Meet Tomorrow’s Pricing Actuary: Digitalisation in Commercial Lines Insurance Pricing

Digitisation, automation and the democratisation of data (and computing power) means that the insurance industry is being completely reinvented. In this talk we will consider what this means for the pricing actuary of tomorrow.

Overall, we will argue that we are about to see a complete step change in the role that actuaries play in rating, selecting and targeting insurance risk. Specifically, tomorrow’s pricing actuary will:

–       Embrace and optimise use of disruptive technology: by determining the extent to which new approaches can, and critically *should*, play a part in the pricing process. We will explore the economic value as well as the ethical, moral and legal implications of using disruptive technologies, such as AI, in pricing

–       Experiment with new data sources: previously untapped data sources will allow tomorrow’s actuary to dramatically expand the range of data that informs the rating process. A key part of their role will be experimenting with these new data sources to make informed decisions about their value and trade-offs, as a gate way to integration.

–       Completely automate the pricing of uncomplex risks: we anticipate that pricing of uncomplex risks can, and should, be completely automated. We will consider the role of the actuary in writing automated algorithms, giving a case study on the role out of automated follow-only capacity in the London market.

–       Optimise their time based on risk complexity and value: counter to the above we will argue that pricing of the most complex risks will always require a great degree of human intervention, and that ultimately this will lead to optimisation of actuarial resource around the complexity and value of risk.

–       Focus on risk targeting: we believe there are unprecedented opportunities ahead for the pricing actuary to expand their role to not just price the risks presented, and assess their marginal impact on a portfolio; but also to develop real-time algorithms to target risks that will optimise portfolios and capital.

Our conclusion: we are entering a new era of pricing which will see a complete and very exciting revolution of the pricing actuary’s role.

Outcomes:

– learn about the latest cloud computing technology and how it can be used

– provide insight into automated risk selection, and

– diagnostics useful for measuring its effectiveness

– interactive discussion on social issues surrounding digitisation