Sunday, June 14, 2009
The Fifth Romance: Teaching actuaries in Romania
Presented to the Club by Albert E. Easton on April 29, 2002
Two millennia ago, the Roman Empire spread over most of Western Europe and Asia Minor by conquest. While local languages were tolerated in some of the conquered territory, to a great extent Latin became the only accepted language in most places. As the empire fell apart, the speakers of Latin developed local accents and ways of speaking that have evolved into the five Romance languages that we know today. In order by the number of speakers, they are: Spanish, Portuguese, French, Italian, and Romanian. Curiously, although Romanian is the Romance language with the fewest speakers, most Romanians consider that it is closest of the five to the original Latin. Each noun, for example has five cases, from nominative to ablative.
The Romans called the inhabitants of Romania whom they conquered the “Dacians”. I almost said the Dacians were Romania’s original inhabitants, but considering the history of that land over the past 20 centuries, that seems unlikely. Romania has been subject to invasion many, many times. In the 16th century, the country became a vassal of the Ottoman Turks, sending tribute to the sultan, and was not free of that domination until the mid-nineteenth century. The Hapsburgs also dominated the area from time to time, but from about 1878 to 1914, Romania enjoyed a brief period of freedom and prosperity. Romania sided with the allies in WWI, and was rewarded with reunification after the war. Unfortunately, the country succumbed to nazism and anti-Semitism in the late 1930s, and while the government was changed to a pro-Russian form in 1944, the inevitable result was that Romania lost some territory to the USSR and fell in the communist sphere in 1945. In December, 1989, a popular revolt in Bucharest overthrew the communist dictator and installed a democratic regime.
On May 30, 2000, I received an e-mail from my friend, Godfrey Perrott, asking for someone to teach “an upcoming seminar in Bucharest, Romania planned for the week of June 12.” Godfrey added a comment that he had taught a similar seminar in Russia eight years ago and found it a rewarding experience. The agenda for the seminar, which was attached to the e-mail, seemed to cover pretty much the same ground as the textbook that Tim Harris and I published last year. While I have only a small amount of experience in teaching, I decided to give it a try, for two reasons:
First of all, it seemed like a worthwhile thing to do – Romania was one of the last countries to abandon communism, and is really struggling to develop a private economy. A viable insurance industry would be an important part of that, and a viable insurance industry can't exist without actuaries.
Second, I was hoping Godfrey was right, and it would be a rewarding experience, although not financially. The trip was sponsored by the Financial Services Volunteer Corps, which is supported by USAID, and it was clear from the start that the sponsor would pay expenses and nothing more.
By the time I had contacted all the people who needed to be contacted and been approved as the seminar leader, it was already the first week in June, so it was lucky that the date of the seminar was changed to the week of July 24-28. Even the six weeks this gave me to prepare really wasn’t enough, but at least it was more realistic. I spent the time that I could make available during those six weeks reviewing the literature that I thought might be useful, and developing a series of 289 slides in PowerPoint and some numerical examples. I wasn’t sure that I could get PowerPoint to work in Bucharest, so I made transparencies of all the slides.
One of the contacts in Bucharest for the seminar was Adina Lupea, actuary for Asigurari de Viata Romania (also sometimes called by its holding company parent’s name: Nederlanden Romania), an ING subsidiary based in Bucharest, and currently the country’s second largest life insurer. (The largest is ASIROM – the remainder of the state owned life insurance fund.) It was helpful that Adina visited the United States during the third week of June, so I had a chance to meet her in advance and discuss what the teaching strategy would be.
On Saturday, July 22, I checked my luggage at the Albany Airport and climbed aboard the first of the three airplanes that would take me to Bucharest. With me, in my briefcase, luckily, were the 289 transparencies and my notes on the talks. Inevitably, 18 hours later when I got to Bucharest, my luggage didn’t. I waited in line with quite a few others to file a claim for lost luggage. One of my worries was that Romeo Eftemie, the Romanian FSVC employee who was meeting me at the airport might conclude I’d missed the flight and give up. As it turned out, I needn’t have worried. When I didn’t appear, Romeo concluded that my bag was lost, as happens often in Bucharest, and waited until I did appear. He wasn’t at all surprised that I was the last passenger to appear from that flight.
