Life and property and casualty (P&C) insurers are set to accelerate their use of automation over the next five years as they look to improve the efficiency and auditability of their actuarial processes.
That is according to findings from Willis Towers Watson's (WTW) Actuarial Reporting Automation survey of 52 life, and 66 P&C insurers across the world, including some of the largest multinational and domestic companies.
Most life insurers said that they currently use “no automation” or merely “some automation”, with assumption processes their least automated core areas of a valuation process.
P&C insurers echoed the same sentiments, with most having used little automation to date, and said that engagement with senior management was their least automated core area of the current reserving process.
However, the survey found that both life and P&C insurers intend to deploy “some” or “strong” automation over the next five years, with the former focusing mainly on assumptions, audit trail and results production, and the latter prioritising senior management engagement, assumptions and audit trail. Data processes are currently the most automated function for both.
“Insurers are looking to transform actuarial processes to achieve greater efficiency and efficacy, enabling more granular analysis and more frequent and timelier insights from their data,” said Max Drannikov, WTW's global product leader for business process excellence.
“We have seen life insurers gain value from automation around model point grouping, allocation of IFRS 17 cohorts, and economic capital processes. Many challenges P&C insurers face stem from reliance on multiple data sources and coordinating external/internal teams — they can combat this by automating data processes.”
The impact of COVID-19 has also accelerated the drive for automation, which has rapidly moved up on the c-suite agenda over the last year, according to the survey findings. However, limited time, staff and poor data quality are all barriers to adoption.
Drannikov said that insurers should consider all possibilities when looking at which processes to automate and the level of re-engineering required.
“Identifying quick wins to free up time that can be reinvested towards a large-scale transformation is often a key enabler of clients’ automation ambitions,” he continued. “The whole team must be engaged throughout deployment to ensure they embrace the solution.”
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Author: Chris Seekings