From Vision to Execution

Across industries, actuarial modernization is increasingly viewed as a strategic priority. Some reports show billions being allocated worldwide to these efforts, highlighting their importance to companies’ strategies and competitiveness.

The Actuary has published other articles on the topic of actuarial modernization, including:

• Actuarial Modernization Errors, which looks at why transformation projects may fail and how both company culture and individual talent can be part of the problem; and
• How to Succeed at Modernization, which provides possible solutions for overcoming these problems.

These previous articles focused on the theoretical foundation of transformation at an insurance company. This article, taking a slightly different approach, explores how to take the idea of modernization and turn that into an executable transformation program by outlining four steps that typically would occur to launch a program:

1. Defining strategy
2. Measuring benefits and return on investment (ROI)
3. Assessing the scope
4. Launching the program

Evolution and advancement are central to growth and development with an insurance company. In my experience, many organizations have a macro roadmap, or business and vision strategy, for what they aspire to become (typically a three- to five-year plan). It is then incumbent on the level-two or level-three teams, such as the pricing function, to define and deliver more specific roadmaps that advance the company’s macro strategy, and to develop the corresponding operating model and functional implementation.

Figure 1: Modernization elements and considerations

Source: Deloitte

While modernization offers benefits, organizations may face challenges such as cost and change management; and all insurers may not need a large-scale transformation. The step approach outlined here may need to be adapted for different organizational sizes and market contexts. To illustrate the key steps involved in actuarial modernization, this article examines the modernization of a pricing function as a representative example.

STEP 1: DEFINING STRATEGY

Defining an organization’s modernization strategy sets the blueprint for how the contributing initiatives will enable a company’s macro strategy. Macro strategies define the enterprise vision, identify revenue and profit targets, and outline where the organization will play and how it will win.

For example, these strategies might include focusing on growth in specific customer segments or channels, increasing brand awareness or boosting profitability. These broad strategies guide which benefit levers will be prioritized for the modernization effort across both financial and nonfinancial goals. Some organizations may prefer to improve expense ratios through streamlined processes. Others might be comfortable with current processes but want to enhance model or technical sophistication to reduce premium leakage or improve segmentation. I believe aligning the key objectives of a modernization program with the organization’s strategic vision is often important, as it supports the advancement of the organization’s overall strategy and goals.

STEP 2: MEASURE BENEFITS AND RETURN ON INVESTMENT (ROI)

A return is typically required for investments a company wants to make, and this is true for a modernization initiative. To ease in assessing where returns can come from, reviewing value levers and identifying which will be impacted by the program’s roadmap is a logical place to start. Typically, benefits can be grouped into financial levers and nonfinancial levers. Financial levers would typically be broken down further into top-line growth and profitability, with the loss and expense ratio. Nonfinancial levers can assess benefits less directly tied to financial results, and may result in improvements either externally (e.g., brand, broker experience, customer experience, regulators) or internally (e.g., employee satisfaction, governance and controls, more informed data). The result of this exercise is a value architecture diagram for the transformation that clearly ties tactical key performance indicators (KPIs) for the modernization program to the top-of-house goals.

When measuring the benefit impact, carriers may want to aim to create tactical benefit projection scenarios that specify how benefits will be realized through the key drivers of transformation. For example, in a pricing modernization program, a new pricing solution may allow updated rates to be deployed bi-weekly rather than monthly, as was done previously. By understanding the number of rate change deployments and applying an expected percentage savings per deployment, an initial estimate for the business case can be built. These benefit projections will need to be refined as one moves through the various stages of transformation (e.g., inception) and gain more clarity on the target state and timing of any key technology deployments.

Note that for some benefits, there may be diminishing returns on the investment. Going back to our pricing modernization example, reducing the time to deploy new rates from months to weeks can have a large impact; moving from weeks to days might yield only minor incremental benefits. As most programs will likely operate with a fixed budget, understanding not only the benefit but also the incremental return on investment may help optimize the program’s overall ROI.

STEP 3: ASSESSING THE SCOPE

Based on the targeted end state for modernization, understanding the gap to the target state and the investment required to close it would involve evaluating the current capabilities. The gaps are typically measured across three categories: 1) process, 2) technology and 3) people. These make up the key layers of your operating model and work in harmony to deliver on the strategy.

Process. First and foremost, process is at the root of identifying challenges and pain points in the current state. When assessing the processes, understanding “why” a process exists and challenging that “why” is critical. With actuarial modernizations, finding that balance between agility, transparency, controls and governance is central. Overemphasizing any one area could have negative consequences for the organization, either by diminishing benefits or increasing risk.

Technology. Operating in conjunction with process, new technology can improve processes and may directly elevate capabilities. Understanding the “why” of the process is central to ensuring you are utilizing the technology correctly and effectively. Ideally, future processes would align with what a technology can deliver, while assessing whether new technologies will change the required controls or governance. With technology, there are typically two flavors: buying a tool and configuring it or building a tool from scratch (colloquially referred to as “buy versus build”). An understanding of the buy-versus-build decision may help determine staff needs and the overall program implementation cost.

People. With new or changed processes and new technology, people will inevitably face change, either in what they do, how they operate, or who is accountable for what. Among the three areas of concern, process, technology and people, people may take the longest to develop, as hiring, redeployment and training all take time. Additionally, a program will typically have a phased rollout, which creates an interim state where some parts of an organization, such as a line of business, have moved to the new operating model, while others continue to operate in the legacy mode. This gives teams and organizations time to learn from any growing pains, adapt and assess how resources can be set up for success.

STEP 4: LAUNCHING THE PROGRAM

So far, we have defined:

1. A potential program strategy—a blueprint for where we need to get to.
2. The benefits the program will deliver—the projected return the program will deliver, both quantitative and qualitative.
3. The scope of what the program needs to address across the process, technology and people.

The final step is turning steps 1 through 3 into an investment ask that outlines the ROI. Given that the scope and duration of the program are largely established, the overall program and costs to run it can be estimated. This could include internal and external spend to deliver the program, as well as license fees incurred (and license fees offset as a return). The program should also have articulated the methods for measuring success during and after the program, identifying which KPIs and metrics demonstrate the projected benefits.

An effective change management approach is also important, I believe. Conducting a comprehensive assessment of impacted stakeholder groups and summarizing the “case for change” may equip program leadership with clear, consistent communication that readies the organization for change and drives sustained adoption.

There is an additional consideration for carriers when assessing whether to launch a program: timing. For the program, we have established the costs and benefits of action, but a consideration of inaction bears some importance. If competition is making investments in their pricing and rating for example, the cost of delay is increased by the improved selection competition will have. Conversely, the costs of delivering and running a program typically decline over time through delivery efficiencies and price competition. This timing element is, I believe, a key to staying ahead of one’s competitors.

A special thanks to Felix Antoine, FCIA, FCAS, Carsten Turk, CPA, Jasmeet Bahra, and Ahmed Humzah Rasheed for contributing to this article.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Copyright © 2026 by the Society of Actuaries, Chicago, Illinois.