thank you . To all Academy members : Please continue to share your ideas and concerns with us . I guarantee your voice will be heard .
From the Academy Membership Survey Conducted by Wirthlin Worldwide Top-of-Mind Perceptions of the American Academy of Actuaries lmuRipfe responses)
Working for a Stronger Academy
Bill Bluhm of the Task F orce on Membership
Political functions 25% 38%
Representative functions 12%
0% 10% 20% 30%
40% 50 %
60% 70% 80%
ill Bluhm knows about actuarial volunteerism. As chairperson of the Academy Task Force on Health Organizations Risk-
Based Capital (HORBC) in 1994-95, he
mobilized actuaries in a high-priority project to draft Academy Members ' Use of Academy Communications
a health RBC formula for the National Association of
Insurance Commissioners . The assignment required BillBr m
Standards of Practice and Exposure Drafts
14,000 volunteer hours-many of them his own . Bluhm also serves on
both the Academy Board of Directors and the Society ofActuaries Board Academy Yearbook
of Governors, so he has a thorough understanding of the distinct roles of
the US . actuarial organizations . All of which made Bluhm a logical
Academy Alert 0%
choice to lead the Academy's Membership Task Force . He recently dis-
% of Members % of Nonmembers Agree Who Agree
The Academy is supporting professionalism through the standards and services provided by the ASB and ABCD .
The Academy is addressing major public policy issues with decision makers, elected officials, and regulators on issues of interest to actuaries and to the public.
The Academy is tryin to beneft its individual member
The Academy is mala difference i n how public policyy makers perceive the actuarial profession .
The Academy benefits the actuarial profession much m en it does the individual membe1wAcademy.
The Academy is making a difference in how the news media and general public perceive the actuarial profession.
cussed the task force's work with the Update's managing editor. Were you surprised by your task farciss findings? Yes, we all had at least one of our own pet theories destroyed by the study. The task force, which included members from all areas of actuarial prac came together with the contoal ofstrength-ening the Academy However, because we each had our -own preconceived notio , we decided to get to the fa,ng the survey of attitudes about the Academy. I must say that my chief preconception was shattered by the survey results.
Academy Deserves All Actuaries' Support W by haven't all U.S .-based actuaries joined the Academy? The Academy Task Force on Membership focused on this significant question throughout its deliberations. The survey we had conducted delved into this issue . Fast, we had to clarify for ourselves why an actuary should join . The primary loyalty of many actuaries is to the organization where they took examina tions; this is understandable. Fortunately, the survey told us that those actuaries who are MAA .A.s value their membership in the Academy, We segmented Academy benefits into two types : those for the individual actuary and those in support of the profession. Benefits of the first type are readily apparent , although it is up to each actuary to take advantage of them . They include the ability to sign certaro regulatory opinions if designated qualification requirements have been met, take advantage of various communications, and participate on committees . Benefits in support of the profession are not as tangible, and thus are fairly easy to discount in importance . However, in my opinion, these can be even more important in the long term . Among them are: • Development of standards of practice through the Actuarial Standards Board . • Maintenance of a discipline and counseling process through the Actuarial Board for Counseling and Discipline.
• Public interface on public policy and regulatory/ legal issues, focusing attention on policy decision makers . .Coordination of public interface programs, such as the Forecast 2000. If the benefits for the individual don't apply or appeal to an actuary, it is easy to justify not joining . After all, it can be hard to pay dues or persuade an employer to support the profession by paying them. In fact, there are several large firms and companies in which a minority of eligible actuaries are M.A .A.A.s . This is a shame, for those firms benefit from a strong profession ; I believe it is very important to support its enhancement. Recently, the Academy has improved its performance in the areas of its responsibility. It certainly deserves the support of every U.S.-based actuary . I am optimistic about its future and its ability to contribute to both the individual actuary and the profession . The good news is that, according to the survey, a majority of those who have not joined intend to join-all they have to do is take the initiative. I strongly encourage all US. actuaries to join and help the profession grow and prosper in the United States .
encourage all U .S . actuaries to join the Academy.
