Tag: MSc Actuarial Management

The impact of Covid-19 on the insurance sector

The outbreak of the Covid-19 pandemic has had a huge and devastating impact across the world with its ramifications starting to be discerned across various sectors such as health, finance and aviation. This has threatened the global supply chain which resulted in an economic stall.

The insurance industry has not been spared with new questions arising as the crisis unfolds. Stakeholders want to understand the business’ exposure to the virus as well as what the future holds for the insurance market.

As an MSc Actuarial Management student, joining a student society and hosting events that impact the professional sector I am training has added a lot of value to my studying experience. As Co-President of the Actuarial, Insurance, Risk and Quants Society (AIR-Q), it was an honour to work on the ‘Impact of COVID-19 on the insurance sector’ webinar. The session was AIR-Q Society’s take on investigating and tackling these issues. The event’s keynote speakers, Mr Michael Tripp, Mr Dimitrios Velmachos and Mr Asif John, gave their thoughts on the implications of the pandemic to the UK insurance market, risk management techniques and the future of data analytics in modelling insurance products. The speakers also addressed any questions posed by the attendees based on their vast knowledge and experience in insurance. The event was hosted and moderated by one of our society Co-presidents, David Flanigan.

Why Covid-19 is not a ‘black swan’

This question was initiated by Mr Velmachos, an entrepreneur and insurance executive by profession. He highlighted that the black swan notion was brought about by the theories discussed by Nassim Taleb in his book, ‘The Black Swan: The Impact of the Highly Improbable’.

The notion was based on the similarities between Covid-19 and author’s definition of a black swan.

According to the definition: First, nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact.’ Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

Dimitrios explained that the pandemic does not fully satisfy the properties of a black swan. In fact, many warned the pandemic would happen, including influential people like Bill Gates who clearly stated that the world was not ready for the next pandemic.

With such discussions setting the mood for the forum, the speakers then delved into the insurance world by giving presentations on how various classes of insurance have been impacted in the UK.

Impact on general insurance

Mr Tripp’s discussion focused on the impact of Covid-19 on general insurance segments. As a general insurance actuary working at Mazars UK, Michael stated that actions taken by the government to curb the spread of the virus has resulted in a myriad of general insurance claims. For instance, several corporations have been counting their losses following regulations by the government to close business providing non-essential services. As a result, there has been an increase in business interruption claims prompting insurers to review their policy wordings.

Michael further stated that travel insurance business has also experienced an influx of claims due to cancellation of flights after many states issued travel bans. This argument was also backed up by Mr Asif John, an actuary by profession and founder of ARGenesis consultancy, who emphasised that many travel insurance policies did not exclude coronavirus from cover. Hence, insurers are expected to settle any claim that may arise from these policies.

John highlighted that classes such as commercial liability lines and credit insurance are likely to encounter significant losses in the long haul. For example, a number of health workers have taken to legal action against the NHS claiming negligence by the government in ensuring that personal protective equipment was delivered on time, thereby endangering their lives.

Nonetheless, some general insurance lines have had better claim experience since the pandemic emerged in late 2019 as pointed out by both Michael and John. Classic examples include motor insurance and household contents whereby fewer claims have been reported due to the imposed lockdown. This move by the government resulted in many individuals normalising working from home, thereby leading to a significant reduction in the use of vehicles. With fewer cars on our roads, there have been fewer accidents occurring.

There has also been a reduction in theft leading to fewer burglary claims reported. However, Michael also brought out the fact that the lockdown has also resulted in companies relying on IT systems to deliver value to their clients. As such, there might be an increase in claims relating to cyber risk in the future, and insurers should thus tighten their policy wordings on this cover.

Impact on life and health insurance

The impact on both life and health insurance seems to go hand in hand due to the short timeframe between diagnosis and death. This has led to an increase in both the morbidity and mortality experiences as highlighted by John. The country’s health insurance sector is thus facing losses as a result of the high number of coronavirus cases. The dramatic reduction of health workers available to attend to other serious cases such as cancer will exacerbate future morbidity experience.

