Actuarial Innovation and Technology

Q&A with Kevin J. Pledge and R. Dale Hall August/September 2019

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Last year, the Society of Actuaries (SOA) developed the Strategic Research Program Initiative to determine key themes of strategic research for the future. One of these areas is on Actuarial Innovation and Technology. Kevin J. Pledge, FSA, FIA, chairperson of the initiative’s task force, and R. Dale Hall, FSA, CERA, MAAA, SOA managing director of Research, discuss this strategic research program and the initial reports released.

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What is the core focus of this strategic research program?

Pledge: The Actuarial Innovation and Technology Research Program focuses on the impact new technologies have on actuarial work and on traditional employers of actuaries. We have several projects in development that include studying accelerated underwriting, machine learning, telematics and other innovations relevant to the actuarial field and the insurance industry. This research program purposefully covers both global and country-specific topics. In fact, the members of our Strategic Research Steering Committee reflect this international mix of ideas and representation. You’ll notice a variety of topics that are global, while still providing research specific to Canada, China and the Asia Pacific region, and the United States.

Can you please tell us about the initial research released?

Hall: We’re proud to have completed around 10 papers on topics covering technology and innovation. There’s certainly more to come in the future. The best place to start is our paper identifying the top technology developments and tools of particular interest to actuaries. These include data visualization, predictive modeling, cloud computing and storage. We’ve also explored big data, looking at how insurers currently are using technology to compete on more than price by developing proprietary platforms and connected products that empower consumers to better connect their decisions to their health, safety and wealth. This work also reveals that insurers are offering more user-centered solutions.

Pledge: I’m particularly excited by the research on behavioral science and ethics in artificial intelligence, as these are topics that impact me almost every day. There is also research in progress to be updated on a regular basis, such as on top technology developments and property and casualty insurance policies involving autonomous vehicles. We’ve also released literature reviews on microinsurance and predictive modeling in insurance applications. The microinsurance research examines challenges in microinsurance, rating processes, distribution, payment and claims. The predictive modeling report documents the processes used in our industry today, and it also offers case studies on model evaluation, deployment and governance.

What are some of the other topics related to this program?

Hall: Our research involving technology and innovation includes a variety of subject areas and past reports from our organization. For instance, we’ve released a study on the impact of cancer genomics, providing insights on the cost effectiveness of tumor genetic analysis and immunotherapy. We also have research that explores the potential impact on the U.S. life insurance industry if there were legislative changes to ban the use of genetic testing information in the life insurance process.

What are the next steps and upcoming developments?

Pledge: In addition to the research, we have also gathered a collection of articles to serve as a resource in further learning about technology. These topics include cloud computing, blockchain, cyber risk, InsurTech, telematics, wearables and the Internet of Things.

We have about 20 volunteers on this strategic research committee. While this may seem like a large group, we cover a wide range of topics and geographical regions. We are also open to suggestions from SOA members. That’s the exciting thing about innovation—you don’t really know what is next. So, send us your ideas.

Some of our research projects’ findings will be presented at the 2019 SOA Annual Meeting & Exhibit in Toronto this October. We look forward to continually creating more research studies and reports covering innovation and technology, including in the near future. And, also, we want to thank all of the steering committee members and the various Project Oversight Group members for their ongoing support and guidance in launching and building upon this research program.

Kevin J. Pledge, FSA, FIA, is chair of the SOA Actuarial Innovation and Technology Strategic Research Program’s Steering Committee.

R. Dale Hall, FSA, CERA, MAAA, is SOA managing director of Research.