Building Stronger Connections between the Profession and Universities

By Mathieu Boudreault, ACIA

In 2013, the Board adopted a set of new long-term strategic goals for the CIA. One of these involves the CIA taking steps toward being recognized as an education body, not just an accreditation body. This is a paradigm shift for the CIA, meaning that it now takes full accountability for the education path to Associate and Fellow (ACIA and FCIA).

The most noticeable change that resulted from this strategic goal is the launch in September 2012 of the University Accreditation Program (UAP), which provides Canadian actuarial candidates with an alternate route to becoming an ACIA and FCIA. Since universities have now become obvious education partners, the CIA has also founded the Academic Relations Committee (ARC).

About the Academic Relations Committee

The mandate of the ARC is mostly to propose initiatives, with the collaboration of various instances within the CIA, to enhance the relationship between universities, the CIA and the industry. We also collaborate with numerous committees and councils on matters related to preliminary, advanced and continuing education, research, the UAP, etc. The ARC is composed of nine people (including the chair) who have a range of experience balanced between academia and/or industry practice.

In this article, we first discuss why the profession should build stronger connections with universities, and secondly we propose ideas and examples on how this can be done. The article summarizes some of the key points mentioned during the Friday plenary session of the 2013 Annual Meeting held in Montréal.

Partnering with universities for education and research: two opposing views

A university mainly has two roles: knowledge creation and its transfer to society. Knowledge creation, which includes discoveries and innovations, is mostly accomplished in research labs with the help of government and industry partners. In order to lead to societal advances, knowledge needs to be transferred for possible applications. This is done through education at all levels: bachelor’s, master’s and PhD. Hence, today’s research may be part of an undergraduate’s education five, 10, or 50 years from now.

Former President of the Society of Actuaries Charles Trowbridge once said in his presidential address that there is a "very unusual relationship between the actuarial profession and the academic world . . . We [the profession] put little or no emphasis on academic degrees and we have no university-connected actuarial schools giving the equivalent of MD or JD degrees." (The Actuary, August/September 2012.)

Doctors have embraced university education for centuries. Indeed, research labs are important parts of many hospitals and larger hospitals are mostly associated with a university offering MD degrees. MD degrees are first professional doctoral degrees (as opposed to research doctorates, i.e., PhDs) where candidates have a blend of scientific education and practical training (with patients in hospitals). Due to the proximity of doctors to the research labs, technological transfers in medicine are very quick. Medical treatments can save lives and the whole society can obviously benefit from efficient knowledge transfers.

On the other hand, the actuarial profession has taken two different views on education and research. In Canada, the United States, Great Britain, and Australia, actuarial education has widely relied on a professional organization to define and assess the education of its actuaries and generate knowledge. In many European countries such as France, Belgium, Germany, and Switzerland, universities and practitioners are much closer. French actuaries, for example, obtain their credentials mostly after earning an undergraduate degree in mathematics and a master’s degree in actuarial science. Master’s degrees and PhDs are common among European insurance and reinsurance company leaders and CEOs.

In Canada, university actuarial programs were mostly developed to meet the increasing demand of actuaries from local insurance companies. Undergraduate degrees and majors in actuarial science have become increasingly popular to help students pass preliminary actuarial exams. They turned out to be a standard to obtain an entry-level job as an actuary. Such programs started in Winnipeg (University of Manitoba) and Québec City (Université Laval) and there are now 11 universities with actuarial programs accredited by the CIA across the country. University actuarial education in Canada has been a tremendous success: there are now about 600 actuarial graduates per year in Canada and approximately 80 full-time academics in Canadian actuarial programs.

Despite the fact that the very large majority of actuaries now hold a bachelor’s degree, the connection between the profession and universities has always been rather weak. There are numerous reasons for that: the perceived role of the universities was to help students pass exams; the very strong actuarial labour market; the number of academics was small; there were few graduate programs available; investments in research and development by insurance and consulting companies were low, etc.

The actuarial profession has rapidly evolved over the last 30 years. Deregulation of the insurance and finance industries has led to more competition across companies and, as a result, among professions as well. In 2006, the CRUSAP (Critical Review of the U.S. Actuarial Profession) stated that:

Competition from other professions will increase in areas where actuaries can and do provide services; competing professionals including CPAs, MBAs, PhDs, CFA charterholders, financial engineers [. . .] and risk managers [. . .]

There are actuarial alternatives arising from globalization of actuarial services, technical innovations, and management’s attitude toward greater use of noncredentialed actuaries.