Besides the significant impact on mortality, Michael also pointed out that the shock experienced in the financial markets will also impact life insurance companies. This stems from the fact that they have long term liabilities and as such tend to hold long term assets. Extreme market volatility will negatively impact both the income and capital on these assets such as equity, thereby creating tremendous asset-liability management risks.

Data analysis as a tool for risk management

Being an AI and data science specialist, Asif stressed the importance of data analytics to the current situation, in particular, areas which actuaries should start focusing on. Adoption of data techniques through the use of advanced models will, therefore, succour in eliminating data issues at the input stage leading to credible forecasting.

Analysis of data at a granular level is also key for insurance companies as highlighted by Dimitrios. Granularity helps in properly understanding the data thus making aggregation of datasets into different segments easier. Better risk management techniques may also be identified as a result of having detailed data as risks will be classified and assessed homogenously.

Dimitrios also touched on the importance of incorporating epidemiological features in the modelling process in order to expand the dimensions of the output. This will help in analysing the worst-case scenario hence help in pricing and reserving and proper risk management.

What does the future hold for insurers?

Insurers need to seize some of the opportunities arising out of this crisis. It is clear that the traditional distribution channels have been disrupted indicating the need for accelerated digital transformation. Process optimisation is inevitable for insurers as working from home has become the new norm. The introduction of additional covers such as telemedicine will also be a boost to the insurance penetration in the future.

Thank you!

Being part of AIR-Q has been an incredible addition to my master’s experience: I have gained much deeper knowledge of the actuarial field, networked and built many new friendships. Myself and my fellow Co-Presidents of AIR-Q Society (Rocio Plasencia, Juan Sebastian De La Torre, Evangelos Santas,  Adam Upenieks, David Flanigan and Peter Vodička) would like to thank the speakers, attendees and the Business School’s events team for making this webinar a success. Special thanks also go to Leon Cuthbertson from the events team for assisting with the event. We’d always like to hear your thoughts, so follow us on LinkedIn or  Instagram!

Lucy Nondi, MSc Actuarial Management (2020)

Will AI replace actuaries?

What is data science and how is it related to actuaries?

That is the main question that Mr Dimitrios Velmachos and Mr Michael Tripp, our keynote speakers aimed to answer in the Actuarial, Insurance, Risk and Quants Society’s latest forum.

As an MSc Actuarial Management student, I’ve greatly benefitted from being part of the Actuarial, Insurance, Risk and Quants Society (AIR-Q) as Co-President. Meeting key industry leaders and discussing developments in the sector has enhanced what I’ve learned in my studies.

Students and alumni who attended were eager to understand what trending topic of AI means for their future careers.

Mr Velmachos wears many hats: he is an entrepreneur, an Insurance Executive and an actuary. He has extensive international experience in the fields of finance, insurance and reinsurance. His main area of focus is utilising his technological skills in advising his clients on how to deliver value to the insurance industry.

As the first presenter for the forum, Dimitrios discussed how data analytics are transforming the insurance industry. He talked about the algorithms currently in use for risk assessment, claims handling and policy administration. One of the best illustrations he gave was how technology is being used in China to determine the morbidity rate applicable to a policyholder seeking out an income protection policy. By using AI, the insurer can know information such as the client’s lifestyle, health status and even the age without the need of filling out the proposal form. This trend has thus helped curb the uncertainty involved in determining the appropriate cover to be charged.

Mr Velmachos further explained how the data ecosystem has changed when it comes to pricing and reserving in general insurance. Insurers are now investing in advanced systems that can accommodate more data points, unlike ten years ago when actuaries had to rely on Excel as the primary data storage tool. As a result, more data groupings can be accommodated by this modern software which has resulted in better pricing of insurance products.

