Reimagining Actuaries Services - Future Perfect

 

Actuarial work, the backbone of the insurance industry, is poised for a tectonic shift as big data and advanced analytics start playing a broader and deeper role in the financial sector. 

 

Over the past few years, insurance companies facing an unprecedented disruption engineered by the heightened demand placed on the actuarial workforce have felt the need to consolidate and improve data capabilities and process in the actuarial services. The growing demand for data quality, reduction in costs without compromising on efficiencies, and keeping pace with fast-paced regulatory shifts have contributed to this pressure.

 

For decades now, actuaries have analysed the financial costs of risk and uncertainty using mathematics, statistics and financial theories to offer bespoke solutions to businesses and individual clients towards risk mitigations.  Today, actuaries need not follow the traditional methods such as calculating reserves based on aggregate data patterns Software solutions, combined with robust computing power now gives them new methods and models to analyse data in real time. 

 

In fact, machine-learning algorithms and deep learning could pave the way for actuarial services entering non-traditional areas such as ride-hailing services, driverless cars, blockchain-led transactions, digital marketplaces selling vacations, and ultimately even to space travel. The number of start-ups serving the actuarial space highlights the manner that innovative solutions could transform insurance business as a whole.

 

Technology-led innovations that define actuarial services of the future will be the new normal for the insurance industry. One where we would witness a growth in demand for highly skilled resources who have the capability of harnessing the power of data mining and analytics to solve new challenges. This shift would bring actuaries more in demand than ever before that entails them taking on new roles, creating and managing new types of business and largely shaping the innovation agenda.

 

In this new regime, actuaries that were employed primarily by insurance firms, may work for non-traditional companies such as the ride-hailing service or self-driven cars. Both Google and Uber used technology to innovate traditional transportation, but today they face challenges of risk assessment, its management and the liability involved. This is where actuaries of the future could find solutions using their knowledge and technology expertise.

 

Companies relying heavily on data-driven decision making and service delivery are already realizing the value of actuarial services based on big data analytics. An expert in actuarial services could find herself in demand not just in the insurance business but equally also in a company dealing with waste management or a hedge fund.

 

In recent times, actuaries have developed skill sets in complexity science and systems thinking, which aren’t restricted to spread sheets but focused more on non-tabular models built ground-up on better assumptions such as agent-based modelling and network theory. Though they aren’t full stack developers yet, their programming capabilities are on the rise, having possibly reached the levels of data scientists.

 

This has resulted in actuaries working in non-traditional roles even in the insurance business. Some companies have actuarial staff modelling sales and distribution to identify patterns from the most effective agents in specific geographies. They use big data from embedded telematics devices on motor vehicles and contribute to the claims process by analysing them to identify cases where expected payments exceed the budgeted ones.

 

Besides enabling new forms of statistical analysis, technology is also supporting actuaries in other ways. One of them involves robotic process automation wherein several mundane tasks relating to moving and reconciling data are getting automated, thus freeing up actuarial time to focus on higher value activities. This results in better returns for the company but also a more rewarding work experience for individuals.

 

This also means that as more and more insurance companies embed actuarial services into additional areas of their business process – from product management and claims, to risk underwriting – the skills sought by the industry for recruitments could also change. In addition to mathematics, statistics and financial skills, companies may seek data analytics and programming skills.

 

As actuarial services become more and more technology-enabled, the employees would also be required to contribute to the overall innovation agenda of insurance as an industry. Already we have Insure-Tech innovations virtually reinventing how risk is assessed and addressed. As insurance solutions become more and more innovative, the actuarial business would find themselves playing a decisive role in how companies assess the markets and create new products.

 

A crucial aspect to consider while reimagining the future of actuarial work would be the focus on training and reskilling. Increasing competition among insurance companies will increase the premium on acquiring and retaining employees. While fresh graduates with technological expertise may be good to make entry-level resources, they would require constant skill upgrades to keep pace with the fast-paced technology innovations.

 

Major investments would be required to continuously train and upskill staff in order to keep them current as well as elevating them to both broader and deeper roles in the company. This would be the only way insurance companies can hope to stay ahead of competition in an industry where the bar on actuarial services is being raised with each passing year.