Actuaries in Insurance Companies – Boring Grunt Work

I recently saw an article about actuaries in insurance companies being required to perform mundane tasks.

But while these actuarial teams are getting bigger, in many cases they are counted on to deliver too many mundane tasks, such as data processing, creation of reports and meeting ever-growing regulatory needs.

Having worked in both an insurance company and a consulting firm in an actuarial role, I can testify that there are mundane tasks in both (at least at a junior level, which is what I was at). In fact, in any job, there are mundane tasks. I’ve worked in software development and finance, and each has its own advantages and disadvantages.
Creation of ad-hoc reports, both actuarial and non-actuarial in nature, can be big time consumers for entry level actuarial staff. Some non-actuarial reports include creating a report on paid losses for a department after a large loss. As the amounts in question are in the past rather than speculative, there is no actuarial judgement involved. If a company paid $10 for a claim, the company paid $10. It’s the unpaid claims and future liabilities that are the traditional realm of actuaries, both from pricing and reserving.
So why do actuaries do these reports? Because they are seen as having strong technical skills, so other departments may ask for help.

Reserving actuaries are increasingly asked to perform their services for underwriting, pricing reinsurance and capital-modeling purposes, often with different data segmentations that require a finer level of analysis or a macro view. This increased need for analysis is often not well designed or organized to fit within the broader reserving framework.

Yes, insurance companies tend to care about finer segmentation of data than consulting firms. Insurance companies want to see results broken down by business area (for example, Ontario Personal Auto LOB, how a particular underwriting office is doing so they know how to reward the manager of that business, etc.). Consulting firms are sometimes hired for regulatory requirements, so all they need to provide is that on an overall basis, the client firm has set aside enough money for all future liabilities already incurred (ie: actuarial reserves are adequate).

So what’s the solution to mundane work in actuarial jobs?
Is it to work in consulting companies only? Maybe.
Or maybe someday insurance companies will have teams of quants/technical number crunchers who will do most of the number crunching, and actuaries return to their traditional roles of reserving and pricing only. Who knows. As a side note, however, some insurance companies have horrible IT departments. So I wouldn’t hold my breath on having dedicated quant teams supporting every area… until one company does it, then everyone may follow.

In conclusion on actuarial grunt work
No matter what field you’re in, there will be grunt work. The questions to ask yourself when choosing a career is, how does that grunt work in comparison to the overall value you’re getting from that actuarial position? Good luck on choosing your actuarial career!

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