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Insurers Rethink How to Deploy Their Elite Teams of Risk Gurus
By Cyril Tuohy, LifeAnnuitySpecialist.com. Reprinted with permission.
Lauren Canfield, a long-time actuary at The Standard, represents the future of a profession undergoing big changes.
Last month she was promoted to a key job that involves rethinking the role of a life insurance actuary in order to respond to rapidly changing market conditions, according to a news release that the insurer put out.
Actuaries are seeing their roles transformed. Under pressure to rein in costs and struggling to keep pace with fast-changing technology and new regulations, insurers are keen to put the risk evaluation skills of these professionals in the service of the company.
Actuaries have been on a path from pricing insurance products to engaging in broader financial risk management, Canfield said.
“We’re applying our skills to move all parts of the company forward,” she said in an interview.
Why the Change
The jobs are changing for two reasons, she said.
Changes are looming for accounting standards that govern the many long-duration contracts that insurers have on their books. That is increasing the need for employees comfortable with complex data sets and actuarial assumptions, she said.
Also, the digital transformation sweeping through the industry has sped up how a modern insurer needs to do business. Now there’s an expectation that carriers should be much faster in issuing new products, or changing existing ones.
The Standard, based in Portland, Oregon, employs about 100 actuaries. They are the statistics geeks expected to know at what age a 68-year-old male who works as a construction laborer is expected to die, for instance, and how much premium he should pay for a life insurance policy.
The company sells a lot of group and voluntary benefit products, but also provides individual annuities and disability income insurance.
Roy Goldman, president of the Society of Actuaries, said that a decade ago, insurance products were often designed by marketing departments. “Some of the components of the policy didn't make sense from an actuarial point of view,” he said. Translation: An actuary would have killed the product because it wouldn’t be profitable.
Now actuaries are likely to be called upon at the beginning of the development of a new life insurance contract or new annuity income rider, which thrusts them into more of a product development role, he said.
Products that integrate health metrics into life insurance, like John Hancock’s Vitality program, or life insurance products where pricing changes frequently, need to involve actuaries too.
Actuaries are also applying their quantitative acumen to analyze how products are sold and administered, and to dig into claims data, said Dale Hall, managing director of research for the Society of Actuaries.
There are about 9,000 Society of Actuaries members in the life practice area, according to the organization.
A Different Approach
Matthew Berman, chief distribution officer for Foresters Financial, said he works closely with his company’s actuarial and pricing teams at the fraternal life insurer.
“More and more in the life insurance community there are actuarial transformation teams to align with changing trends in the industry,” he said.
Under pressure to rein in costs and struggling to keep pace with fast-changing technology and new regulations, insurers are keen to put the underwriters’ risk evaluation skills in the service of the company.
“It’s a different way of getting work done with a new set of tools and a strategic mindset,” said Andy Ferris, a member of the American Academy of Actuaries, who said new software tools are helping actuaries complete work in a different way.
Traditionally, they found themselves having to manipulate data in spreadsheets, first on paper and then on desktop versions of Excel. Now much of that work can be completed by software, algorithms and artificial intelligence.
These smart programs can handle the grunt work, merging information from a prescription drug database, an electronic health record database, and a motor vehicle database, and then matching that to policyholder ID numbers, Ferris said.
That frees up actuaries to focus on the higher value tasks of looking for insights and thinking about risk.
Ferris, who serves on the American Academy's Data Science and Analytics Committee, calls this transformation or modernization the “journey of building an actuarial operating model for the future.”
Confidence and Compassion
A Note from Greg Ness, Chairman, President and CEO
At The Standard, we’ve been helping people achieve financial well-being and peace of mind since 1906. As the global health crisis continues to disrupt lives, communities and the economy, I am confident we’ll continue helping people when they need us the most. Our company has been through hard times and market volatility before and we will navigate through this challenge as well. As our customers face tremendous stress and uncertainty, we will continue providing support and stability to those who rely on our products and services.
This pandemic is tough on everyone. Our communities are hurting, our families and friends are distressed and some of our most vulnerable neighbors are at risk.
The crisis and the way we collectively respond to it will define a generation. We are rising to the challenge. I know every single employee at our company — along with staying focused on keeping our business running and serving our customers — is looking for ways to make a difference for those most affected by this pandemic. That’s proving true in businesses and homes across the community, the country and around the world.
Part of the tragedy of this disease is that even as we come together to help those most in need, the unique nature of COVID-19 is forcing us apart. We all understand the importance of —social distancing— to slow the spread, but we should remember that’s just physical distancing. I encourage you to find ways to safely connect with those in your neighborhood who may require extra help and with groups in your community that are making a difference and support them however you can. And now is the perfect time to reach out to friends and others and just check in.
To our health care providers, first responders and everyone selflessly setting aside their own fears and concerns to help others during this time — thank you hardly seems enough. These people are true heroes. This crisis reinforces how reliant we are on the many essential services we too often take for granted. We are grateful to so many for continuing to show up with focus and commitment.
We will get through this, especially if we are sustained by the examples of those who make us the proudest right now — family, friends, neighbors and colleagues working together — rather than allowing our fears to guide us. No matter how unsettled we may feel, remember we are not alone. There are so many people in this world trying their level best to help others. And I am certain we will get through this — together.
In times of crisis, we are defined by how we react. Let’s continue to be defined by compassion.
And to our customers, thank you for putting your trust in The Standard. What we sell is a promise to be there when you need us, and that promise is unwavering.
Be safe and well, and stay connected.
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