2023 Young Actuaries’ Public Policy Essay Competition results announced!

The Institute has an increasingly visible profile in public policy, providing independent, expert advice to governments, their agencies and regulators on a range of issues including insurance, superannuation and retirement income, enterprise risk management, data science, climate change and sustainability, government services, and whole of society challenges such as funding for aged care, intergenerational equity and inequality more generally.  The Institute’s members, through their significant volunteer work and research commissioned by the Institute, produce detailed and balanced analysis looking at some of Australia’s most serious public policy issues. 

Naomi Edwards, Institute President for 2023, has highlighted to members in her Presidential Address the importance of this work to Australia and the admiration the Institute has received from external stakeholders for its contributions to public policy conversations.  We commend the young actuaries that submitted essays this year and encourage all actuaries to consider using their skills to develop the Institute’s strategic priority of social purpose and brand.

In the Institute’s latest public policy essay competition, young actuaries were asked to outline a public policy challenge facing Australia while demonstrating how actuaries can use data for good to help solve that challenge.

Marcus’ essay “How the Australian Reinsurance Pool Corporation (ARPC) and Insurers can protect our data” looks at the vulnerability of small to medium enterprises (SMEs) to cyber-attacks and the resulting losses to their business and the broader economy.  Marcus’ thesis is that better access to cyber insurance for SMEs would highlight the benefits of cyber hygiene for these organisations, however the existing cyber reinsurance market is underdeveloped and there is insufficient cyber insurance available for these types of companies.

In uncovering the problem, Marcus said

“SMEs are increasingly reliant on digital infrastructure for their operations, including communications, cloud processing, physical security systems, data storage, and billing.  We know that around 50% of SMEs have poor cyber security practices and that nearly half of the cyber-attacks target SMEs, posing a significant threat to Australian businesses and consumers.”

He contends that the situation is exacerbated by the costs to hire cybersecurity consultants, consequently a large portion of the economy is priced out of receiving cyber consulting advice.

While cyber insurance for corporates is a well-developed market, Marcus encourages the government to consider access to an insurance pool to protect Australia’s intellectual property and support SMEs, a significant portion of Australia’s business and critical to the support and growth of Australia’s GDP.

His paper uncovers why insurers do not offer adequate cyber insurance for SMEs, why an insurance pool could solve the problem and why, in an increasing age of data and digital dependence, Australian SMEs are a vulnerable segment not adequately protected from, and covered for, cyber-attacks.

In awarding Marcus’ essay as the winning entry in the 2023 Young Actuaries’ Essay Competition, Anthony Lowe, Chair of the Institute’s Public Policy Council Committee, said

“Marcus addressed a shortcoming evident in the Australian insurance market and has offered an insurance pool as a policy tool to better protect Australian SMEs from cyber-attack.  Marcus’ essay further examines issues raised in the 2022 Green Paper Cyber Risk and the Role of Insurance and uncovers an important segment of the insurance market that could benefit from a public policy solution.”

Two essays were highly commended, both providing evidence of actuaries using data for good.  An essay from Nirosana Maheswaran explores Australia’s complex and disparate health system. Nirosana suggests that actuarial modelling can help alleviate pressure on the health care system, uncovering those cohorts that are at risk of developing a chronic medical condition and using health data to revise funding of the health system. Potential revisions include improved access to general practitioners, restructuring the Medical Benefits Scheme and incentives to integrate GP care with other allied health professionals.

The second highly commended essay from Fahad Malik looks at the availability and affordability of home insurance in flood prone areas of Australia.  Fahad advises that Computable General Equilibrium (CGE) modelling could be used to understand the long-range impacts of government policies addressing natural disasters, including the economic costs of floods, the success of flood mitigation measures and the impact that flood insurance has on households and investment.

Congratulations to all! 

Marcus will receive $4,000 for his winning essay and is working closely with the Cyber Risk Working Group to expand on his ideas. We hope there will be a further Institute publication on cyber risk later in 2023.

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.