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1
Actuaries, who do we think we are?
Nathan Colbert
Avanti Patki
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3
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?
5
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
14
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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