How Insurers Are Modernizing the Actuarial Environment

Market fluctuations, changes in consumer expectations and product designs, and new risk modeling techniques are increasing the pressure on carriers to modernize their approach to the actuarial sciences. What are the requirements of a modern actuarial environment, and what technologies can help insurers meet current and future modeling needs?

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Driving the Development of Modern Technology Architecture

By Robert J. Reynolds, Actuary and Director, Individual Financial Management, Securian Financial Group (St. Paul, Minn.)

The life insurance industry certainly is feeling the pressure for actuarial modernization. One major driver is the push to develop economic scenarios for business unit projections and results. This calls for best-guess assumptions in a variety of scenarios to give a better understanding of the range of results that are possible in the current environment. (This contrasts with a typical legacy approach that often uses a single deterministic formula.)

While the economic results should be much more reliable, actuaries need two things to bring this to life: the ability to run thousands of scenarios rapidly, and the ability to quickly update assumptions driven by market and experience changes. This puts a large demand on the availability of data and technology. To support these demands, there have been significant recent developments in systems, software and storage.

The actuarial profession will continue to take advantage of these developments to keep up with the ever increasing modernization demand. In fact, actuaries sometimes drive development of the modern technology architecture. Securian recently purchased systems and software for actuarial projections and data manipulation. We developed customized data marts to more accurately and quickly serve us. And we even take advantage of cloud computing's efficiency where warranted. All of this comes with the requirement that actuarial skill sets expand to use these new tools.

These demands create a lot of change and excitement in our world, and there appears to be no slowdown in sight. The end result is better pricing, valuation, and risk and capital management.

Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio

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