Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • April 2012
04

Technology: Head in the clouds, but feet firmly planted

Open-access content Tuesday 3rd April 2012 — updated 5.13pm, Wednesday 29th April 2020

James Maudslay explores how cloud services can improve access, processing and delivery of information for underwriting businesses

2

—

Wherever information is found in a modern underwriting firm, there will usually be an actuarial team on site to provide analysis services to business users.
 
Thanks to the data-crunching that is essential to their roles, actuaries require high-specification PCs. However, when the board needs to decide whether to underwrite a new line of business or not, the last thing they want to hear is that the model doesn't run fast enough or has fallen over because the bank of computers in use don't provide a stable platform.
 
Quick and reliable
The business needs quick and reliable access to management information that allows it to deliver risk-adjusted return on capital to its shareholders. Equally, if a capital model takes three or even six hours to run, then the actuary needs to be free to carry on with the rest of their job while the model runs, rather than being affected by reduced processing power.
 
In the past six months, we have conducted cloud-computing trials for both capital and catastrophe modelling. For example, by working together with actuaries from a number of different underwriters, we have been able to design and build platforms that provide the stability to complete the huge number-crunching exercises required for capital modelling. A stable platform that can be scaled as required provides confidence that information can be delivered to the business within a requested timescale.
 
The issue of speed is also vital for capital modelling. When the opportunity arises to underwrite a new line of business, data needs to be made available to understand the amount of capital required and whether changes to the existing quantity or make-up is required. Waiting a weekend for a model to run before the decision is made leaves the business open to its competitors gaining first-mover advantage.
 
One business we worked with had a specific requirement to reduce the model runtime to a maximum of three hours. Working together, we set up a trial to see whether the application could perform successfully within this timespan. Once the environment was up and running, the first phase proved that it was much more stable than the previous approach of networked PCs. The next proved that it would meet the business objective of running the programme in under three hours - repeatedly.
 
The team is now able to run the models twice in a single day, allowing the business to make decisions more quickly and respond to market opportunities. Given that the three hours includes data transport across the internet, we have worked out that if we connect the office and cloud using a dedicated link, we can reduce the running time to just over an hour and a half.
 
As the complexity of datasets grows, processing power needs to expand, which could mean throwing more high-specification servers at the problem every nine to 12 months. This can be avoided with a cloud platform, which, as well as guaranteeing confidence that data can be provided as and when the business requires it, also provides infrastructure that meets the continuously growing processing requirements of capital modelling without the upfront investment.
 
A cloud platform offers a financial model based purely on consumption, a pay-as-you-go approach that works for models that need to be run on a monthly or ad-hoc basis. Solvency II will almost certainly require capital models to be run more regularly and internal business planning may dictate a monthly requirement or an ad-hoc service throughout the year. Whichever way you look at this, regular periods of non-use occur - and paying for a dedicated, high-spec environment 365 days of the year doesn't stack up.
 
Scalability
These models can be run to make business-critical decisions while being used at the same time to evolve business processes to address Solvency II requirements. In an environment where insurers are increasingly analysing high-exposure risks, they need a platform that gives them the ability to be agile in their decision-making. Stability, scalability and pay-as-you-go are all really important elements of why cloud services can support businesses.  

From our perspective, cloud services are not a new technology. They present a different way of consuming IT services that is more in line with the flexibility that businesses need today to address their challenges. It changes the role of technology within the business, making it an enabler for the broker to get to market faster or improve its internal processes to be more effective. As the insurance sector continues to grapple with the increased capital and reporting demands of Solvency II, these trials prove that adopting cloud computing platforms significantly reduces the challenges of running capital models.?
 
