This data management has turned out to be a major issue for insurers. Actuaries are, therefore, found most responsible for this evolution.
Big data is changing the way of developing and pricing insurance contracts and products. It also helps to better assess and control risks. Behavioral analyses make it possible to impove product offering which tends towards individualisation. The accumulation of descriptive behavioral data now allows insurers to dissect the needs of their customers to whom they propose targeted and inexpensive solutions. The insurer-insured relationship is now altered.
In order to speed up the dynamics of change, some insurers have pooled up actuaries into data labs, tasked with product innovation. This search for new products is nowhere near slowing down.
With increasingly powerful tools, these experts are facing new challenges: data visualization, graphical representation methods, predictive models, cloud storage, collaborative tools, etc.
As shown in the graph below, data visualization is a technology undergoing strong growth in the actuarial business. It is followed by predictive models, cloud computing and storage, collaborative models and artificial intelligence.
According to a recent study by the "Society of Actuaries" of Illinois, United States, these techniques are already used and will be used in the actuarial business [4].
Technologies used by actuaries
Data visualization
Data visualization consists in graphing data in two or three dimensions, in color or not.
These graphical data make it possible to present complex analysis results to audiences unfamiliar with statistical techniques. Actuaries incorporate these charts into different applications: pricing, performance indices, risk management analysis, benchmarking, automated event tracking.
Some insurance companies have created dashboards that include uniform charts whose use by actuaries meets criteria set by management.
Data visualization also offers the ability to detect trends in an environment where the amount of information is significantly increasing.
Predictive models
Actuaries have been using predictive models for several years, particularly in life and non-life insurance. On a day-to-day basis, they use data from the past to predict the probability of a future event, using analytical models.
These analytical techniques still have a bright future ahead of them. They allow an improvement of the studies of experience and related analyses, a better definition of the hypotheses, a more refined pricing, and the rationalization of the underwriting processes.
Cloud calculations and storage
The use of the cloud for computing and data storage comes henceforth for the actuary. Recourse to cloud will continue to grow especially on dedicated platforms such as Microsoft Azur or Amazon Web Services. Several factors are at the root of this increased use: efficiency gains, low storage costs and increased computing powers.
In current environments, actuaries have in most cases access to the companies’ centralized bases which contain aggregate information. This is likely to impede extension of pricing patters to the most meticulous approaches based on risk.
The advent of cloud storage and computation, has made the utilization of individual data and the development of refined models for the policy possible.
Cloud technology therefore allows actuaries to:
- Move individual users to the cloud.
- Access virtual machines cost-effectively and efficiently by significantly reducing execution time.
- Implement more detailed modeling methods.
- Take advantage of the internal data storage offered by machines applications.
With easy access to data, actuaries expect intensive development of machine applications.
Collaborative tools
Collaborative tools will be more used. The gains in efficiency and time in the exchange of information explain this craze for collaborative tools. The latter are likely to facilitate work sharing among teams, especially when they are geographically dispersed.