Why declining numeracy skills is a big problem for insurance

Vol 46: Issue 3 | September 2023

As president of the Actuaries Institute, Naomi Edwards is worried about Australia’s numeracy.

Declining numbers of maths graduates and competition from other fields will potentially make it more difficult to attract young actuaries, data scientists and business analysts into the insurance profession.

“Traditionally, the insurance industry was able to recruit a very large percentage of maths graduates from universities,” says Edwards, who also sits on the board of TAL, Australia’s largest life insurer.

“We now have fewer maths graduates choosing data science occupations in a growing number of other industries.”

Hong Kong-based Jeffrey Chan, a non-executive director at the Actuaries Institute, is also concerned about future generations of actuaries in the APAC region. “Numeracy is a fundamental skill required in the actuarial field, as it involves complex calculations, statistical analysis and risk assessment,” he says.

But the risk isn’t just in relation to actuaries and data analysts. “Without a strong foundation in numeracy, it can be challenging for insurance professionals to accurately analyse data, make informed decisions and mitigate risks effectively,” says Chan.

Additionally, while the rise of artificial intelligence (AI) offers convenience, Chan worries that relying on it may further erode numeracy. “It is important to understand the key assumptions employed by each AI, how the underlying analytics engine is trained, whether the data is biased and to apply critical judgement,” he says.

Asia ahead on numeracy

Concerns also centre on declining numeracy standards in Australia and New Zealand.

The most recent numeracy figures from the Programme for International Student Assessment (PISA) are from 2018 and show Australia is ranked 29 and New Zealand 27 — well behind Asian countries such as China, Singapore, Japan and South Korea.

Estonia, Canada, Finland, Poland and Ireland are also ahead of both Australia and New Zealand. The United Kingdom ranks 18 and the United States 37.

Since 2007, when PISA started collecting its data, Australia and New Zealand have seen substantial declines in numeracy compared with a relatively stable Organisation for Economic Co-operation and Development (OECD) average of five. 

An independent review by a Royal Society Te Apārangi Expert Advisory Panel, commissioned by New Zealand’s Ministry of Education, confirms that “students coming to university know less and less year on year”, according to Dr Tanya Evans, senior lecturer and head of the Mathematics Education Unit at the University of Auckland.

Evans points out compelling evidence of “very poor life outcomes associated with low levels of numeracy and an impact on our economy of more than 2 per cent per annum equating to a few billion dollars a year in lost productivity”.

“And don’t get me started on the OECD skills outlook for future economies and the role mathematics plays in them, with the NZ Productivity Commission saying our country should simply import those with the skills we need,” she adds.

“Apparently, properly educating our children is either too expensive or too hard — better to let another economy do it. So our children should do what exactly?”

Unskilled maths teachers

One of the key issues in both Australia and New Zealand is the low levels of teacher numeracy skills.

Evans argues that it’s essential for teacher knowledge to be “well beyond the student level” for effectively planning and implementing the maths curriculum, as well as answering students’ questions, making connections and making the most of “teachable moments”.

However, she says, in New Zealand “very few primary teachers have specialised in mathematics or teaching mathematics, and only 14 per cent of Year 5 teachers have specialised”.

According to Evans, New Zealand’s numeracy problems have been exacerbated by recent government reforms that have seen maths education decentralised with a highly generic, non-prescriptive curriculum focused on “teacher autonomy” rather that professional development.

As a result, she argues, the design and implementation of the maths curriculum is left in the hands of low-skilled, unsupported teachers.

In Australia, Edwards describes the maths teaching profession as “gutted”, pointing to a 2018 report from the Australian Education Union that identified unqualified maths teachers at more than 45 per cent of schools.

She also says that more than one third of schools in Queensland, Victoria and New South Wales are unable to offer advanced mathematics because of teacher shortages, referencing research from the Australian Mathematical Sciences Institute.

Edwards says improving the quality of maths teachers in Australia through extra training and professional development could be an important way to lift numeracy standards. She suggests scholarships and other monetary incentives to persuade people to become or stay maths teachers. “This might seem extreme, but so is the situation,” she says.

High-status educators

By contrast, consistently high-performing Singapore has a centrally planned curriculum incorporating a single framework with a common emphasis throughout the year levels.

This framework unifies the direction of the mathematics curriculum from primary to pre-tertiary. There is a series of connected syllabuses, each with its specific aims designed to meet the different needs and abilities of students.

In Taiwan — ranked by PISA among the best in the world — teaching “attracts strong candidates, including 15-year-olds who scored significantly higher on average in mathematics than students who expected to work in other professions”, reports the National Center on Education and the Economy in the US. This is despite the absence of an official minimum grade for entry to teacher education.

