Automating Complex Actuarial Processes


In the current economic climate, insurers need to improve their processes continually – making them more efficient and cost-effective while maintaining the agility to deal with new requirements.  At the same time, technological change is providing new ways of achieving these objectives.  In particular, the term ‘robotics’ appears to be used everywhere, and it is important to grasp the impact and potential use of these new technologies.  In this article, we start to explore the automation landscape and identify the potential approaches best suited to different types of process.

The Automation Landscape

There are many well-established line-of-business automated systems which actuaries may already be using, such as systems for actuarial projection, general ledger postings, and policy administration.  These cover a large section of the automation landscape in the quadrant below.  Alongside these traditional systems there are a couple of types of automation that should also be of interest to insurers:

1. Robotic Process Automation (RPA) – is a type of technology that can emulate mouse clicks and keystrokes from a user – interacting directly with the user interface layer of applications.  This is an ideal solution for automating small, frequent and straightforward transactions where an operator is required to enter the same data into several systems or where a process is repeated a large number of times.  One example of this in insurance is claims processing – where call centre operators are taking information from customers and typing this data into claims handling systems.  In an ideal world all the insurance systems would be integrated to avoid duplication of data entry, but in the real world, there are often legacy systems which require human operators to provide the ‘glue’ between these systems.  In these cases consider RPA as a solution for delivering significant efficiency gains.

2. No Code/Low Code automation – is a type of technology that allows subject matter experts, such as actuaries, to automate their own processes.  This technology is suitable for processes which tend to be run by a few experts on a monthly, weekly or daily basis.  There is a lot of ‘heavy lifting’ of data involved – copying, transforming, calculating and enriching.  Typically desktop tools such as Excel are used, combined with manual ‘cranking the handle’ type tasks to produce the outputs.  In these cases consider No Code automation platforms as a solution for delivering better data quality, audit trails, reduction in key person dependency, efficiency gains – and more importantly freeing up some of the time of those experts to focus more time and energy on the value added analytical insight parts of their roles rather than mechanically producing the results.

Both of these types of automation tools will have a role to play in the tasks that actuaries get involved with.

Actuaries are pivotal in the construction, development and execution of the underlying processes aimed at delivering the right data and reporting outputs at the right time.

The Problem

Regulation and reporting requirements are increasing. Processes need to be carried out to produce information for regulators, clients, management and boards. These processes, including many of the mechanical tasks within these processes, are performed by highly qualified staff yet tend to be time consuming and repetitive. The information is too sensitive for the process to be outsourced and there is no tolerance for error.  Being able to produce regulatory and management information reports more efficiently will give companies a competitive edge.

The Solution

Automating these processes using a modern automation solution can lead to efficiency gains with faster processing, improved data quality and better compliance. It removes key person dependency and provides a detailed audit trail.  It pieces together disjointed IT systems and seamlessly connects all tasks in a process.  Cloud-based platforms enable easy scalability of processes while keeping data secure.

How it works

Insurers receive data from many different sources. This can be from various brokers to different reinsurers and in a wide variety of formats. This data needs to be cleaned and joined before analysts can run checks and reconciliations. After the checks are done, the data needs to be manipulated; calculations performed and analysed for information. This information needs to be joined together and displayed in a report. This report then needs to be sent to management for authorisation before it is sent to its required recipient.  With automation platforms, the entire process can be put on a high-speed digital production line, and the software robots can be configured to perform all these tasks that were previously performed manually.

With an automation platform, the actuaries can remain close to the process and retain the agility of being able to modify the process when the business requirements change.  Contrast this with a traditional IT approach where the automation is carried out via a ‘black-box’ where the actuary has no visibility of the rules and has to then work with IT to specify changes.  Good governance is still required to make changes to production processes, which is why enterprise-grade audit trails, controls and documentation features are an important part of an automation platform.

Process Diagram of Automation

Further benefits

This new technology allows skilled resources to reduce the time they spend performing manual, repetitive tasks such as preparing data and use their time to perform analysis and provide guidance to the business. This makes users more valuable to their employers and makes their jobs more interesting.

What processes should be automated?

So how does one choose the right processes to automate? There are standard metrics one can use to identify potential use cases and help direct the projects to achieve the highest payoff quickly and speedily. The usual metrics are how often the process is run and how long it takes to complete, as well as the nature and complexity of the underlying tasks involved. Other important measurements are the cost to the business of errors, the fall out from failure to produce results in a timely fashion and if there is currently a lack of controls and audit trails. Automating these processes will lead to the greatest return on investment.

A handy, non-exhaustive checklist is included below:

  • processes that involve a large amount of manual processing time
  • requires a large number of data files
  • involves a large amount of data processing
  • work with information from multiple legacy systems
  • routine-based
  • faces a high risk of human error due to complexity or number of steps involved
  • requires an audit trail.

Role for Actuaries

Actuaries can assist with identifying the right tasks within each process to automate. They can help with the implementation and overseeing of the configuration. Actuaries will be aware of the various sources of data, know the calculations that will be done to the data and what the final reports need to look like. Actuaries have a crucial role to play as part of the automation programme to make sure everything is working as expected before signing it off.

Looking to the future

This new technology enables the actuarial team to readily and quickly provide answers to the many questions posed by management and regulators through automation. The technology of tomorrow will see smarter and more rapid automation, easier modelling and a solid foundation on which to assess risks better with cheaper processing power and more auditable results.

Summary of Benefits

  • Reduction of human errors
  • More efficient use of human FTEs
  • Generates audit trails for compliance
  • Compliance and conduct related costs are reduced
  • Removes key person dependency
  • Scalable and secure

Article Source:

Valerie du Preez (FIA), Dupro Advisory

Mark Schneider (FFA/FIAA), co-founder and joint MD - Solvexia

Michael Jordan (FASSA), Dupro Advisory

To know more about the benefits and options related to automation contact

Automating Complex Actuarial Processes

Written by Valerie Du Preez

This post was certified by Actuartech on

Review: This article is well-researched and provides valuable information.

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