Advanced analytics and big data are fundamentally changing actuarial work. Today's actuaries no longer have to follow the traditional methods, calculating reserves based on aggregate data patterns. Instead, robust software and vast computational power have unlocked new methods and models, including analyzing individual claim and policy data in real time.
For fresh graduates and the top actuaries in the field, this reality is the new normal – and the impacts of this change are being felt throughout the industry and beyond. Harnessing the power of these new technologies, actuaries are more in demand than ever before, taking on new roles, working for new types of firms, and shaping the innovation agenda.
Growth of non-traditional actuarial work
Where once actuaries were employed primarily by insurance firms, it is increasingly common to see actuaries working for a wide range of non-traditional companies. Actuaries' key skillsets are in hot demand across a number of industries – especially technology.
One key example is that of technology companies developing ridesharing businesses and self-driving cars. For a long while the focus of firms such as Google and Uber was on the technological challenge of creating an AI-controlled vehicle that can safely navigate the streets. Yet now that self-driving cars are becoming more viable and ridesharing is widespread, tech firms are facing different kinds of problems – ones surrounding risk assessment, risk management, and liability. Actuaries are the perfect choice to analyze and help manage these risks as they develop.
As the world becomes ever more data-driven, a wide range of organizations understand the value that actuaries and data scientists contribute. From jobs at hedge funds and investment banks, even to unexpected roles at a waste management firm, today's actuarial talent has access to a wealth of opportunities.
The evolving role of the actuary in insurance
Even in insurance, the actuary's traditional home, it is becoming more common for actuaries to work in non-traditional roles and contribute to other areas of the business. For example, in some firms actuaries are modeling the sales and distribution process to identify the characteristics of the most effective agents in particular geographies, innovating in the use of big data produced by telematics devices in vehicles, or contributing to the claims process by doing a claim-by-claim analysis to identify which claims have risks of exceeding the expected payment. Most insurers also have actuaries embedded in product management, claims, and individual global risk underwriting.
Not only has technology enabled new methods of statistical analysis, but technology is also helping actuaries in other ways. Use of Robotic Process Automation (RPA) within the insurance space is automating routine tasks such as moving and reconciling data, freeing up actuaries' time and energy to focus on higher-value activities. The result is not only more rewarding work for the individual, but also more effective use of internal resources for the firm.
Actuaries and insurance innovation
Another evolving role for actuaries is as a contributor to the insurance innovation agenda. Today, insurtech innovations are reinventing how insurance risk is addressed. Companies are reconsidering where, when, and how they deliver insurance products, from apps to telematics and per-use coverage.
The question of how to assess and mitigate risk become increasingly complex when looking at innovations such as renting cars through a phone app, using a rideshare, or taking a trip in an autonomous vehicle. This is where actuaries can best contribute. Given not only new tools but also a new mindset on how to analyze risk, actuaries are helping to shape how companies create products, assess the potential market, and bringing these innovations to that market.
Advice for the road ahead
Competition is increasing in the actuarial space, and both the financial institutions that employ actuaries, and actuaries themselves should take action now to be well positioned to succeed in coming years.
For financial institutions that employ actuaries, invest in training. While fresh graduates may have technological knowledge as a second nature, technology continues to evolve at a rapid pace. Ongoing investment in training and skill upgrades will be required to keep your people current, help elevate your existing actuarial staff, and assist you in competing for increasingly in-demand talent.
For actuaries, develop a forward-looking view and take individual initiative. Regardless of where you work, do not rely on your employer to shape your career. Find opportunities to advance and hone your skills, pursue innovation within the workplace, and do not be afraid to pursue non-traditional jobs or work for non-traditional companies.
The bar for actuaries is being raised, not only in terms of what companies want but what actuaries can deliver. Innovation, technology, and inventive thinking are key to the actuarial workforce of the future – and those that choose not to pursue this path risk obsolescence.
Article originally published in The Digital Insurer's December newsletter: Shaping the actuarial workforce of the future.