The speaker also highlighted how the use of telematics has improved policyholder behaviour in motor insurance, thus reducing the number of claims significantly. The use of Google Maps in property insurance has also helped mitigate fraudulent claims arising from such cover. By using such examples, Mr Velmachos concluded that data science is a significant contributor to the digitisation of the world of insurance.

Data Science and the IfoA

Our final speaker Mr Tripp talked about how the Institute and Faculty of Actuaries (IFoA) have started embracing data science by offering courses and assessment to its current members in partnership with the Royal Statistical Society. Being a general insurance actuary with over 40 years of experience in the insurance industry, Michael can comfortably say he has been part of the transformation. Being part of the data science steering committee in the IFoA council, he has helped push forward this transformation.

 

Michael emphasised that the council aims to reposition the actuarial profession by enhancing members’ experience based on what is currently happening in international markets. It is for this reason that the team considered it wise to include elements of programming to some of the professional papers offered by the body to build skills and maintain professional competence.

In his concluding speech, Michael also agreed with Mr Velmachos by stating how artificial intelligence has aided time series prediction, data analysis and modelling and optimising logistics. Thus, by applying these features, AI has been able to use cognitive reasoning in the decision-making process.

What Does the Future Hold for Actuaries?

So, what does this mean for the actuarial profession? Will AI surpass human intelligence in such a way that fewer actuaries will be needed in the future? These, among other questions, were discussed at length during the panel session led by Dr Zoltan Butt, a senior lecturer at Cass Business School and our event moderator for the Cass AIR-Q Actuarial Forum.

 

 

Both speakers disagreed with this notion as actuaries will stay play a big role in making data science a success. It is apparent most systems require some form of human interaction to execute a job. Thus, AI will help make work easier for the role that actuaries play in the insurance and finance market. Dimitrios also stated that although it is not a requirement for excelling in the profession, it would be advantageous for student members to learn some element of programming language.

Michael highlighted that the decision between needing humans or machines is more a philosophical debate. The answer will depend on how you see intelligence: is intelligence natural or artificial?

Thanks to AIR-Q and Cass!

The Cass AIR-Q Actuarial Forum was an eye-opener for the attendees as they were given a chance to interact with the speakers during the networking session that followed the panel discussion. The society aims to bridge the knowledge gap between our student members and the industry— and I can say the forum did justice to this goal.

Myself and the fellow Co-Presidents of AIR-Q Society (Rocio Plasencia, Juan Sebastian De La Torre, Evangelos Santas, Lucy Nondi, David Flanigan, Adam Upenieks and Peter Vodička) would like to deliver special thanks to our speakers, our moderator, and the entire Cass Business School events team. We would also like to congratulate the audience who participated in making the event an engaging one.

The AIR-Q Society will also like to thank the LSE Actuarial Society representatives that came to offer their support. We are looking forward to meeting you in the next academic year but in the meantime, stay safe and follow the regulation of the government towards fighting the coronavirus pandemic.

Lucy Nondi, MSc Actuarial Management (2020)

AIR-Q Insurtech Forum: the Future of Insurance is Now!

Tech is a game-changer across all industries, but none more than insurance.

I was delighted to work on this year’s Actuarial, Insurance, Risk and Quants (AIR-Q) society forum. This year, we selected a focus on insurtech, which is a very pertinent issue within the insurance space. The event brings together students from the actuarial, insurance and risk master’s cohorts as well as insurance industry practitioners and is held at Cass Business School.

The impact of technology cuts across both market needs and service delivery for insurance providers. As Co-President of the AIR-Q society, myself and the rest of the committee felt it was important for students to consider the changing landscape as we prepare to start our professional lives in the sector. Being an MSc Actuarial Management student, it is always an exciting prospect to be at the heart of conversations happening in the career of my choice.

Through keynote addresses provided by esteemed guests Madeline Bailey, James Norman, Massimo Vascotto and Rahul Mathur, attendees had the chance to listen in on how insurtech is expected to transform the future industry roles and market needs.

