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One of the topics of conversation at the InsureTech Connect (ITC) show earlier this fall was whether emerging data-related technologies, such as artificial intelligence, would replace underwriters and actuaries. Some of Insurance Innovation Reporter’s interlocutors at the show were positive in their opinion that technology would render these professions redundant. However, ITC was also the venue for a joint workshop presented by the Society of Actuaries (SOA) and the National Association of Insurance Commissioners to demonstrate how InsurTechs and data scientists can work with actuaries and regulators to drive innovation in insurance. That led to our meeting Joe Wurzburger, Senior Director and Fellow of the SOA, and to a subsequent conversation that we share below.
Insurance Innovation Reporter: We’re hearing a lot of scuttlebutt about the potential of data and AI to take the place of various tasks related to underwriting and actuarial. Are rumors of actuaries’ demise premature?
Joe Wurzburger, Fellow, SOA: There’s are certainly tasks performed by actuaries that are ripe for disruption, and technologies are providing plenty of opportunity for automation. That said, I don’t foresee how actuaries could be replaced. There are just too many skills and responsibilities that they bring to the table. How they do their work could look quite different, with a shift away from some of the more basic, fundamental task, freeing them up to do higher-level, more innovative things. There is absolutely a creative opportunity in light of new data sources, AI and automation.
IIR: So actuaries see the explosion of data science as more opportunity than threat?
JW: We like to say that actuaries were the original data scientists. We’ve always been using data to solve business problems. The increase in the volume and granularity of data, new ways to process and analyze data—these are things that are creating new opportunities for actuaries. You might say that at one level we’ll be doing what we always have, but with far greater precision and speed. Actuaries love data, and we see emerging opportunities to analyze in ways we could only have dreamed of in the past.
IIR: How do you see actuaries embracing and growing into new ways of doing their jobs? I will admit that I’ve met plenty of actuaries who don’t fit the stereotype!
JW: I’ve been fortunate to meet a few as well! The truth is, there isn’t one type of actuary. They fulfill different function areas and practice areas, and different personalities find their niche. It may be that certain types of actuaries are at more risk than others, but many are quite different from the stereotype and in fact are business leaders excited by the new possibilities. They will thrive as all this change and disruption in the insurance industry continues. I think you’ll see that’s a very large proportion of the actuarial profession.
IIR: Where do actuaries fit in those changes? More precisely, how are actuaries involved in the InsurTech movement?
JW: The actuarial profession, and the SOA in particular has been very engaged in InsurTech movement. We held a workshop at the InsurTech Connect conference where we shared the success story of InsurTech startup Neurocern [Chicago], featuring founder and CEO Anitha Rao. Focused on dementia diagnosis, she enjoyed initial success, but then began collaborating with an actuary and found that what she created had applications far beyond what she realized—for example for claims management and underwriting. The collaboration opened up a new set of use cases and business opportunities. So this is one role for actuaries in InsurTech: partnering with startups and expanding their vision. Actuaries have a good understanding of both technology and business and are in a good position to see opportunities.
IIR: What other ways are actuaries working with startups?
JW: Another way is helping them to validate their business propositions, using data-driven research approaches to analyze their effectiveness and reduce friction points. If a startup is using an actuarially sound, data-driven process, there may be a role for actuaries to assist in that process.
Also, actuaries are very well-versed in insurance regulation and other insurance industry-related complexities related to data and technology. There are things required for bringing a solution to market about which InsurTechs may lack the depth and breadth of knowledge necessary to navigate various hurdles. To this effect, we have collaborated with the NAIC, and we intend to continue that collaboration to help InsurTechs navigate industry-specific challenges.
IIR: What does a successful partnership between actuaries and an InsurTech look like?
JW: I think there are many versions of collaboration, but all directed to a win/win proposition. Actuaries’ worlds are going to change because of InsurTech, so it benefits them to get on board and collaborate—that’s their “win.” InsurTechs can benefit from the skills that actuaries bring, as in the Neurocern story. Both parties are trying to solve real-world problems, not just trying to find just business success, but also an element of big thinking and trying to change the world and they can do it much more effectively together.
IIR: Does the InsurTech movement make it easier for actuaries to embrace change?
JW: Yes, I think it does. Change is never easy, but opportunities for collaboration inspire a creative approach to change. Also, seeing the talent coming into the actuarial profession makes the future look very bright. The new generation I’m meeting at events and colleges are just as smart as previous generations and very interested in the technological culture they grew up in. They’re interested in technology and innovation, and they absolutely embrace change. They’re bringing that energy into the profession. At the same time, we’re bringing technological-driven change into the credentialing process. We’ve adjusted our curriculum to include more data analytics, for example. That kind of adaptation will certainly reinforce this being the right time for embracing today’s culture of change.