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Actuarial Pricing Strategies: Reshaping the Market?

Changes to actuarial pricing strategies are transforming charging models across the insurance industry. As pricing models evolve to embrace dynamic pricing and AI developments, Sarah Schadek-Keane, Managing Director International Actuarial for Emerald Group, describes the impact this is having on skills and hiring approaches across the actuarial market.
Written on 03/20/24

Increasingly, industry leaders across the insurance market are adopting a customer-centric approach to pricing, responding to an ever-changing landscape that is keen to take advantage of digital transformation and AI. These technological advances, combined with a focus on risk profile management and a need to respond to evolving customer behaviour and preferences, are prompting companies to become agile in their pricing strategies.

What does this mean in practice for the insurance market? Companies are determined to optimise processes while developing income-generating products. They are focusing on cost efficiency, cost-based pricing and automation, supported by software solutions. Risks can be managed more effectively with predictive analysis around the impact of everything from natural catastrophes to societal changes, health awareness, lifestyle and driving patterns, such as the growth in driverless cars or the rise in obesity in industrial countries.

With such complex and simultaneous change at the heart of pricing strategy development, this inevitably has an impact on how clients are building new skills into their teams. There are variations across different subsectors of the market, but we are seeing a strong focus on experience in certain program and software solutions. As product complexity increases, market leaders are looking for experts in specific areas who can bring knowledge, creativity and forward-looking ideas to an area already subject to constant change. This is definitely a move away from all-round skill sets, as clients look to build new skills into teams that are already operating successfully.

Hiring approaches are also being adapted to support these needs. At Emerald Group, we are seeing an increase in technical tests for candidates, as well as detailed exploration of the analytical and problem-solving capabilities of candidates. 

From a candidate perspective, there are different considerations according to seniority.  Senior candidates need to stay on top of market developments and software solutions. They need to understand and embrace the future shape of the market. In some instances, further qualifications and skills development in key areas, such as programming, are highly desirable for hiring companies.

More junior candidates need to think about the future direction of their profession. Interdisciplinary work is becoming more important, and strong communication skills coupled  with technical and programming skills are key to securing the best roles available today.

A great way for all candidates to stay ahead is to look at how the field of dynamic pricing and innovation in pricing strategies is developing. Thinking creatively and observing what competitors and other markets are doing in these areas is a good pathway to understanding what the future might hold.

We are now in a fast-paced world where actuaries no longer focus exclusively on the product, but need to understand market positioning, customer perspective and the development process.  They need to ensure their company keeps ahead in this ever-changing environment where competition may come from AI-driven solutions, capable of progressing at a hitherto unseen pace. Teams that combine data analytics, digital technology and AI skills with industry leading knowledge and experience is the winning combination that many clients are now looking to establish.

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