-Gutterman is president of the ,Society ofActuaries and a member of the Academy Task Force on Membership
What was your idea? [ thought that the Academy should seriously consider a competitive election system. There was a lot of anecdotal evidence that some people are critical of the leadership selection process . However, the Wirthlin study showed that our members generally were unconcerned about elections. So instead of changing the process, we're calling for better cott~munication .
How would that work? As I see it,Academy members will be notified that certain positions are open and that the process of selecting leadership is underway The criteria that are used to select leadership candidates will be discussed, and interested members can have input. We want to make sure that members understand the process .
I The task farce report points to the need to strengthen the volunteer structure of the Academy. What is the bast way to get more people actively involved? It's a difficult problem, and there have been various attempts to deal with it over the years . One of the Academy's strengths is that it calls on experienced actuaries who can provide specific technical assistance to regulators and government officials , and these arel typically seniorlevel actuaries. Unlike the SOA or CAS, the Academy does not have an exam committee system that provides opportunities for large numbers of new Fellows to participate . This will be a major challenge for the membership committee.
The task force calls for reinstituting the membership committee . What will the committees function he? I see a twofold function . First, the committee will find ways to build an earlier and stronger affinity with the Academy among actuaries . The goal will be to increase membership at younger ages and lower
levels of experience. Second, the committee will oversee the mechanics of the volunteer process and implement systems to provide incentives to our volunteers . The goal here will be to build a volunteer force that ' vibrant, young, and enthusiasrti need to counteract the impression that the Academy is an elite organization for a few senior actuaries .
You continua tan extremely busy Academy volunteer, curraatly is a leadership role far the Health Practice Council. What's on the health agenda for the next year? The Health Practice Council will be doing a lot of work on Medicare issues-on managed care and fimding levels, but also including Medigap insurance and market-based pricing . On the state level, there will be a high-visibility project to educate regulators on new health-care providing entities that are taking on considerable risks . We'll also address guaranteed issue, health-plan conversion issues, and continue working with the NAIC to implement the health organizations risk-based capital formula.
You recently conferred with Sen . Edward Kennedy at a crucial moment in negotiations an his health care bill . Can you tell us about it? Along with Academy Member Ed Hustead and other health-care financing professionals, I met with Sen . Kennedy and his staff to discuss differences between the House and Senate versions of the Kassebaum-Kennedy health care bill. (See page 2 .) It was the most interesting experience I've ever had advising a public official. The senator was very knowledgeable about . the technical aspects of his bill and was very attentive to what we said . His staff followed up the next day with more questions on yet another version.
THE ACTUARIAL Social Securi
Roller Coaster EXECUTIVE DIRECrost WilsonWWyatt,Jr.-
Ken Steiner, in his July letter to the editor, asserts that Congress has not "formally endorsed pay-as-you-go financing" for Social Security . Not
Specifically, the combined employer-employee contribution rate for OASDI for 1972 would have been decreased from 9 .2% in previous law to 8 .4% and for 1973-74 from 10% to 8.4%, but would then be increased for 1977 and later years from 10 .3% to 12 .2%. At the same time
PRZ?siDENT-ELECT Larry Zimpleman VICE PRESIDENTS Vince Amoroso John M. Bertko Arnold A . Dicke David P. Flynn Charles Barry H .Watson SECRETARY-TRF,.ASURER Stephen R . Kern
Knight-Ridder Tribune/PAUL TRAP
the retrospective fund ratios (fund balance at the end of the year as a percentage of the outgo in the year) would be sharply reduced The 1977 amendments inadvertently changed the funding basis to what may be termed temporary partial-reserve (or perhaps roller coaster) financing . In consideration of the 1983 amendments, sufficient time was not available to reexamine the matter, and the funding basis remained unchanged . --ROBERT J. MYERS SILVER SPRING, MD.
