A huge increase in data generation, data capture and data storage combined with significantly increased computing power is providing life insurers with a unique opportunity to re-evaluate the value that their data can provide.
It is well known that customers do not respond well to offers that they consider not relevant to them. However, life insurers with an understanding of a customer’s likely needs can proactively engage – successfully – with customers with a relevant personalised deal that is responsive to their needs both now and in the future as their needs change.
Sophisticated data science and analytics tools are used by many in the industry as data scientists have been hired to derive greater insights from the data to support customer outreach efforts. The questions on the table are: (1) Have these efforts been successful? and (2) Is this all that can be done or are there additional steps that can be taken to dramatically improve the insights being developed by the data scientists?
We believe that enabling actuaries to embrace modern-day data science tools and to work closely with data scientists is the missing link that will give dynamic strategic advantages to life insurers in the further development of dynamic policies and personal customer connections.
A Powerful Combination
For example, let’s consider demographic and occupational data for a life insurer’s in force customers. This data provides insights to the insurance needs and risks that certain customer profiles have. As these data points change over time, so do a customer’s likely needs and hence the underlying potential coverage opportunity for the insurer. The crucial components here are not simply the gathering, storing and accessing of available data points and the enabling of machines to find connections. Rather, the crucial components are using relevant business insights that actuaries have developed over many years in conjunction with the practical data science tools recently enabled by data scientists as well as increasing computing power and data. The combination of data science and actuarial science is powerful!
As data continues to grow and transform exponentially, the actuary continues to remain vital for insurers to create relevant, personalised and economically suitable engagement points and policies for customers. For actuaries, this demand for personal connection and the rise of data at large is a sign that their role is more crucial than ever. For life insurers this means boosted customer engagement and an improved business model.
Looking to the Future
Looking forward, the actuary will continue to evaluate key sources of data and need to find ways to incorporate data science that uses state of the art machine-learning and data technologies together with the actuary’s business insights. As J. M. Affolter, FIA, stated, “Actuaries are the original data scientists.” We need to refresh our methods and make use of emerging technological advances.
As the evaluation, monitoring and management of customers needs and ultimately insurance risk gets more complex, the ability to ensure efficient risk measurement, management and policy building is what businesses and insurers will look for and depend upon in the foreseeable future. The actuary – using available technology and working closely with relevant professionals – is an indispensable part of the insurer of the future.
Valerie du Preez (FIA), Dupro Advisory
Martin Snow (FSA, MAAA), Vice President and Chief Delivery Officer Atidot