7 out of 10 actuaries and underwriters worry about being replaced by AI

With the vast majority (91 percent) of insurance companies already investing in AI or planning to in the next five years, it’s no surprise that nearly 7 in 10 actuaries and underwriters are concerned about being replaced by AI , according to a new study from the hyperexponential pricing platform.

Its State of Pricing 2024 report also reveals fears of a looming technical skills shortage and attrition, with 69% of actuaries and 79% of underwriters indicating they are concerned about attrition over the next five years.

Both actuaries and underwriters are concerned about the future of their roles, with 69% of underwriters and 67% of actuaries saying they worry about being replaced by AI in the next five years.

Many fear they won’t have the skills or technology to do their jobs in the future. Actuaries are concerned that they “don’t have the right pricing platform” (84 percent); “not having the right technical skills” (83 percent); and “need to code in different languages” (80 percent).

Meanwhile, underwriters indicated they were very concerned about “shifting to portfolio underwriting from risk underwriting” (82 percent) and “adhering to compliance standards” (78 percent).

The insurance industry must “be intentional about using AI to bring tangible and long-lasting solutions to market, as well as laying the groundwork by improving the workforce,” said hyperexponential CEO and co-founder Amrit Santhirasenan in a statement.

“Far from being replaced, actuaries and underwriters can add significantly more value by adopting and leveraging AI, enabling them to analyze complex data, communicate more effectively and build new tools that would have been impossible five years ago.”

“While AI is not a panacea for all the challenges facing the sector, it has the ability to create a more productive and meaningful work life for insurance professionals. This will be vital in making the sector a more attractive prospect for potential new entrants and attracting a diverse new generation of technically minded underwriters and actuaries.”

A technical review is required

Ninety-six percent of respondents said they believe their pricing technology needs improvement, and 7 percent believe a complete technology overhaul is needed.

Among respondents’ complaints about their current pricing technology:

• 47% said they bought pricing platforms that didn’t deliver on what they promised.
• 47 percent said they are unable to determine an optimal price due to the integration of new and legacy technology.
• 8% said they still rely on Excel and “super spreadsheets”.

Relationship problems

The relationship between pricing actuaries and underwriters is fundamental, but 76% of actuaries and 77% of underwriters believe there is “room for improvement” in how they work together. Poor collaboration can affect adoption of pricing models, with less than a third of underwriters surveyed saying they consider pricing models “essential,” while 41 percent said they only use models for risks they trust to produce. Eight percent said they “don’t trust” the models because they are “often outdated and inaccurate.”

The study noted that regular interdepartmental meetings, joint training sessions and the establishment of integrated project teams can help improve the working relationship between actuaries and insurers.

About the Study

Independent research firm Coleman Parkes surveyed 245 underwriters and 105 pricing actuaries in the UK and US on behalf of hyperexponential. Respondents came from insurance companies (72 percent), reinsurers (20 percent), and MGAs (8 percent) and worked in either specialty (33 percent) or commercial (67 percent) lines.

TOPICS
InsurTech data-driven AI underwriting