Big data, numerical analysis and advanced modelling are all things you’re going to have to get your head around if you want your company to trailblaze in the insurance industry.
Staying relevant and finding dominance in an evolving industry is never easy. What should you invest in to make sure you keep up to date with the competition but also find a competitive edge?
Actuarial consultants can provide an outside perspective to help companies assess their internal operations, invest in change and ensure that investment runs smoothly.
Insurance Business spoke to Greg Fanoe, a consulting actuary at Merlinos & Associates, who said more and more insurance companies are seeking advice about new technology and advanced modelling systems through fear of being left behind.
“In the insurance industry, there’s enormous pressure to stay current. If other companies have a more accurate and more predictive rating plan than you do, then your results are going to start deteriorating quickly,” Fanoe said.
“Some smaller companies didn’t want to embrace advanced technology because they thought they were too small or they wanted to keep their programs simple – but now they’re finding that it’s something that can’t be ignored. More and more companies are getting involved and you’re going to be left behind if you don’t incorporate new techniques into your rate plan.”
Maintaining relevance is not just about incorporating modern technology and techniques into your business; it also revolves around new data. Advanced modelling solutions are providing insurance companies with hordes of information that they’ve never had to process before.
Many companies are at a loss as to where and how to start with big data. That’s where a consultant actuary can help. They can advise what makes sense in terms of analysing big data and what the insurance regulators will find acceptable in that space, explained Fanoe.
But the regulators are also struggling to stay current in the changing industry.
“The regulators want to do the right thing to make sure they’re allowing companies to stay current and they’re not holding the industry back,” Fanoe told Insurance Business. “By the same token, they also have a responsibility to make sure companies are treating consumers fairly, which they look at with a different perspective to the companies.
“Consultant actuaries are being asked to step in and help the regulators understand how predictive analytics and advanced modelling software works from a consumer standpoint. Everyone (insurance professionals and regulators) needs to understand how these things work so that they can be used and regulated appropriately.”
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