This increasing competition coming from other industries raises the opportunity for the actuarial profession to innovate and position itself differently. It is clear that the Canadian actuarial profession could further leverage its partnership with Canadian universities not just for preliminary education. With graduate and continuing education, in addition to research, there is room for many other types of mutually beneficial partnerships between the profession and universities.

How to forge better partnerships with universities

The role of universities has significantly evolved over the last decades, offering more and more services directly to organizations (governments, companies, etc.). First, most universities have a dedicated continuing education office, linking courses, programs, and professors to the continuing education needs of the organization. Canadian actuarial programs could offer, for example, (graduate) courses that would count toward Continuing Professional Development (CPD) credits. Although some presentations might be very technical, attendance at local seminars, conferences, and scientific events is a great way to get to know more about the latest developments in the scientific literature. Given the presence of actuarial programs in the larger Canadian cities, university-based continuing education could help lower travel expenses incurred by organizations. It is also very likely that the price tag for these university events is very competitive. Overall, the actuarial profession would have access to a tremendous amount of scientific knowledge in actuarial science, finance, statistics, etc., at a very reasonable cost (travel and registration).

Universities also have partnership offices dedicated to linking professors and organizations for research projects. These offices accompany the professors during the whole process: they organize networking events for professors and organizations to meet, they provide the legal counseling necessary for the contracts, etc. There are generally two types of partnerships between an organization and the professor: consulting and research contracts. They both differ on the nature of the services and the ownership of the intellectual property. In consulting contracts, the professor acts as a counsellor to the organization, whereas research contracts are agreements with emphasis on knowledge development. Ownership of intellectual property for scientific publication is always crucial for professors and there are generally many ways to arrange a contract where the professor can publish its findings while the organization keeps a competitive advantage for a determined period of time. In both cases, the professors can use the money to support graduate students that can help in the project, buy the necessary equipment, etc. Hence, university-based partnership offices help organizations invest in scientific research and accelerate the integration of the newly-discovered knowledge into the organization.

The federal and provincial governments largely support research with the industry and technological transfers to the society. For example, the Natural Sciences and Engineering Research Council of Canada has various programs to help researchers and companies collaborate on research projects. There are the industry-sponsored research chairs, the industrial postgraduate scholarship (IPS) program, the industrial undergraduate student research awards (USRA), etc. With an IPS, the master’s or PhD student’s thesis is co-supervised by a professor and a practitioner. The university and the organization are both partners in the student’s education and the scholarship is paid by both the government and the organization. It is important to emphasize that depending on the organization’s status, its contribution is subject to very important tax rebates as it is deemed a research investment. The industrial USRA is a co-sponsored internship program (16 weeks) for undergraduate students. The workings are similar: both the professor and the practitioner supervise the student, and the scholarship is also paid by both the federal government and the organization (also subject to tax credits). In Québec, BMP Innovation scholarships are similar to the federal IPS but the scholarship is financed by the federal and Québec governments and the organization (33.3 percent each). Mitacs, a not-for-profit research organization, offers similar opportunities for research partnerships between universities and companies. Thus, there are plenty of government-sponsored programs available to help organizations invest in research, access university expertise, and hire highly-qualified personnel, all at a very low cost for the organization (shared between sponsors and eligible for tax credits). These programs are widely popular in many fields, such as engineering, chemistry, biology, and pharmaceuticals.

The ARC is currently working on a strategic plan to help companies and other organizations leverage partnership programs that already exist. Meanwhile, for those interested in creating education and research partnerships with local universities, it is always possible to contact professors directly whenever collaboration is sought.

Conclusion

It is clear that the insurance industry has been facing increased competition over the last decades, and consequently the actuarial profession has as well. With risk comes opportunity: the profession and the industry could seize this occasion and build stronger connections with its academic community. The infrastructure and the programs already exist to encourage education and research partnerships. The only thing missing from organizations is their leaders' willingness to jump in, just like so many other professions did.

The actuarial profession has been relying on itself for almost a century and obviously partnering with universities is a cultural change. But with the launch of the UAP and the ARC, the CIA has initiated this change and paved the way for the profession to strengthen its relationship with Canadian universities. The Canadian actuarial profession clearly has the potential to stand out from the rest of the world by leveraging our highly-reputed academics and university-based actuarial programs.

Mathieu Boudreault, ACIA, is Chair of the Academic Relations Committee.

M. Boudreault would like to thank Dave Dickson (Chair of the Research Committee), Alicia Rollo (director of membership, education, and professional development), Jason Vary (Chair of the Eligibility and Education Council), and José Garrido (a member of the ARC) for their helpful feedback.


 

 

Canadian Institute of Actuaries/Institut canadien des actuaires
http://www.cia-ica.ca/