James Maudslay insurance consultant Colt
James Maudslay is an insurance consultant at Colt
This article appeared in our April 2012 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

Embedding and Solvency II - know your model

Richard Schneider discusses the importance of understanding and communicating model limitations to ensure effective risk management within Solvency II and beyond
Tuesday 10th April 2012
Open-access content
2

Q&A: On my agenda - Elliot Varnell

Dan Georgescu talks to Milliman's Elliot Varnell about ESGs, CROs and the impact of Solvency II
Tuesday 3rd April 2012
Open-access content
2

Letters to the editor - April 2012

In which actuaries discuss bootstrap models and the bigger perspective
Tuesday 3rd April 2012
Open-access content
2

Soapbox: When black swans turn grey

Armoghan Mohammed asks whether the reoccurrence of high-risk events signals a need to review risk planning
Tuesday 3rd April 2012
Open-access content
2

London market actuaries get modelling lesson from LCP

General insurance actuaries attending the London Market Student Group’s first programme event of the year found themselves challenged to rethink their views on actuarial modelling.
Tuesday 3rd April 2012
Open-access content
2

Insurance deal for older people comes into force

An agreement between the insurance industry and the government which aims to make it easier for older people to get motor and travel insurance has come into force.
Tuesday 10th April 2012
Open-access content

Latest from General Insurance

td

Brain power

The latest microchips mimic cerebral function. Smaller, faster and more efficient than their predecessors, they have the potential to save lives and help insurers, argues Amarnath Suggu
Wednesday 1st March 2023
Open-access content
bl

'Takaful' models of Islamic insurance

Ethical, varied and a growing market – ‘takaful’ Islamic insurance is worth knowing about, wherever you’re from and whatever your beliefs, says Ali Asghar Bhuriwala
Wednesday 1st February 2023
Open-access content
il

When 'human' isn't female

It was only last year that the first anatomically correct female crash test dummy was created. With so much data still based on the male perspective, are we truly meeting all consumer needs? Adél Drew discusses her thoughts, based on the book Invisible Women by Caroline Criado Perez
Wednesday 1st February 2023
Open-access content

Latest from April 2012

2

Pensions funding statement: reaction and responses

The publication of the Pensions Regulator’s first annual funding statement has already elicited a considerable response from actuaries and others involved in the pensions industry.
Friday 27th April 2012
Open-access content
2

FSA tightens up rules for pension TVAs

The Financial Services Authority has published new rules and guidance which aim to reduce the number of transfers from defined benefit pension schemes to personal pensions.
Friday 27th April 2012
Open-access content
ta

ERM reviews needed to address innovation risks, says WEF

Banks and insurers should review and adapt their enterprise risk management to address the risk and uncertainties introduced by financial innovation, the World Economic Forum said yesterday.
Friday 27th April 2012
Open-access content

Latest from formbuilder_item_removed

2

Implementing IFRS 17 Discount Curves: Theoretical and Practical Challenges

The International Financial Reporting Standard (IFRS) 17 requires liability cash flows to be discounted at rates that reflect the characteristics of the cash flows, including their liquidity
Tuesday 3rd September 2019
Open-access content
2

Profit Emergence Under IFRS 9 and IFRS 17: The impact of choice of liability discount rate

With the IFRS 17 accounting standard, insurers need to understand the patterns of profit emergence that arise under the standard, and how current business and methodology decisions affect such patterns.
Wednesday 10th July 2019
Open-access content
2

Whitepaper: Aggregation and diversification of the IFRS 17 Risk Adjustment

This paper forms part of a series of high-level papers designed to provide an introduction to different features of the risk adjustment that should be considered in advance of implementation.
Tuesday 29th January 2019
Open-access content

Latest from 04

2

Actuaries! In an adventure with climate change scientists!

In the second part of his ‘travel tales of a pensions actuary’, Nick Silver finds vodka a useful aperitif to applying actuarial methods to climate change risks in Tajikistan
Wednesday 11th April 2012
Open-access content
2

Careers: Why become an actuary?

Dr Geraldine Kaye explains why an actuarial career is a popular choice and describes the characteristics of a model recruit
Tuesday 10th April 2012
Open-access content
Dr Trevor Watkins

Education: Sunrise for Indian actuaries

Trevor Watkins reports back on the ascent of actuarial education in India
Tuesday 3rd April 2012
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Pricing Trading Manager - Contract

£700 - £1000 per day
Reference
148579

Head of Financial Risk

Flexible / hybrid working with minimum 2 days p/w office-based
£ excellent package
Reference
148578

Insurance Risk Leader

Flexible / hybrid with 2 days p/w office-based
£ to attract the best
Reference
148577
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