Actuarial transformation: from number crunchers to business advisors

Article Bianca Meijer, Senior Manager, Inge van Zon-Zeilstra, Partner en Peter Bosschaart, Senior Manager KPMG

Despite being a fundamentally digital sector, the insurance industry has seen limited innovative progress in recent years. Investments in innovation often remain focused on front-end operations and customer experience, leaving back-end processes often unattended. For insurance firms to retain their competitive edge, a digital overhaul of finance and actuarial procedures is crucial.

The actuarial function is a core component of the finance function at insurance companies. The current actuarial process, frequently hindered by inefficiencies and inaccuracies brought on by manual operations, tends to result in inconsistent business insights, fluctuating financial results, and a loss of control over the financial reporting process. The intricacy of existing models intensifies these situations, emphasizing the pressing need for transparent governance and auditable trails, efficient and uniform calculations, and seamless coordination between the Finance, Actuarial, and IT departments. Nonetheless, it is precisely those situations that also provide new opportunities for insurance companies to improve, bringing about a more reliable and efficient operation, and set themselves apart from the competition. 

The actuarial function is central to the insurance proposition

The actuarial function not only allows insurers to properly assess and price policy risk, but also plays a key role in helping insurance organizations manage their own enterprise risks and opportunities, and optimize capital. In addition, leaders are looking at their actuaries to expand their support into evolving areas such as quantifying ESG risk, financial planning and analysis enhancements, Artificial Intelligence (AI) integration, and identifying new market opportunities. Insurers want their actuaries to deliver better insights, across a broader range of topics that are, more than ever before, aligned with the business.