The survey, conducted by Willis Towers Watson, found Life and Property & Casualty (P&C) insurers are likely to enhance their use of automation over the coming five years to streamline processes.
In recent years, there has been an increasing demand amongst insurers to use modern technologies to implement automation across their business. This has been driven by a range of factors including regulatory changes, the need for greater business insights and cost challenges.
To further investigate this trend, Willis Towers Watson ran a global actuarial reporting automation survey to explore how insurers currently use automation and where they aspire to use automation in the future. The survey involved 52 Life and 66 (P&C) companies across the world, focusing on automation in Life valuation reporting and P&C reserving reporting.
The insurers were surveyed on key areas including data processes, assumptions, results production, model execution and audit trails. Answers were provided in the form of either: No automation, Some automation, Strong automation, Intelligent automation, or Not applicable. These answers were then converted to an automation score between 0% and 100%, where 0% represents no automation and 100% represents full intelligent automation, key trends and detailed findings emerging from this survey were summarised in their July 2021 report.
While there has been a focus on automation, current adoption levels are relatively low with both Life and P&C insurers answering ‘no automation’ or ‘some automation’ to majority of the survey questions. There is still a dependence on actuaries to perform repetitive and manual processing tasks.
Insurers noted their aspirations to significantly increase the level of automation in the next five years. The COVID-19 pandemic and the various lockdowns appear to have accelerated this drive. Some of the key focus areas include integration between systems, ability to quickly validate multiple data feeds and creating informative interactive dashboards. There is a strong desire to use automation to achieve greater agility in producing results and driving insights from the reported information. Additionally, insurers are looking to operate in an efficient way to ensure proper audit trails and transparency exist across their processes.
For Life insurers, data processes are currently the most automated area (highest automation score). However, there is still room for improvement in this area, with insurers aspiring for most automation in data processes in the future. Compared to current levels of automation, Life insurers are aspiring for the greatest relative improvement in automation in areas related to assumptions, audit trail and results production.
Life insurers are looking to use automaton to improve efficiency in executing model runs and looking to componentize/modularize their valuation process by using the best tool for each aspect. They are also looking to outsource or move to cloud-based solutions offered by specialist providers to derive value.
Similar to Life insurers, data processes are currently the most automated area for P&C insurers and they are also aspiring for most automation in data processes in the future. Compared to current levels of automation, P&C insurers are aspiring for the greatest relative improvement in automation in areas related to assumptions, audit trail and senior management engagement.
P&C Insurers are looking to use automation to produce results earlier in the reserving process through rules-based reserving or machine learning techniques, and then utilising actuarial resources to create insights. Looking forward, Willis Towers Watson expect different processes for on-cycle (e.g. quarterly/annual financial reporting) and off-cycle reserving processes. On cycle reserving is expected to be quick and controlled to simplify understanding and communication of results. During off cycle reserving, companies will be able to conduct deep dives into segments and tweak algorithms to quickly produce on-cycle results.
The aspirations identified by Life and P&C insurers related to use of automation could fundamentally transform their actuarial departments. Such ambitions will require a strong and clear vision, and appropriate change management will be critical to ensure a successful transformation. Additionally, it would need to span across technology, processes and people to be effective and bring about real change in the business.
This article is a summary of the 2020/2021 global automation in insurance report, conducted by Willis Towers Watson. For further information on the report, click here.
CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.