How actuarial change can drive improved returns for insurers

1. Devise a holistic approach and refine the operating model to drive ongoing change.

Continuous technology advancement has made business transformation a standard part of operations. Actuarial leaders must take a similarly long view toward ongoing optimization and continuous improvement. Innovation and transformation can’t be viewed as one-off projects with fixed timelines culminating in a single implementation. Forward-looking chief actuaries who understand this dynamic may look to develop innovation labs that are charged with monitoring tech developments, identify relevant use cases for generative AI (GenAI) and other powerful tools and experiment with new solutions to address business needs. Establishing innovation labs builds on the progress made in the run-up to Solvency II and IFRS 17, when many carriers integrated data flows and key processes across finance, risk, investment and actuarial domains.
 

Long-term plans to address the requirements of Solvency II and IFRS 17 must address technology and data, process design, people and talent and the actuarial operating model. Structuring the actuarial function to be more outward-looking is important for carriers aiming to strengthen decision support and business planning.
 

Actuarial leaders must also address the process of change itself. Clear milestones, based on the realization of incremental value, will help track progress and strengthen the organization’s capacity for change. Given that this is a long-term journey, actuarial leaders must embrace core principles for organizational change management, crafting extensive and detailed communication plans so affected workers understand both the “why” (the underlying business reasons for changes) and the “how” (the specific impacts on their jobs) of transformation. 
 

2. Prepare to take advantage of the latest technology

Technology is critical to successful transformation, though it’s important to note that systems used to develop the balance sheet can’t be changed overnight or on a wholesale basis. Many carriers have already made major gains in adopting cloud platforms, migrating key data, models and applications to cloud-based environments, which can help with access to computing resources, improving scalability and promoting collaboration with the business. Stronger tools for actuarial modeling are another priority for many insurers. These are the foundational elements for a tech-driven, high-performing actuarial team in the future.
 

The business case for new technology is built on automation and digitization, which offer major benefits in terms of speed, efficiency and accuracy. Automated processes for data ingestion, calculation, and model runs and reporting can be a difference maker in terms of freeing skilled actuaries to invest more time and effort in decision support and advising the business. Coupled with high degrees of automation, AI will further boost efficiency in streamlining data gathering, for instance, and increase actuarial effectiveness by generating more insights.
 

Technology priorities will be different across varying lines of business. For non-life, data analytics will be a higher priority, particularly in managing actuarial modeling for natural catastrophes. In life, automation is more likely to be a useful first step, with an emphasis on long-term modeling of diverse macroeconomic scenarios.
 

Here again, chief actuaries must take the long view, while ensuring that near-term technology deployments are closely aligned to business needs and objectives. We know technology will become more powerful. We know that GenAI in insurance can revolutionize much actuarial work, and that quantum computing is coming in the relatively near future. But we can’t say for sure what future technology will make possible, which means establishing a highly flexible, scalable and secure IT environment must be the priority for now. 

3. Solve for actuarial talent and expertise

As critical as advanced technology is to actuarial transformation, human talent is just as important. Top actuarial talent and expertise is necessary for actuarial teams to play a larger strategic role in steering the business. Actuarial leaders must find ways to attract and retain actuarial expertise, which is an increasingly scarce and valuable asset. The most accomplished actuaries are not merely technical specialists; they are strategic partners capable of unlocking critical insights in a rapidly evolving risk landscape.
 

Attractive career pathways and a rich employee value proposition are necessary to attract, develop and retain elite actuarial professionals. That means thoughtfully structuring roles and responsibilities, offering meaningful and challenging assignments (e.g., working as part of innovation labs), targeted learning and development opportunities and clear rewards for career progression and skills enhancements. Environments that nurture both technical mastery and leadership potential are more likely to engage top actuarial talent for the long term and maximize their contributions to the business.  
 

4. Drive actuarial knowledge across the business

With modernized technology and more sophisticated analytics upgrading insurers’ modeling capabilities, chief actuaries can focus on sharing new insights with their peers across the business. This will help the entire organization become more conversant with actuarial principles and the value of actuarial knowledge to the business.
 

At some carriers, it may not be clear how actuarial information can be used to identify emerging market needs and customer preferences, which can inform pricing and product design processes. Specifically, actuaries can help increase agility in product development by producing models of iterations and enabling rapid response to sudden shifts in market demand and emerging opportunities. Given the prevalence of ecosystems and other collaborative distribution strategies, carriers are looking for every possible advantage in product design, customization and release.
 

Actuarial insights can – and should – also inform strategic decision making at the highest levels of the organization. As such, chief actuaries should seek to build strong relationships with the C-suite and wider senior management. Our market experience has taught us that the more actuarially savvy senior leaders are, the better strategic decision making will be.