Actuarial Aging

October 17th, 2006 by

The Insider is partial to actuary jokes. Perhaps it’s because so much depends upon the actuarial viewpoint. These are the people who drive the insurance bus. Those of us seated in the bus often feel a bit queasy, as the driver has the vehicle pointed backwards and attempts to drive while looking through the rear view mirror. They drive in this hazardous manner, because historical losses are the primary predictor of future losses. Well, sort of.
One joke says that actuaries are accountants who couldn’t stand the excitement. But when you look at the big picture in workers comp today, there is plenty of excitement and a lot of uncertainty. You have to admire anyone trying to make sense of current trends by predicting future losses in the comp field. In a word, you have to admire the actuaries. (Check out our links to a number of admirable actuarial blogs.)
Retirement Receding
The comp industry is confronted with many issues relating to an aging workforce – including the fundamental fact that many people are postponing retirement: some won’t retire because they like working, while many more plan to keep working because they have to. As people work longer, we will begin to see more claims activity in the higher age groups: people in their 60’s, 70’s and even 80’s will suffer work-related injuries and, despite their ages, will file comp claims. Comp administrators in each state will be confronted with new issues as these claims wend their way through the system.
Here are a few of the condundrums that we assume might lead the actuaries to lose a bit of sleep:
: aging employees with no retirement options (except, perhaps, retiring on comp)
: People in manufacturing and construction in their 50’s and 60’s, their bodies breaking down, with work a significant contributing factor in the breakdown
: Aging, over-weight and poorly conditioned workers performing physically demanding jobs
: Aging workers whose ability to perform the job safely erodes a little each year
: Older workers returning to work after knee surgery, at risk for further surgeries
: Older workers with little education, broken bodies and no transferable skills
: Illegal immigrant workers, working hard, growing older and suffering from permanent partial disabilities
Casting No Aspersions
I have no idea how actuaries will go about factoring in the new and largely unprecedented risks of an aging workforce into the calculation of premiums. We can only wish them luck – and perhaps, have a little fun at their expense. While the Insider would never cast aspersions toward the work of actuaries, we think it appropriate to let them make fun of themselves. Here’s a little sample of their self-deprecating humor, compiled by Jerry Tuttle. Based on these examples, actuaries may be having a better time than the rest of us have been led to believe.
“Old actuaries never die – they just get broken down by age and sex.”
How do you get an actuary to laugh on a Thursday? Tell him or her a joke on a Monday.
How do you tell the difference between an actuary and the deceased person at a funeral? The deceased
has a new tie.
Workers compensation fatality benefits are generally payable to the surviving spouse until death or remarriage, so remarriage is the actuarial equivalent of death.
An actuary is someone who expects everyone to be dead on time.
Two actuaries are duck hunting. They see a duck in the air and they both shoot. The first actuary’s shot is 20 feet wide to the left. The second actuary’s shot is 20 feet wide to the right. The actuaries give each other high fives, because on average they shot the duck.
What does an actuary’s wife do when she has insomnia? She rolls over and says, “Tell me again, darling. Just what is it you do for a living?” [NOTE: this works just as well for insurance consultants.]
“I once told an actuary to go to the end of the line. He came back five minutes later and said he couldn’t because someone else was already there.”
Here’s wishing the best of luck (and solid projecting) to the actuaries in their rear-view oriented look toward the future. And good luck to the rest of us, who must live with the consequences of their work!