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Insurers share how automation is changing the reserving function

January 19, 2022

During a recent roundtable discussion with insurance executives, we identified ways automation is helping actuaries provide more valuable insights.
Insurance Consulting and Technology
Insurer Solutions

The business and regulatory environment and the pressure to speed up cycle times and reduce expenses has put automation at the forefront of strategic priorities for both large and small insurance companies. Consequently, reserving teams are increasingly using automation for mundane tasks to free up valuable actuarial resources and focus on more valuable activities.

WTW has long promoted the use of automation in reserving. As a result, we recently held an open roundtable with over 20 participants to discuss some of the real-life successes and challenges experienced by those working within insurance companies.

Some of the questions asked during the roundtable included:

  • What were the objectives of adding automation?
  • What benefits did you realize?
  • How were the benefits quantified (e.g., time saved)?
  • What were the initial reactions of the teams directly impacted? Were they enthusiastic or concerned about being automated out of a job?

Below are some key takeaways about automation from the roundtable discussion.

Reduces costs while adding more value

The goal for one of the participants was to bring the basic reserving function in house, and re-deploy their consulting budget on specialized issues and identifying insights. Like many other professions, actuaries want to work smarter and not just harder. Automating enabled the team to spend less time on routine “data jockeying” and more time using the results to deliver value-added insights. Also, it enabled them to reduce overall costs and gain more value from both the internal team and consultants.

Gets to the baseline quicker

Actuarial teams are using automation to establish an early indication of results. They want to get to the baseline quicker so they can look at diagnostics and apply their expert judgment. “Automation doesn’t pick on newer trends especially if it’s still anecdotal” was a comment shared by one participant. However, there was broad agreement that automation can provide actuaries with more time to delve into identifying current trends.

Provides better C-suite reports

Actuarial teams across various companies are using automation to report to senior management. There is a growing trend in the industry toward using data visualization tools like Power BI. According to a participant “I want senior management to see progress in real time.” Putting the relevant information and insights in the hands of senior management more quickly allows them to make more informed and timely strategic decisions.

Invokes both fear and excitement

Like many other fields, some actuaries are worried about automation replacing them. However, many others – especially younger people who have programming skills and love the challenge it presents – are excited about automation and its potential. As an example of the excitement, a roundtable participant explained plans to move current processes (done in SAS) to a more automated set-up. This individual’s comment illustrates an important success criteria for any company looking to automate: The team impacted must be open to adopting automation and not feel threatened by it.

Overall, it was an engaging discussion that reflects an industry keen to embrace automation, but not simply for the sake of doing things differently or more cheaply. Robots are not coming to do the job of the reserving actuary, but they just may make our jobs even more engaging and more challenging, and our results and insights more actionable.

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