Speakers illustrated how the sector is already changing. For example, the US-based insurtech startup Lemonade uses AI for most of its operations, including underwriting and claims management. This presents opportunities for “insurance-on-demand” which could be as influential a disruptor as Uber was in the taxi sector.

The speakers’ talks were followed by an interactive panel discussion. One of my key takeaways was that insurtech can be a tool for the optimisation of insurance products and services. Madeline Bailey gave an example of how the Insurewave platform uses blockchain technology to make marine insurance more efficient, thus providing better protection for the very complex maritime logistics sector.

For students to gain an edge in this changing market, they need to equip themselves with modern skills such as programming and data analysis. It is therefore clear why Cass shows support for this by offering modules such as Python Programming, Machine Learning, Modelling and Data Analysis and VBA programming among others.

It was not all praise for insurtech though. Insurtech does indeed present new opportunities, but it is also important to remember that at the centre of it all lies the end-consumer of insurance. Domain knowledge and a good understanding of human factors are crucial in the successful implementation of insurtech. This provided a very balanced debate and an engaging learning experience for both speakers and students.

Leading up to the event, myself and my Co-Presidents Maria Bou-Rizk, MSc Insurance and Risk (2019), Vinit John, MSc Insurance and Risk (2019) and Peter V, PhD candidate in Actuarial Science, worked with support of Cass’ events team to book the speakers and venue. With immense gratitude, we received further support by the Faculty of Actuarial Science and Insurance, with Dr Simone Krummaker moderating the panel discussion. It was an incredible learning experience that tested our teamwork and organisational skills. Hearing all these current conversations in the sector and mixing with industry leaders has helped bring into focus many of the academic aspects of my programme.

At the end of the event, we hosted a networking session which provided the chance for all the attendees to mingle. Overall, it was a great evening and I look forward to many more successful forums!

Eric Ndoria, MSc Actuarial Management (2019)

Keep Calm & Trust Cass Careers

After one long year of brainstorming, I finally decided to quit my Senior Actuarial Analyst job at AXA XL Catlin in New Delhi and begin an MSc in Actuarial Management at Cass Business School.

Like most of my peers, I aspire to work in the UK and I’m keen to explore the various routes to employment here.

Two weeks into the course, Cass gave us an opportunity to meet more than 60 employers under one roof at the Cass Careers Fair. Here, we could network with an array of leading companies: Aviva, KPMG, Deloitte and many more.

Before the Careers Fair, we were given access to online sessions and workshops on how to make the most of the event. Looking back, it really helped me understand the application process of the companies that interested me.

The Cass Careers Service organises weekly sessions to enhance our employability. In those sessions, they address various topics like the preparation of CVs, covering letters, interview skills and sessions on industry-specific knowledge.

I made sure I attended each session at least once and they turned out to be very helpful in the application process. Moreover, the Cass Careers website has a real-time update on graduate jobs in different industries in the UK market, making it easier for us to keep track of opportunities.

I was invited to a telephone interview with KPMG. Afterwards, I had to record a series of answers and send them back by the end of the day. I had classes until 3pm that day, so I went to Cass Careers immediately afterwards. Although I’d not booked an appointment beforehand, they assigned an expert who helped me refine my answers until they were perfect and ready to be sent off.

As of today, I’ve been invited to five video interviews (stage three of the applications process for many companies). I’ve made it this far thanks to the Cass Careers Service. The detailed guidance and feedback at every stage– from drafting application answers to psychometric tests – really makes it easier.

The Cass Careers Service employ experts who have worked in the industry for more than 10 years, so they understand better than anyone else what makes your application stand out from a pool of thousands of other applications. Soliciting their advice throughout the different stages of the application process is really helpful.

So, if you enrol to Cass, then you can be confident and trust their Careers Service.

Sambhav Jain,  MSc in Actuarial Management (2019)

If you have any questions for Sambhav or any of our other student ambassadors about the student experience, visit our Ask a Student page. 

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