By now, it was 5 p.m. Sunday in Bucharest. Romeo took me to the Bucharest Hilton, a very comfortable air-conditioned hotel, one of the best in Bucharest. Although I was dead tired, I had made arrangements to meet with Bill Taylor at 7. Bill is the Country Director for the FSVC in Romania, and the only other American I would see during my stay. Bill and I met for dinner at a Romanian restaurant, where I had one of the best meals of my trip. Restaurant food is a bargain in Romania – a full dinner for two at a nice restaurant, including wine, coffee and dessert came to less than $20. On the other hand, since the average rate of pay is only about $80 a week, this means only the wealthy can eat out. Romania struggles with very serious inflation. From July 24 to July 28, the official rate of lei to dollars increased from 21,678 to 21,824, about 2/3 of a percent in four days., which is very typical in recent years. That works out to annual inflation of about 85%. But some progress has been made. By contrast, the legal exchange rate on April 19, 2002 was 33,189 lei, so in about 21 months, inflation has been only about 53 percent.
After dinner, Bill filled me in on things like how to get to the seminar site, what to expect from the students, and other last minute details about the assignment. Back at the hotel, I stopped at the newsstand to pick up a razor and a few other necessities that were in my missing suitcase, and fell into bed for a long overdue sleep.
Bucharest seems like a grand old dowager who’s a little down on her luck. In the late 19th century, Bucharest was called “the little Paris” and its wide boulevards and impressive architecture do call Paris to mind. (There’s even a spot where boulevards come together in a star with a copy of the Arc de Triomphe in the center.) But the years under communism have left a serious legacy of poverty. Beggar children are probably not unusual in countries where the economy is weak, but those in Bucharest are especially persistent. If they spot you as an American (and I’m not good at disguising myself) they will follow you persistently, grabbing at your clothes and asking for “money, money, money” – apparently about the limit of their knowledge of English. Perhaps unique to Bucharest are the packs of wild dogs, descendants of household pets that had to be set free during the revolution against communism in 1989. The dogs roam the streets in packs of four or five even in downtown areas and are best given a wide berth. Capturing or destroying the dogs is apparently a political hot potato, so nothing is done by the city government. Between the kids and the dogs, I found that it was not pleasant to walk around the hotel in the evening.
On Monday morning, I took a taxi to the seminar site (across the street from the offices of Nederlanden Romania). I have yet to figure out how taxi drivers in Bucharest support themselves. The fare for a six or seven kilometer taxi ride was about 28,000 lei ($1.25) Even though the taxi was a wreck, I’m not sure how he even paid for gasoline, which cost almost one dollar a liter.
At the site, I got the slides ready for the overhead projector, got set up for the simultaneous translation, and awaited the arrival of the students. The simultaneous translation was an interesting process. Monica, the translator, sat in the back of the room translating as I was speaking. I wore a lavaliere mike that fed into Monica’s earphones. Each student had a set of earphones that brought in Monica’s translation. I also had a set of earphones. If a student asked a question in Romanian, I could put my earphones on and get Monica’s English translation of the question. This helped a few times. Even though most of the students understood enough English that they didn’t bother with the earphones, some were not good at phrasing questions in English. If a student asked a question in English that I couldn’t understand, I’d ask that it be repeated in Romanian, and try to formulate an answer based on Monica’s translation.
There were about 15 students, about an equal number of men and women, most in their 20’s – what young Romanians call the “Coca-cola generation”. (Under the communist regime, Pepsi was freely available, but not Coke; so the generation Xers of Romania call themselves the Coca-cola generation after the beverage that their parents didn’t have access to. I saw lots of Coke while I was there – no Pepsi.) Most of the students had jobs in life insurance companies, but two worked for the Romanian insurance regulatory authority, and at least one was a recent college graduate and not yet employed. Most of the students were also members of Romania's actuarial society, Asociata Romana de Actuariat, which was the organizer of the session with the FSVC.
