Transforming your actuarial function to stay agile and competitive

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While transformation is important, its success depends on putting data in capable people’s hands

Insurers are facing increasingly challenging market and regulatory forces as well as new technological and consumer complexities. In a Risk.net webinar, Transforming your actuarial function to stay agile and competitive, panellists agreed that the role of actuaries needs fundamental change so their input remains relevant to their company’s competitive advantage in the industry. This article discusses the particular interests of the panellists, such as the place of technology and data in actuarial transformation, as well as the mindset of its teams and the managers they report to.

The current actuarial function is at full capacity, but not full potential, said Michelle Sun, head of insurance solutions at the SAS Institute. “Insurance companies have highly fragmented and siloed systems, which generate inefficiencies with a time-to-market that is no longer aligned with business needs.” To Sun, the use of disparate platforms by actuaries working in different departments inherently increases risks and costs, and heightens the chances of business disruption. Ideally, she said, actuaries should have access to a single platform that provides them with the tools they need to fully utilise their skill set to become true strategic partners of the business.

Sun remarked that artificial intelligence and machine learning are noteworthy developments that can facilitate many aspects of actuaries’ work.

Ed Plowman, group chief actuary at Sompo Holdings, said that technology is absolutely critical to the transformation and efficiency of the actuarial function, particularly cloud computing and new analytical techniques that allow actuaries to analyse greater volumes of data. “At Sompo we’re ruthlessly automating the tasks that can be automated – particularly the data processing side of things – and freeing up time for actuaries to actually do actuarial analysis.”

While agreeing that technology is important to bring about greater efficiency to the insurance industry ecosystem, Jiong Du, chief pricing actuary at SCOR, said: “More importantly, we need more soft data. We must go beyond the traditional data the insurance industry normally captures. Technology at the moment is not the bottleneck, it’s the availability of other data and the source of this data that is more of a critical issue.

“The insurance industry captures only a small subset of data of the entire economy, particularly when it comes to customer behaviour. ‘How do we actually expand data access?’ is how we must think as an industry.”

While technology and data are undeniably powerful enablers, Plowman cautioned insurance companies as to how these are used in actuarial functions in the long term. “It doesn’t mean we must suddenly leap towards developing super advanced data science and analytics capabilities because, in many cases, that’s putting the cart before the horse. The first step is to make sure all the relevant sources of data are integrated and put in the hands of the right people.”

How new technology and new sources of data are used depends to a large extent on the mindset of those that work in actuarial functions. “In the past, actuaries have put a lot of focus on number crunching and modelling and how we can produce more and faster metrics, which, at the end of the day, have very little impact on the business,” said Jackie Chu, chief actuary at ZA Group.

“In the future, the mindset of our people must focus more on extracting business insight and opportunities and communicate these appropriately to senior management.”

The panellists conceded that, while technology, data and a change of mindset are important for the successful transformation of the actuarial function, none of these can properly affect the business if senior management is not on board with the transformation itself.

Learn more

Find out more about actuarial transformation in the Risk/SAS white paper: Key actuarial transformation trends across Apac in 2022

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