Global life and property and casualty insurers plan to accelerate their use of automation over the next five years, according to a new report from Willis Towers Watson.
The Actuarial Reporting Automation survey polled life and P&C insurers on how they currently use automation in their valuation (life) and reserving (P&C) processes, and how they aspire to use it in the future.
“Insurers are looking to transform actuarial processes to achieve greater efficiency and efficacy, enabling more granular analysis and more frequent and timelier insights from their data,” said Max Drannikov, global product leader for Business Process Excellence at Willis Towers Watson. “Unfortunately, achieving this is a challenge due to several barriers, including limited time, staff, and poor data quality. To achieve their objectives, the first step for insurers is to leverage automation to create the time and space necessary to invest in and achieve their ambitions.”
Most life companies surveyed by Willis Towers Watson said they currently use either “no automation” or only “some automation,” and said that assumption processes were their least-automated core areas of a valuation process, while their greatest investment so far has been in data processes.
P&C insurers also said they currently used either no automation or only some, and said that engagement with senior management was their least-automated core area of the reserving process. Data processes were the most automated function.
“There are significant opportunities for life and P&C insurers to embrace automation,” Drannikov said. “We have seen life insurer gain value from automation around model point grouping, allocation of IFRS 17 cohorts and economic capital processes. Many challenges P&C insurers face stem from reliance on multiple data sources and coordinating external/internal teams – they can combat this by automating data processes.”
The survey found that the life insurance sector aspires to deploy “some” or “strong” automation over the next five years, with assumptions, audit trail and results production being the top three core areas on which they will focus. The P&C industry also aspires to use some or strong automation over the next five years, with a particular focus on assumptions, audit trail and senior management engagement.
“Automation is not just about technology and selecting the right tool for the job,” Drannikov said. “Insurers should consider all possibilities when looking at which processes to automate and the level of re-engineering required. Identifying quick wins to free up time that can be reinvested towards a large-scale transformation is often a key enabler of clients’ automation ambitions. The whole team must be engaged throughout deployment to ensure they embrace the solution.”