HE PERENNIAL QUEST for competitive
advantage—coupled with expanding regulatory requirements—often places actuaries at odds
with their information technology (IT) counterparts.
Actuaries need data and
sophisticated software to meet
company and client demands. IT
to keep information secure, they often face limited resources as they struggle to maintain best practices.
Overcoming inherent obstacles between the two
teams is a growing necessity. No longer can either
avoid or work around the other. “This becomes a
competitive issue,” said J. Eddie Smith IV, a life and
annuities actuary and director of Society of Actuaries
exams for the Infinite Actuary. “Companies that are
agile and adapt are going to be at a more competitive
advantage compared to companies that are inert.”
It used to be that actuaries often could get away
with working independently of their IT departments.
“But this is not going to be possible anymore,” said
Phil Gold, vice president of research and develop-
ment at GGY Axis, a Toronto-based provider of life
insurance, disability, annuity, and long-term life soft-
ware for companies around the world.
Addressing a relationship that is burdened with
some negative historical baggage will require a con-
certed effort from the C-suite down to individual
cubicles. But the stakes couldn’t be higher. Those who
succeed will reap competitive advantage. Those who
don’t will fall behind.
“We have come from a period when change was slow
and incremental. Now it’s rapid and game changing,”
said Gold, who is both an actuary and an IT pro.
It’s not just technology that’s moving quickly. Sol-
vency II, international financial reporting standards,
Own Risk and Solvency Assessment (ORSA), new
requirements for dynamic hedging for systemically
important financial institutions, and revisions to gen-
erally accepted accounting principles are some of the
changes actuaries have to tackle, he said. To address all
of these rules, “models have to be much more sophisti-
cated and computer intensive,” Gold said. If actuaries
and IT professionals are going to solve these problems,
“they are going to have to work together,” Gold said.
At the same time, models need to bolster profitabil-
ity, said James Roberts, senior technical consultant
for Innovative Architects in Duluth, Ga. Techniques
including predictive modeling and dimensional
analysis, which introduce more metrics for multitier
rating and more diverse reserving approaches, go far
Actuarial and IT Departments
By Annmarie Geddes Baribeau