access. The stress can harm the relationship with IT when actuaries resort to going over the heads of the IT department, Smith
said. “I have seen that happen,” he said, “and it builds bad blood.”
Even worse is when actuaries feel there is no choice but to
“hack up some alternative solution,” Smith said. When actuarial
processes and spreadsheets are “duct-taped together,” he continued, they are at risk of becoming erroneous from being poorly
documented or poorly scaled.
These independent actions can be costly for an organization
and interfere with its goals, Watson said. He cited a situation in
which expansion into a new state was delayed by nine months
because IT had to make up for lost time. “We could have done
some of the work in parallel to save time,” said Watson.
Actuaries also can be resistant to change if IT wants to initiate improvements. At Grange Insurance, actuaries have opposed
program upgrades, Watson said. Mosley explained that actuaries, by nature, can be reluctant to change. “Our methods are
embedded in spreadsheets and have a process,” Mosley said,
which makes adjusting difficult. Actuaries don’t tend to be dazzled by new shiny tools, Mosley said. Rather, they wait until they
see a measurable difference.
IT professionals and actuaries also place greater emphasis
on different details. IT believes actuarial spreadsheets and their
underlying codes are extremely inefficient and lack syntactical
sophistication, Roberts said. Actuaries, on the other hand, are
fine with them. As a result, Roberts said, tech pros might conclude that actuaries are poor programmers because they use
command-oriented linear code, lack any development process,
or fail to test programs to IT standards.
At the same time, actuaries often feel IT doesn’t understand
what is necessary for them to accomplish their tasks, Roberts
said. And actuaries feel they are too busy to explain the actuarial
concepts behind their particular business problems or analyses.
Since actuaries and IT truly need each other to meet organiza-
tional goals, investing in the relationship has become a priority,
Gold said, adding, “The relationship is strategically important
for the companies, and risk managers need to be thinking about
how to manage the relationship.”
Since IT professionals often lack the incentive to make ex-
ceptions for actuaries or anyone else, Smith said, management
should consider ways to motivate IT to make some concessions
and partner with actuaries. The tension between actuaries and
IT professionals has little to do with technology itself, Smith
said: “It is a manifestation of a management problem and orga-
Executives also need to set priorities and develop a culture that
encourages the communication necessary to solve business prob-
lems, he said. “Companies with siloed IT and actuarial departments
have the most problems,” he added. “The best situation is when
companies plant dedicated IT staff within the actuarial depart-
ment.” Gold agreed, saying, “If you work in silos, you will fail.”
Mosley observed that those companies with the most inno-
vative actuarial and IT teams tend to be smaller and younger,
with management that is willing to think outside of the old box.
Providing communication training to actuaries and IT professionals will also help build better relationships because clear
communication builds trust. “you may need to lock all parties
in the same room and get them to quit talking in jargon,” Gold
said. For example, when discussing cloud computing, “you need
to ask them what kind of cloud they are talking about. The term
‘cloud’ can mean very different things to different individuals,”
Improving communication requires a deliberate effort from
both sides. Mosley said IT professionals were using the same
terms as actuaries, but they had entirely different meanings. As
an example, he spoke about a recent meeting of actuaries and
IT professionals in which the word “clustering” was bandied
about. “We were referring to clustering to build territories, such
as the way we put ZIP codes together for rating territories,”
Mosley said. “They were hearing K-means statistical cluster-
ing.” Once terms and desires are detailed, Mosley said, “then
[IT professionals] can follow a documentation trail, which is
Still, Mosley believes communication between IT profes-
sionals and actuaries is improving. “The speed of business does
not allow for bottlenecks in the process, so communication has
to improve to keep up with the pace of change,” he said.
Building trust also means listening to suggestions and concerns
from IT. “Trust has to be earned through a practical relationship—it’s not an automatic right,” Gold said. “You earn that trust
by listening, by being responsive, and by giving accurate, impartial
answers and helpful suggestions.” This applies equally between
insurance companies and their actuarial software providers and
between actuarial and IT departments within companies.
To address this divide, Gold said he challenges IT personnel
to try the software within an organization. They soon see that
the actuarial software indeed does need to stand alone. “And they
have to set aside some of their previous rules as to how actuarial
software is run. It might be unachievable to do it in-house. They
may need to move to cloud computing or other accelerators.”
This process of accommodation, however, can take six to 12
months, Gold said.
To benefit the most from the skills the IT team has to offer,
Roberts said, actuaries should remember that IT professionals are highly motivated by the intellectual challenge of solving
problems. They enjoy knowing that they are helping colleagues.
“IT staff love new projects—especially at great scales where
we can show our stuff,” he said. And if it makes money and
pleases top executives, so much the better.
ANNMARIE GEDDES BARIBEAU has been writing about
insurance and actuarial topics for more than 20 years. Her last
article for Contingencies was about F# programming language in
the Winter 2013 Actuarial Software Now supplement.
A Delicate Dance CONTINUED