Myers was chiief actuary of the Social SeturityAdminishatonfrom 1947-70.
"Wlil.e I've Got You on the Line . . ." While Wirthlin Warldu'ide was surreying Academy members on behalfof the Task Force on M'embershi'p the Academy requested that the survey team ask a separate set of questions about the future of retirement . he retirement survey results were released last spring (see May Update), and have been used to raise actuarial visibility dsrough the profession's Forecast 2000 communications program. This graphic was developed from the survey data by KnightRidder netas service and has appeared in major dailies, including the San Diego Union-Tribune .
of nominated candidates to help members understand why those individuals were selected for office .
• Develop opportunities for less experienced members to participate in volunteer projects and use other U .S. actuarial organizations as sources for volunteers A significant number of survey respondents expressed interest in Academy Involvement However, task force and committee chairs often tend to recruit people they know without adequate consideration to creating opportunities for newcomers. The task force recommends that committees and task forces set aside positions for new volunteers and that the other U.S. actuarial organizations be used as a source of volunteers .
• Establish a Membership Committee This committee would be charged with implementing the task force's suggestions and with making volunteer opportunities available to nontraditional practitioners . • Encourage greater openness in the election process Although the Academy's election process did not appear to trouble most of the survey respondents, the task force recommended the Academy Nominating Committee improve the process by being more open in describing its activities . The task force urged that the Nominating Committee dearly state its search criteria, publicize its efforts to identify suitable candidates, and then provide brief biographies
The American Academy of Actuaries 1100 Seventeenth Street, NW 7th Floor Washington, DC 20036 . . - Fax : (202) 872-1948
• Develop a formal system to recognize volunteers for their contributions A majority of survey respondents said that increased recognition would not affect their willingness to volunteer for the Academy. However, the task force supports a more systematic approach to volunteer recognio that would increase affinity to the Academy. For a copy of the report of the Academy Task Force on Membershipfax a request to Rita WinkeI at 202-872-1948.
CoMM rrEE ON
Wilson W. Wyatt ..Jr•; Suruey .Prnvides the Data We Need Task Farce Chair Bill Bluhm an a .Stran9er Academy
The task force analyzed the results of the Wirthlin survey, and in light of the original task force objectives, made recommendations that include
join The survey showed that many nonmembers have neglected to join out of simple procrastination ; a directed campaign to recruit them could be highly successful .
EXECUTIVE OFFICE :
Woodfield Corporate Center 475 N. Martingale Road Schaumburg, IL 60173-2226 (847) 706-3513
confined from page 1
• Develop and implement a program to recruit nonmembers to
PRESIDENT Jade M Turngaist
really so! In developing the legislation that became the 1972 amendments, the US. House of Representatives actually did endorse pay-as-you-go when it lowered early-year contribution rates and raised later year ones, while at the same time liberalizing benefits . After all, action speaks louder than words! This is all shown in the actuarial cost estimates section, which coincidentally I wrote as a consultant to the committee .
CHAIRPERSON E .Toni Mulder
Social Security Roller Coaster
EDITOR Adam Reese . AssocixTR Ebrrols William Carroll Ronald Gebhardtsbauer Patrickj . Grannan MANAGING EDrroR JeffreySpeicher"`- ` 7A764,2620u compuserve .com CONTRIBUTING EnrEOR Ken Krehbiel PRODUCTION MANAGER
Renee Saunders ..Statements of factand .opinios uu this public-, including editorials and letters to the ed-'. are made on the responsibility of the an ors alone and-do not necessarily imply or represent the position of the American Academy ofActuaries, the editors, or the members of the Academy. 01996 The American Academy of Actuaries . AU Rights Reserved
ASo Bexscare a I n Seardi - lf
-Familiaritybreeds approval: The* more familiar actuaries were with the Academy's work, the higher the fa- vorability ratings they gave the...