Are Actuaries Getting Left Behind? The ‘Double Hurdle’ To Innovation

Wednesday, 30 October 2024, 10:58 am
Press Release: Montoux

The pressure on actuaries today is relentless: growing regulation, cost pressure and a market hungry for smarter, more competitive pricing and products. The answer seems obvious - leverage the best technology to do more with less (or even just keep pace!). But innovation isn’t just a matter of ‘wanting it’; platform modernisation comes with a unique, compounded set of challenges.

Klaas Stijnen, Co-Founder and Co-CEO of Montoux, weighs in on the ‘double hurdle’.

Hurdle 1: The myth of ‘Nothing better’

It’s baffling. In a world where colossal data centers pulse 24/7 and AI churns out insights in seconds, why are actuaries still waiting in a queue for model runs and doing mountains of manual work? Customer-facing tech is spitting out AI-powered summaries in milliseconds, but actuarial platforms are stuck in black-box mode, where control and transparency are traded for “Trust us, it’s complicated.”

If you’ve ever been told your software “Just can’t handle” certain features, you’re in good company. It’s as if actuarial tech is being shielded from the advancements that are reshaping every other data-driven profession. These professions are flourishing with open-source languages, like Python, that integrate seamlessly with broader toolkits, yet actuaries remain confined to proprietary languages and tools. In an age where complex models are built by non-coders, actuaries are left tethered to their terminals, developing models like it’s the early 2000s.

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Actuaries know that data-rich, agile solutions exist across other large industries, but when it comes to actuarial software, the sentiment is often “It doesn’t exist,” or even worse - “That’s just the way it is.” Legacy software providers, claiming to be irreplaceable, have effectively become gatekeepers, stifling new approaches that might otherwise enable actuaries to deliver transformative results.

The fact is that when providers convince actuaries that no better option exists, it’s a closed door on potential, innovation and advancement. The longer the profession relies only on legacy tools, the wider the gap between today’s problems and tomorrow’s solutions.

Hurdle 2: The ‘Impossible’ migration myth

This brings us to the next hurdle: the myth of the impossible migration. If an actuary does discover that there’s more out there than what they’re currently using, there’s a pervasive idea that transferring models and systems will disrupt business as usual for so long, it may be better to simply stick with what you know.

“It’s a multi year-long process,” they’ll say, “And fraught with risk.” But that belief is outdated. Technology advancements, from AI to smarter migration tools, are cutting timelines to migrate a model from six months to a few short weeks, sidestepping the friction entirely.

While old systems may have taken years to overhaul, today’s intelligent platforms can compress that timeline exponentially, giving actuaries the flexibility they’ve needed for years. What’s more, it’s also possible to tackle migration model-by-model or to utilize advances in modern APIs to build new, more advanced models that draw their data from older ones and allow for experimentation.

A new mindset for actuarial tech

Actuaries don’t just need new software; they need tech that offers scalability, transparency and efficiency. They need tech that opens up integration, automation and agility— fuelling innovation and supporting actuaries' natural drive to question and refine, rather than imposing rigid structures.

Up until now, this ask has been a fairytale; but with the two prevailing platform myths ‘busted’, there’s a brand new narrative ahead…

Imagine a world in which you could ask and answer questions faster? What if you could evolve from siloed calculations to dynamic, real-time pricing innovations that allow for quicker product launches and agile responses to market demands? What if you could move away from the confines of rigid processes and lengthy adjustment periods to instant modeling for ‘what-if?’ scenarios, sharpening pricing accuracy and refining strategies on the fly.

Actuaries now have the power to swiftly adapt and optimise, using integrated tools that support an iterative and holistic approach rather than imposing static structure. This shift will not only accelerate product development but also enhance market competitiveness by allowing actuaries to respond with precision and foresight.

Solving the double hurdle

In a landscape where every other industry is progressing with next-gen tools, it’s high time for actuaries to leave “That’s the way it’s always been” behind and start asking - “What’s next?” of their legacy software as they look to supercharge their capability. With pressure mounting, technology can and should solve our most pressing challenges; and anything less is simply unacceptable.

What’s more, breaking the legacy cycle doesn’t have to mean taking undue risks. After all, if complex genetic structures can be decoded by AI in moments, surely actuaries can expect technology that delivers high performance, flexibility and insights on demand?

Given the right technology and mindset, stepping into the future can be both rapid and low-risk.

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