Articles - From back room to C suite the actuary’s evolving role



About 20 years ago, when I decided to become an actuary, job opportunities were good for people with our specialised skillset. However, there were not that many actuaries, even less so female, in key corporate leadership roles. Today, I’m glad to say that has changed dramatically. Since I started, many actuaries have evolved from the purely technical background into the limelight, assuming more commercial roles.

 By Chloe Paillot, Chief Transaction Actuary, Enstar Group

 In my area, non-life legacy insurance (better known as run-off), we’ve risen high to stand alongside the dealmakers in the corporate hierarchy. I expect that trend to continue, with a growing wave of leadership opportunities on the horizon for actuaries in the coming years.

 Our developing role
 Over the last decade, actuaries have become so much more than number crunchers, we understand the insurance value chain and different areas of the business and have demonstrated we can have a commercial mindset. Nowadays, most non-life insurance businesses look to actuaries to carry out key business and leadership roles due to their invaluable technical insight, and ability to underline or moderate strategic decision-making. Our role has gone well beyond individual risks: in the insurance numbers-game, actuaries’ views are increasingly sought at the outset of major projects and transactions.

 We are also moving beyond analytical roles. It’s not uncommon these days to see an actuary being a CEO, CFO, or CUO, Non-Executive Directors, or working in innovation, technology, or product development. This is a testament to our broad understanding of insurance, supported by analytical skills and risk awareness.

 Drivers of change
 One driver of this expansion of the actuarial playbook has been regulatory change. New regimes such as Solvency II (and more recently, IFRS 17) brought the actuarial skillset of understanding risk, capital and reserving to the forefront. Regulation led to a greater need for actuaries and gave us exposure, right up to the Board.

 Actuaries’ spectrum of responsibility has developed alongside the industry’s changing approach to risk. During my career, insurance companies and the market in general have increasingly viewed risk analysis as a science, rather than an art and a central part of any company. We have seen the increased importance of Chief Risk Officers in a growing number of organisations and it has become progressively more common to see actuaries in this role.

 Another key turning point has been the development of technology, which goes hand-in-hand with data. Access to greater amounts of data, supported by constantly evolving technology, has enabled actuaries to increase their impact in a variety of areas. Many new technology providers now offer sophisticated actuarial tools. That has helped expand the range of solutions available to us, and the range of tasks we can regularly perform. Pricing is a great example. There has been a massive increase in demand for pricing actuary roles especially for the commercial lines, as actuaries have positioned themselves as key business partners with increasingly sophisticated pricing analysis, utilising technology to leverage a greater volume and variety of data to make more informed decisions.

 The development of artificial intelligence (AI) is a pivotal moment in the actuarial space providing a large range of opportunities. For example, my colleagues and I see potential to use AI to support our due diligence around acquisition, whether it is to provide a time-efficient starting point for modelling or accelerating information discovery and summarising documents in our claims due diligence.

 As frontline actuaries, the power of applied technologies enables us to spend time on higher-value tasks, and therefore to create greater value, whether through finance, pricing, claims, underwriting, or processes. However, with these opportunities also comes challenges. The data produced is only as good as its users – given the greater depth of data we have at our fingertips, it’s vital that it’s utilised in the optimal way, by skilled actuaries. Subsequently, this has meant we have had to evolve our skills base, adapt our use of data, and keep up-to-date on the latest technology, encouraging data science literacy.

 Lasting legacies
 Legacy (or run-off), which is now a $1 trillion legacy market , is another area of the insurance ecosystem where actuaries are being empowered. Our sub-sector gives live risk carriers powerful tools to achieve policy finality, dampen reserve volatility, manage capital more efficiently, and realise their strategic objectives.

 This versatility has driven increased demand for legacy transactions, which see closed portfolios of live risks transferred from the original underwriting entity to another legal carrier. That’s been supported by the growing sophistication of pricing, a process underpinned by actuarial expertise.

 Our profession has always been integral to the complex pricing and structuring of legacy transfer deals. But now our role is much broader and more flexible, for example as Chief Transaction Actuary at Enstar, I oversee a team that evaluates all potential legacy transactions for the Company. We look at the potential reserve and capital impact of a transaction. It’s a collaborative and dynamic role and function – we are regularly working with the M&A team, brokers, our consulting colleagues within Cranmore, as well as our claims, actuarial and finance teams.

 Legacy should never be a zero-sum game. When a transaction is structured and priced well, both sides will be winners. Innovation in solution design is core to achieving such outcomes, and actuarial skills are fundamental to ensure all counterparties’ objectives are met.

 That sits at the heart of why actuaries have now moved into front offices and c-suites. We create value for everyone, throughout the insurance sector. As our role evolves and expands, particularly to make greater use of tools such as AI, the actuarial star will continue to rise.

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