Scoring an A grade in actuarial reporting

Insurance is a complicated business. Behind every customer policy sits a series of intricate, often automated calculations based on masses of data. And the insurer must make its own calculations to be sure it can meet claims on a rolling basis without substantial risk to the solvency of the business.

These calculations are not only important for understanding solvency. They also form the basis for significant strategic decisions, such as moving into new markets, seeking a merger, or changing overall exposure to risks.

So it's essential that these calculations are made with appropriate, complete, and accurate data, and that the processes for integrating and reporting it are instinctive and flawless.

Our client knew that its calculations and reporting in its property line of business weren't accurate enough. Although it could report on its solvency to the regulator, its processes for doing so often generated inconsistent results, and reconciliation issues were common. This was eating up time for a team that was already stretched to capacity.

When we assessed the problem, we discovered that the actuarial team had been running its technical provision calculations (working out the amount of capital in reserve required to meet claims) in a fragmented way. It used Excel-based technology, and outdated subprocesses created by people no longer working with the team created confusion.

The actuarial team was also under-resourced, so sensitive data and critical processes were subject to key-person risk, and it was under constant pressure to meet strict reporting submission deadlines. Something had to change.

Our first step was to run workshops with key client teams to understand all the pain points and challenges they faced. We mapped every process within the property portfolio, assessed the performance of existing systems, identified gaps, and measured current skill sets against the requirements for the ideal future state. Then we recommended a partnership that would draw heavily on its business, IT, and data strategy and also augmented capacity in its actuarial regulatory reporting team.

Next, we delivered a detailed plan for a revised actuarial reporting TOM, including an integrated rollout and migration plan, portability assessment, and right-skilled resource planning. When the insurer signed off on this, we built a multidisciplinary team consisting of actuarial analysts, data and IT specialists, and financial analysts to provide business support, data and technology support, and execution support to work alongside the carrier.

The client didn't just want to solve a single analytics and reporting problem. It also wanted to support its objective to become a data-centric enterprise. To meet this broader goal, we designed and implemented a consolidated data mart (a subset of a data warehouse) with algorithm-enabled automation to drive actuarial and analytics solutions. This data mart has multiple advantages:

• It acts as the single source of truth with consolidated data, including policy, claim, exposure, reserve information, rate monitor, premium allocation, pricing information, and external data
• It displays data integrity with consistent business rules and definitions across multiple systems
• It displays data accuracy and can derive the same results from multiple sources for all KPIs
• It provides flexible options to multiple users for analysis and actuarial reporting
• It's easily accessible and enables cross-functional data-sharing and controlled access to all datasets across groups
• It uses common business terminology with consistent definitions of attributes and hierarchies

A close partnership was essential for the success of this project. We adopted an agile, incremental, benefits-oriented approach to transforming actuarial reporting operations, which meant the client was able to fine-tune the project, avoid duplication of effort, and realize benefits from each phase before advancing to the next.

Actuarial function processes are now standardized, and a single source of high-quality data is now available centrally to different users across the team to enable more strategic decision-making and more accurate reporting.

Efficiency improvements have led to a significant one-off cost saving and lower year-over-year costs will follow as we deliver more automation and streamlining.