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Challenges and opportunities ahead – Interview with Clemens Frey

Dr Clemens Frey is a partner in the Financial Services division and advises Roland Berger's insurance clients. Dr Frey is also a member of the Advance Committee of the International Actuarial Association (IAA) and will take over the International Committee of the German Actuarial Association (DAV) at the turn of the year.
Written on 12/16/22

Dr Frey, as 2022 draws to a close, we would like to take a look at the past few months – what particular challenges have actuaries faced in Europe and internationally, in your view?

The major challenges facing the insurance industry are, of course, also challenges for us actuaries. 2022 was a difficult year: the consequences of Russia's attack on Ukraine, high claims inflation, supply shortages, but also the aftermath of Covid-19 and high natural catastrophe losses will keep us busy for a long time. There are also long-term challenges such as ESG reporting, sustainability management, managing the risks and impacts of climate change and digitalization. 

But there are also positives to report: The introduction of IFRS9/17 in January 2023, after really long and intensive preparation in the companies concerned, is an incredibly important milestone, even though we will all probably have to work a little longer to fully understand how to work with the new standard. 

As a member of the IAA's newly formed Advance Committee, you are actively shaping the professional reality of actuaries worldwide. What goals is the IAA pursuing in its new structure, and what topics will it focus on in particular?

The Advance Committee is intended to stimulate and support the further development of actuarial expertise and thus focuses on the third of the IAA's three strategic objectives. These are – in short - Impact, that means the development of relationships with important supranational institutions and the provision of actuarial expertise on a global level; Assure, support for the development of the profession, and Advance, meaning the further development of actuarial expertise, also and especially in new topics and fields of work. 

In concrete terms, the Advance Committee coordinates the establishment and work of the (virtual) forums of the IAA, which include, for example, General Insurance and Health as forums and Data Analytics and Mortality as virtual forums. The goal is always to make collaboration as efficient as possible and to ensure a clear focus of resources on the topics that are truly relevant for the future.   
Some of the topics you mentioned last year, be they war, inflation, or Covid-19, will certainly continue to play a role in 2023 and influence actuarial work. Beyond that, what other additional challenges do you see the profession facing in the future?

The topic of inflation and the management of the interest rate situation will certainly keep us busy until 2024, and questions of sustainability management and digitalization even longer. The term "digitalization" doesn't really go far enough. Digitalization is very complex and opens up many different opportunities: for example, greater efficiency through the simplification of processes and products and intelligent automation, the application of new methods from the field of advanced analytics and AI across the entire value chain of insurers, and the development of new insurance products. Those are also opportunities for us actuaries with several new fields of activity. At the same time, there is also a high level of responsibility, namely, to operate all of this with "clean" data, within a governance structure that ensures end-to-end quality, and takes into account particularly vulnerable customer groups. 

What does this mean in terms of the actuarial profession and the hiring of new talents?

We will have to deal with the fact that not only our professional field, but also the profile of young graduates and thus of prospective actuaries is changing significantly. I am very positive about this development. Because graduates nowadays have a much stronger focus on computer science, practical data management and the application of data science, and we should be open to this. At the same time, this means that we need to continuously adapt our qualification practices. 

Overall, as a profession, we need to take responsibility for these manifold opportunities. Above all, this means that we will only be able to successfully maintain our " core brand" as experts in all quantitative issues of the insurance industry if we develop it further in a continuous and pro-active manner. 

Thank you very much for this interview!