The challenge: Competitive and regulatory pressures piling up for actuaries
Changing customer behaviors and preferences and the rise of insurtechs are increasing competitive pressure on actuaries. They need to offer the right products at the right price and speed up underwriting processes.
On top of this, new regulations such as LDTI, which impacts actuarial modeling, and IFRS 17, which comes into play in 2023, are adding to the challenges actuaries face.
These developments are happening at a time when actuaries need to tap into more data than ever before. Machine learning (ML) and artificial intelligence (AI), along with the insights they generate, are parsing statistics in important new ways.
All these factors are putting pressure on insurers and their actuarial teams to streamline their systems and processes and adopt a new digital framework.
But modernizing the actuarial function is no easy task. Actuaries spend up to 80% of their time consolidating and cleaning data, preventing them from focusing on core actuarial responsibilities. And the recent series of mergers and acquisitions within insurance has left many firms with fragmented, disparate, and siloed data environments that they can't mine for valuable insights. This also limits actuaries' ability to do what they do best: innovate.
What's more, companies may find it difficult to allocate resources to hardware upgrades and other capital-intensive spend in an uncertain economic climate as well as amid rising compliance costs.