The actuarial recruiters at Smith Hanley Associates would like to share our view of the 7 Key Industry Disrupters that actuaries must pay close attention to in 2017. In the ever evolving, ever more complex insurance environment, here is what to watch out for.
1. Smart Cars
For everyone that attended this years Annual SOA conference in Las Vegas we were provided a unique insight to what the future of automated transportation may look like. The evolution of smart transportation raises some interesting questions in regards to the actuarial & insurance profession. Calculating and assigning risk will be just one of the challenges we begin to look at in 2017.
2. Affordable Care Act
Anyone who paid attention at all to President elect Trump’s campaign knows the future of Obamacare (ACA) is very much in doubt. Whether certain portions are replaced or repealed entirely remains to be seen but certainly many healthcare actuaries are paying close attention to the changes expected to take place under the new regime.
Not content with over a decade of 2 to 3% GDP growth, organizations are instead looking to grow through mergers & acquisition’s rather than through organic endeavors. In the actuarial profession no where is this more evident than in health insurance. The proposed mergers of Aetna & Humana and CIGNA & Anthem, if allowed, will pose some interesting questions regarding operating synergy between the new organizations.
Principle based reserving which goes into effect January 1, 2017 for many in the US life insurance market will provide more accurate reserves based on the true risk of individual products. This system will allow companies to adjust reserves based on economic outlook and increased data, leading to more accurate and effective actuarial work .
5. Climate Change/Catastrophic Events
The insurance industry has incurred record losses in recent years due to extreme weather,and one of our most pressing matters is climate change. It will be paramount for insurers and reinsurers to invest more time into catastrophe risk. In order to anticipate the actual consequences, actuaries will need to use more forward projections and not just rely on historical data when creating CAT Models. Demand will only increase for this type of modeling expertise.
6. Insurance Taxation
With a new President and a Republican controlled congress, controversy has already begun to stir about new tax proposals. It is apparent that all insurers, regardless of size or specialty, should tighten up on operating costs and be meticulous about spending capital. The reserving work of actuaries will be a huge component in allowing companies to maintain a competitive edge and avoid costly and time consuming regulation penalties.
7. Cyber Insurance
With the amount of data being generated daily by the internet, wariness of cyber risk is certainly widespread. However, it is still an underutilized opportunity by insurers and reinsurers in today’s marketplace. Today’s actuary must be aware of the growing threat of cyber risk as well as the growth of cyber insurance. This is an exciting new product area, however, there are many challenges for actuaries: limited availability of data, weak policy standards and ever evolving risks.
Actuarial work has never been more exciting or more changeable. If you are interested in hearing where your skills fit in this new environment, give me a call. 2017 will be an exciting and opportunity filled year!