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Actuaries, who do we think we are?

Nathan Colbert

Avanti Patki

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1 Where do actuaries play today?

2 The headwinds for our profession

3 What do we do now…

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1 Where do actuaries play today?

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Where do actuaries play today?

Claims

Manage-ment

Product Fulfilment

Pricing

andUnderwriting

New

Business Acquisition

Product Development

Actuarial advice

(T&Cs, surrender

value basis, unit

pricing)

Actuarial modelling

and commercial

judgement

Valuations

Experience investigation

Capital management

Asset-liability management

Reinsurance

Expense apportionment

Profit and sensitivity testing

Enterprise Risk

Management

Lapse, mortality and

morbidity experience

investigation

Lapse, mortality

and morbidity

experience

investigation

Product pricing

Advice on

commission

structures

Assumption setting

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2 The headwinds for our profession

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What are the headwinds for our profession

today?

1. Data analytics – the quantum physics to our Newtonian physics

Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

2. New players making traditional

insurance product design obsolete

3. Virtual reality making strides in

wellness

4. The modular approach to the insurance value chain

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Claims

Manage-ment

Product Fulfilment

Pricing

andUnderwriting

New

Business Acquisition

Product Development

Actuarial advice

(T&Cs, surrender

value basis, unit

pricing)

Actuarial modelling

and commercial

judgement

Valuations

Experience investigation

Capital management

Asset-liability management

Reinsurance

Expense apportionment

Profit and sensitivity testing

Enterprise Risk

Management

Lapse, mortality and

morbidity experience

investigation

Lapse, mortality

and morbidity

experience

investigation

Product pricing

Advice on

commission

structures

Assumption setting

1. Data analytics

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2. New players making traditional insurance

product design obsolete

Traditional approach:• Own car insured by

an individual for their

own use for a set

period (year) to be

garaged at a set

location

• Pricing based on

characteristics of

driver, car, garage

location

Trying to shift the perception of

underwriting

Collaborative consumption

through the sharing economy

These services replace the need

for you to own a car

It’s not just cars, we can share

our places of residence too

New world order:• More flexible

cover

• Cover for a

driver that is

not you

• Cover for a

car that is not

your own

What if the car’s driving itself…

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3. Virtual reality making strides in wellness

Traditional approach at

claims time:

• To pay or not to

pay?

• Deploy “Return to

Work” strategies for

IP / Workers Comp

• Love them and

leave them

New world order:

• Superior injury rehab

• Faster recoveries

• A matter of ‘mind

over matter’

• Life saving help at

fingertips

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4. The modular approach to the insurance

value chain

Claims Manage-

ment

Product Fulfilment

Pricingand

Underwriting

New Business

Acquisition

Product Development

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4. The modular approach to the insurance

value chain

Strategy & Product Development

New Business

Acquisition

Provider 3

Provider 5

Provider 1

Provider 2

Provider 4

Pricingand

Underwriting

Provider 3

Provider 5

Provider 1

Provider 2

Provider 4

ProductFulfilment

Provider 3

Provider 5

Provider 1

Provider 2

Provider 4

ClaimsManagement

Provider 3

Provider 5

Provider 1

Provider 2

Provider 4

Other supporting functions

Provider 3

Provider 5

Provider 1

Provider 2

Provider 4

Entity

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If other professions that can do it better…

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…where do actuaries fit in??

1. Data analytics – the quantum physics to our Newtonian physics

2. New players making traditional

insurance product design obsolete

3. Virtual reality making strides in

wellness

4. The modular approach to the insurance value chain

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Where do actuaries play today?

Claims

Manage-ment

Product Fulfilment

Pricing

andUnderwriting

New

Business Acquisition

Product Development

Actuarial advice

(T&Cs, surrender

value basis, unit

pricing)

Actuarial modelling

and

Commercial

judgement

Valuations

Experience investigation

Capital management

Asset-liability management

Reinsurance

Expense apportionment

Profit and sensitivity testing

Enterprise Risk

Management

Lapse, mortality and

morbidity experience

investigation

Lapse, mortality

and morbidity

experience

investigation

Product pricing

Advice on

commission

structures

Assumption setting

1 A

ctu

arie

s To

da

y2 H

ea

dw

ind

s3 T

he

So

lutio

n

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Claims

Manage-ment

Product Fulfilment

Pricing

andUnderwriting

New

Business Acquisition

Product Development

Actuarial advice

(T&Cs, surrender

value basis, unit

pricing)

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What is left for us…Actuarial modelling

and

Commercial

judgement

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3 What do we do now…

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Should we…

Beat them?

Join them?

…not with our current training

…good for insurers, not so good for the actuaries

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The Solution?

Do neither…

But start playing where we’ve never played before

without

losing our identity

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Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

Insurance Value Chain

FeedbackProduct

FulfilmentCosting

Launching

biodiversity

initiatives

Determine the

“market”

Biodiversity Project

• Industry

collaboration

• Actuarial

Control Cycle

• Statistical

sampling

• Identify and

manage risks

• Mortality /

longevity

studies

• Developing an

MVO

• Assumption

setting

• Apply

domain-

specific

knowledge to

projections

• Financial

modelling

• Develop

success

metrics

• Project

uncertain

populations &

cash flows

• Monitor &

report on

experience

• Review

experience

and

assumptions

Actuarial Toolkit

Biodiversity…

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Claims

Manage-

ment

Product

Fulfilment

Pricing

and

Underwriting

New

Business

Acquisition

Product

Development

Insurance Value Chain

Take

To

market

Food

ProcessingProcurementAgriculture

Food Production

• Actuarial

pricing

techniques for

sell price of raw

materials

• Actuarial pricing techniques for buy

price

• “ALM” hedging against changes to

underlying commodity prices

• A/E for

procurement

costs

• A/E for

product sales

Actuarial Toolkit

Food production…

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The way forward

The actuarial toolkit can be applied to a myriad of

problems

Where we apply our skills is up to us

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