I had prepared about 80 slides for the first day of class. Included in the slides were some pauses for class discussion of the material being covered. This didn’t work well. The students were quite reluctant to talk much, probably partly because of the language problem, and maybe partly because they didn’t want to expose their company’s practices or show how limited their practical knowledge was. I also had some numerical problems for the students to work on, but not enough of them. I wound up covering about 120 slides before the day was over.
Monday night I went out to buy some clothes, since my luggage still hadn’t arrived and I was wearing stuff I had originally put on Saturday. I didn’t have much luck. The first store I stopped in had about six men’s shirts, none in my size. The next store had more – about three in a size close to mine. I chose one that cost 335,000 lei, about $17. When I got back to the hotel, my bag had arrived, of course. I had dinner with Bill and Adina at an Italian restaurant. Since I’m used to the American version of Italian food, the Romanian version seemed strange to me and I didn’t enjoy it as much as the Romanian food I’d had the night before.
Class on Tuesday went about the same as Monday. Again, I covered far more material than I had planned. It was clear that I needed to do some work to have enough material for the rest of the week. The more knowledgeable students indicated that they would like to see more examples worked, so I set out Tuesday night to get some examples for them to work on.
Somehow, it all worked. I was able to get a projector set up so we could work with live spreadsheets, and the time spent exploring the spreadsheets seemed extremely well received. The last few days of the seminar, the weather was unusually warm, with temperatures as high as 43 degrees C. (=109.4 degrees F.!) and the seminar site wasn’t air conditioned, so we ended our sessions about 3 p.m.
By Wednesday night, I was feeling relaxed enough to visit the Casino in the hotel for a little recreation. This turned out to be a mistake. At 8:30 p.m., about an hour after the casino opened, I was the only patron in the entire casino. The staff seemed to consist of a cashier, and croupier who would have dealt baccarat or spun the roulette wheel. I asked the cashier for some change for the slot machines and was given one hundred coins in exchange for my 100,000 lei bill. The coins were not legal tender, but the equivalent of casino chips, and worth between 4 and 5 cents each. The slot machines were of an ancient mechanical variety and in need of a good lube job. I lost my 100,00 lei as quickly as possible and went back upstairs.
On Friday, we had planned a half day, and most of the morning consisted of a discussion of actuarial ethics. I presented the US Code of Professional Conduct, showed some examples of our Standards of Practice, and discussed how the profession polices itself, using bodies like the Actuarial Standards Board and the Actuarial Board for Counseling and Discipline. Romania still has a lot of work to do in getting its Insurance Law up to a reasonable standard, but I wanted the students to be aware that a lot of what needs to happen to make a healthy insurance industry goes beyond what can be legislated.
We adjourned at noon on Friday, and I got to use the rest of the day to explore a little bit of the part of Romania that is outside Bucharest, with Romeo driving. I saw many contrasts. Agricultural fields back up to industrial parks, and horse carts share the highway with trucks and automobiles. Our destination was Sinaia in the Transylvanian hills. In addition to passing about a hundred kiosks that offered merchandise stamped with images of Dracula or Vlad the impaler, a fifteenth century Romanian king, we visited the castle of King Carol, Romania’s last independent king, and stopped for dinner. The dinner of wild boar meat, which tasted like lamb to me (probably because of the heavy use of garlic in its preparation) was accompanied by huge amounts of very good Romanian wine. Enough that I was encouraged to sing along with the accordion and violin duo who strolled among the tables. Needless to say, I fell asleep on the ride back to Bucharest.
On Saturday morning, I returned to the Bucharest airport for my return flight. The flight from Bucharest to Paris included several American couples who were accompanied by Romanian speaking children, and this helped to make me aware of another unhappy aspect of Romanian life. During the last communist years, all forms of birth control were outlawed, and many unwanted children were born. Immediately after the overthrow of communism, Romania became a haven for childless American couples hoping to adopt. Because poverty persists, there are no social services available to single mothers, and placing a child in an orphanage for later adoption is still perceived as the best alternative.
I came to like the Romanian people that I met, and to hope that their efforts to make their economy work in the twenty-first century are successful. When I finally returned home I was very tired, but satisfied that Godfrey had been right – It was rewarding.
Photo: Castelu Peles, Sinaia, Romania. Photo by Chodaboy, used under Creative Commons License.