All we need to do is look around and we can see the world is changing. The use of technology now compared to just five years ago is simply amazing. With 5G just around the corner, these changes will only come quicker now. A question being asked in actuarial circles is whether the actuarial profession will survive. At the recent Asian Actuarial Conference in Singapore, one of the sessions asked the participants if they felt there would continue to be actuaries in the next twenty years and a sizeable minority felt that indeed actuaries will not survive!
At the heart of this worry is the AI revolution, i.e., the fourth industrial revolution. It is quite common to see data scientists, where in the past were actuarial analysts, and the news is filled with stories of how AI will automate certain jobs. The chart below represents the prediction of one major website of how likely several professions are to be replaced by robots. These predictions are fairly consistent by website:
Generally speaking the more routine the job, the more likely it is to be replaced. Interestingly, actuaries have a 21% of being replaced. To me, I interpret this not as a 21% chance of actuaries to disappear but rather 21% of the actuary’s work to disappear.
It has been said that there are 4 kinds of jobs which will be safe from the AI revolution:
Thus, being a right brained actuary who uses creativity and emotions in their job will be very important.
Are Actuaries Creative, Strategic, or Neither?
Actuaries can be both creative and strategic. For instance, designing products for new market segments as well as differing model designs are definitely creative. Recently, we designed an insurance product for a frontier market. Such a product had never been sold in that country. No lapse experience, no mortality tables, first time putting together an agency structure, no problem for a right brained actuary!
As a member of top management, the actuary certainly has a key role in the strategic direction of the insurer. Furthermore, risk analysis such as in Financial Conditions Reporting requires creativity to explore the types of potential risks in the insurer and ways of mitigation or monitoring. However, the work of actuarial analysts, perhaps not yet, and is an area likely to be taken over by AI.
General insurance is certainly getting a lot more complex with the explosion of data and pricing of products using this data. Will this be the role of actuaries though, or AI? On the other hand, reserving in general insurance can be more of an art than a science, something in which IBNR robots can identify trends but are unlikely to be able to look at claims’ triangles and sense where the past can or cannot predict the future.
In Life Insurance, Where is Creativity Used The Most?
In life insurance, the frontier markets definitely require creativity. There will be no mortality tables, no data, no experience studies, no insurance penetration at all in certain market segments, thus requiring creativity in our work. In addition, designing models and products to access the lower income market like micro products for the B40 (lower income market) requires creativity. Beyond the actuarial science of carving out useful benefits is the need to package the coverage with other benefits to ensure there is a feeling of value (rather than value is by finding a way to claim from the insurer). Actuaries in Takaful or Islamic insurance also require creativity in combining religion with actuarial theory. Last but not least, product design is likely to move from generic savings products to products focusing on very precise needs and risk management requirements. This will likely require the actuary to have a much greater understanding of the social sciences and behavioral analysis.
The world is changing. The next 5 – 10 years are likely to be amazing times, where so much of our work gets automated, requiring us to move more and more into creative aspects of our work. It’s up to us now to encourage actuarial students to take more behavioral analysis and other courses encouraging creativity. It’s also necessary for us to continue to develop our creative abilities to move to more right brain activities, giving rise to the right brained actuary!