Taiwan has several measures in place to build quality maths education and equity, including significant funding for schools (Taiwan’s total budget for education is about 5 per cent of GDP), the elimination of student fees and a Teacher Remuneration Act, which sees teachers paid according to education, experience and seniority, and awarded generous benefits.

By law, teachers must engage in teaching-related research and professional development, with kindergarten teachers specifically allocated 18 hours to complete each year.

Making maths relevant

Vietnamese researchers examining Realistic Mathematics Education (RME) extol the high-performing Dutch approach, which retains the freedom of choice in education prized by Western cultures, while also utilising a national curriculum.

RME emerged in the 1970s due to the number of students struggling to apply maths in the real world. It helps “both able students and slow learners to better understand abstract mathematical concepts”.

The Vietnamese paper argues that developed countries embracing RME, such as the Netherlands, Denmark, the US and Japan, have “raced to find the best way to teach mathematics” because primary students “should be able to understand and resolve both practical and theoretical mathematical problems” and secondary students “should not only understand advanced theories and practical problems but develop skills such as group problem-solving, mathematical communication and critical thinking”.

Somewhere along the line, Australia and New Zealand seem to have missed the boat. “I am often struck by how out of date and irrelevant the practical problems in high school maths textbooks are,” says Edwards.

“There is a real opportunity for the insurance industry to develop learning materials for teachers that illustrate real-world uses of maths. Governments and industry should work together to focus the narrative for school kids on how maths can be used to solve real-world problems.”

Learning by rote

Actuary Win-Li Toh, principal at Taylor Fry and winner of ANZIIF’s 2023 Australian Insurance Industry Leader of the Year award, grew up in Malaysia and studied mathematics at Oxford University in the UK. Her children, however, learned maths in Australia and New Zealand.

Toh remembers the Malaysian approach was to “learn addition, subtraction and times tables by rote until immediate recall was achieved”.

Meanwhile, in Australia, Toh noticed there was “more emphasis on storytelling and trying to make the numbers fun and relevant”. She made sure her children memorised their times tables at home. “That solid, consistent grounding provides such a reliable base to build on as difficulty increases,” she says.

Likewise, Chan, who was born and raised in Hong Kong, recalls rote learning was the focus of his early maths experience. Chan went to university in Australia and says the approach “doesn’t necessarily teach the logic and implications behind the problem, but rather builds familiarity with types of exam questions and the required toolkits to solve them”.

Like many Asian countries and locations, Hong Kong SAR places a significant emphasis on mathematics education. Chan says students are exposed to “rigorous curricula and assessments” resulting in generally high levels of numeracy — although this might not apply to higher, post-graduate levels of mathematical skills.

A culture of achievement

Toh says learning maths in Malaysia is almost like breathing — “you just do it”. It’s commonly accepted as a skill for survival, not just in business but in everyday interactions, such as deciding whether a purchase is good value. Weighing up risk and reward is part of life and a rite of passage.

Equally, says Toh, if a maths teacher in Malaysia calls a child “lazy”, most parents won’t be insulted. They’ll hear, “your child needs to put in more effort” and seek help to ensure their child works harder. “There’s a sense of gratitude, support and agency,” she says.

Chan agrees Asian cultures believe academic success comes from effort and perseverance while Western cultures tend to place more emphasis on innate talent or interest. Where Asian communities are more parental, Westerners respect individualism. “That’s why Asian parents are willing to invest in paying tuition centres to train their kids to excel in exams,” he says.

In comparison, Edwards describes a strong Australian bias of disliking maths or finding it “too hard”.

In most states, general maths is not compulsory at Year 11 and 12 levels, and, disappointingly, higher-level maths isn’t even a prerequisite for many university courses in the science, technology, engineering and mathematics (STEM) fields, leaving many Australian students struggling with their degrees.

Making the changes

Toh points to key areas of improvement on the agenda: equitable learning and distribution of resources; early identification of need; a united, consistent national teaching approach; and adopting a flexible, adaptive mindset.

“Our industry involves a lot of complex challenges requiring maths, so communication and nurturing relationships with tertiary institutions are essential,” she says. “Being a positive influence at the start of schooling could be a game changer. We need to highlight the value of a STEM education in our schools.”

Edwards adds that families can also help change the dialogue.

“When kids are struggling with maths at school, many parents say, ‘Don’t worry, I hated maths too’. But with fantastic teaching and perseverance, almost any kid can love and excel at maths.”

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