Actuarial Applications of New Technologies

Q&A with R. Dale Hall August/September 2018

Managing director of research at the Society of Actuaries (SOA), R. Dale Hall, provides research insights on technology and new practices.

What type of research has the SOA explored on image recognition technology?

Hall: The SOA Research Expanding Boundaries Pool sponsored a study focusing on image recognition applications within insurance. This report examines how it can help the actuarial profession and the insurance industry. The report provides insights on image recognition techniques to improve customer service, facilitate data collection and provide additional valuable information for pricing, reserving and risk management.

The report also provides an example of how auto vehicle driver behavior can be assessed using image recognition. This process helps predict driver behavior based on images captured during driving.

As noted in the report, models can be fine-tuned with insurance-related image data. There is an opportunity to combine meaningful model output and object identification. Ultimately, it provides an opportunity for actuaries to improve the business value of image recognition techniques to address insurance problems.

What are the practical uses for the industry?

Hall: This research explores how image recognition can be applied to agricultural insurance pricing and risk analysis, to property insurance, and following extreme weather events. There are also applications possible for health insurance, such as with pricing factors for individual customers. The report also delves into the challenges with harnessing image recognition applications, including with fraudulent claims.

Research Reads

Student Research Case Study Challenge

The SOA announced the winners of the 2018 SOA Student Research Case Study Challenge, which include the Cass Business School at City, University of London; Nanyang Technological University in Singapore; and the University of Lisbon in Portugal. More than 70 teams of actuarial students from around the world participated in a research competition to apply their actuarial skills on a social long-term care insurance program.

Pending Insolvencies on U.S. Multiemployer Pension Plans

The SOA provided an analysis of pending insolvencies on “critical and declining” multiemployer pension plans. It explores the impact of insolvency on plan participants and contributing employers.

Cyber Risks and Other Emerging Risks

Cybersecurity ranks as the top emerging risk among risk managers, according to the 2017 Emerging Risks Survey. This report is sponsored by the Joint Risk Management Section, the SOA, the Canadian Institute of Actuaries (CIA) and the Casualty Actuarial Society (CAS). Other emerging risks include climate change, asset price collapse, financial volatility and terrorism.

At what level are insurers approaching predictive analytics and other emerging topics involving technology?

Hall: Over the past two years, the SOA conducted a survey to gauge how insurers are working or planning to work with predictive analytics, accelerated underwriting and enhanced underwriting. The research responses focused on marketing, underwriting and post-issue management of these topics. Thirty-six companies responded to the survey, providing knowledge on which areas they’re addressing. The participants noted that the most frequently implemented predictive analytics programs are underwriting risk class and decisions on underwriting requirements. The majority of companies currently working on these programs plan to implement them within two years.

What other research projects involving new technology are in development?

Hall: The SOA works on a variety of research projects looking at new technology, approaches and its impact on the profession. For instance, we have a research study to understand genetic testing, family history and mortality—in terms of the impact on life insurance. Later this year, we are also exploring the impact of autonomous vehicle implementation on the insurance industry. As part of the SOA’s strategic research efforts, we are pursuing research to highlight the evolution of technology as it applies to the actuarial profession, the insurance industry and population trends. Some of the topics we may explore include accelerated underwriting, business technology, machine learning, cyber risk, wearables, telematics and other new innovations.

R. Dale Hall, FSA, CERA, MAAA, is managing director of Research at the Society of Actuaries.