Walk the line: balancing accuracy and transparency in pricing

With the UK’s FCA Consumer Duty newly in force, Mikolaj Skraburski and Dawid Kopczyk look at how actuaries can build pricing processes that carefully balance accuracy and transparency.

In December 2021, French slackliner Nathan Paulin crossed from Babilônia Hill to Urca Hill in Rio de Janeiro, Brazil. He covered a distance of 500m at an altitude of 80m, requiring an immense amount of resilience and balance.

This stunt serves well as a metaphor for the struggles of an insurance pricing team. As these teams navigate the rapidly evolving financial world, they continuously strive, like Paulin on his slackline, to achieve the golden mean: in the case of pricing, a perfect balance between accuracy and transparency.

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