Tech is lagging for actuaries, but it shouldn’t be

At Montoux we have an optimistic, but achievable vision of how life insurance actuaries’ skills can be used far more effectively within the business. We see them as key pillars of effective strategy and innovation, helping to drive commercial success and longevity for carriers.

Unfortunately, this vision is yet to be realized by most life insurers. For many, the skills actuaries have to offer are largely underutilized, as their time is instead taken up by cumbersome, manual model building using outdated tools.

Actuaries perform complex calculations, and develop enormous spreadsheets often using old fashioned software that’s not built for purpose and hampers progress. These programs (eg. Excel) lack effective tracking and quality control, and can often lead to multiple versions of the same file being stored, preventing efficient collaboration between multiple actuaries. Conversely there is the risk of having too few key people who understand the specifics of a models, but cannot share nor easily handover their work.

The actuaries of the present should be using cloud based, purpose built software solutions, which enable faster processing, more accurate outputs, and optimized pricing. All this can free up the actuaries’ time, and allow them to contribute business insights to enable growth, as growth is something that all life carriers continue to seek in today’s challenging environment.

The advantages of the cloud

As opposed to local server-based systems, working in the cloud allows actuaries to operate in a more flexible and collaborative manner, accessing their work when and where they need - even providing results to contribute within a meeting in real time. It  provides the opportunity for powerful data processing and endless secure server options. This means models can become even more effective, and efficient. Parallel cloud computing offers incredible reductions in processing time, as demonstrated in this example from Milliman.

Purpose built

Using purpose built technology solutions means each component of actuarial workflow can be individually optimized by engineers and data scientists. As our Chief Technology Officer Gert Verhoog explains, “Using a preprogrammed and highly parameterizable tool instead would mean that coding is done by specialist software developers. That would take away a huge amount of risk and time wasted just making models work, allowing actuaries to focus on what they should be doing.” We believe actuaries should be using their actuarial insight, this is what provides companies with a lot of value.

More strategic value

Actuaries can combine all actuarial outputs (such as those used for valuation, pricing and competitive analysis) for a big picture view. Greater speed and power allows actuaries to calculate this highly detailed and segmented data in a fraction of the time, so pricing can be truly optimized. This level of pricing intelligence is invaluable when it comes to making strategic decisions. Insurers gain a view of the effects of their pricing changes which is compelling and clear in its strategic directive, and yet contains a far greater level of detail and insight than ever before.

In short, “actuarial technology” can extend beyond spreadsheets and calculations, to tools enabling faster, smarter business intelligence, optimization, collaboration and strategy. Providing actuaries with the right, purpose built tools for the job will ultimately lead to better results, and bigger profits.