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Assumption Management: Modern Solutions in a Complex World
Assumption Management: Modern Solutions in a Complex World explores the evolving role of assumption management in the life insurance industry. The article highlights how behavioral, economic, and demographic assumptions are critical to pricing, forecasting, and explaining financial results, yet many insurers still struggle with fragmented practices and outdated processes. Drawing on survey insights from 15 U.S. insurers, the authors illustrate persistent challenges in governance, data integration, and automation. They argue for a more holistic, technology-enabled operating model centered on centralized assumption repositories. Such repositories provide a single source of truth, enable automated ingestion into models, support sensitivity testing, and enhance governance and transparency across actuarial, finance, and risk functions. The article offers guiding principles and design considerations for building scalable repositories that improve efficiency, consistency, and decision-making. Ultimately, it positions assumption management modernization not as a technical upgrade but as a strategic imperative to unlock clarity, agility, and competitive advantage in a complex market. -
Optimizing Open System Actuarial Models
This article explores strategies for optimizing actuarial models built on open system platforms. It begins by contrasting open and closed system modeling environments, emphasizing that users of open systems must take responsibility for in-house runtime optimization. The authors underscore the critical role that efficient, well-optimized models play in supporting a high-performing modeling team. To reinforce the techniques discussed, the article includes a case study focused on disability insurance modeling to offer practical insights. -
Actuarial Model Validation
In this episode, Joe Alaimo interviews Jeremy Levitt to explore the critical role of model validation in actuarial practice—what it is, why it matters, and how to do it effectively. From technical procedures to strategic impact, we break down the components of a strong validation framework and discuss how emerging technologies like AI are reshaping the landscape. -
Emerging Topics Community: Model Validation 101: Bring your Calculus Mindset!
In this episode, Joe Alaimo interviews Bob Leach to introduce us to the article he has written for the emerging topics community: Model Validation 101: Bring your Calculus Mindset!. Bob describes how the calculus concept of differentiation can be used to validate results from actuarial models. -
Quantum Actuarial: Part 2—The Prelude of the Harmonic Oscillator
In this part of the article, we will delve deeper into the complexities introduced by external influences, extending our discussion to the quantum anharmonic oscillator model. We will analyze how different types of external forces—constant, linear, and nonlinear—affect the probability distribution functions, drawing parallels with the external factors influencing medical costs and interest rates in the insurance industry. -
Introduction to Bermuda SBA Modeling - Part 2
In this article, we continue to discuss the modeling considerations for Bermuda SBA BEL calculations. -
Emerging Topics Community: Comparison of Regulatory Framework for Non Discriminatory AI Usage in Insurance
In this episode, Joe Alaimo and David Schraub dive into the evolving landscape of AI regulations in the insurance industry. They explore key frameworks from the U.S., Canada, the EU, and China, shedding light on the challenges and opportunities that actuaries and insurers face in ensuring non-discriminatory and ethical AI use. -
Quantum Actuarial: Part 1—The Prelude of the Harmonic Oscillator
The quantum harmonic oscillator model, with its rigorous mathematical framework, delineates the statistical probabilities of microscopic particle behavior. When this theory extends into actuarial science, it heralds the potential for interdisciplinary research to achieve effective integration of theoretical innovation and practical application, thereby opening new avenues for research and practice. This study focuses on the innovative connection between the probabilistic properties of the quantum harmonic oscillator and actuarial practice, aiming to dissect how this quantum model reshapes the understanding of actuarial risk assessment and cost distribution. The core of the discussion lies in revealing the intrinsic mechanisms of the quantum harmonic oscillator wave function and its mapping within the actuarial framework, providing an in-depth analysis of innovative perspectives on insurance cost assessment and interest rate patterns. This interdisciplinary research exploration not only tests the theoretical feasibility at the intersection of quantum mechanics and actuarial science but also deeply analyzes the inherent uncertainty in the financial system. With the oscillatory rhythm of the harmonic oscillator, this article anticipates the opening of a new chapter in actuarial science, seeking the actuarial wisdom hidden within the quantum fluctuations. -
What Does the Video Game Industry of the 1990s and Actuarial Software Industry Today Have in Common?
In this article, Igor Nikitin compares the challenges faced by early 1990s video game developers with those now confronting the actuarial modeling software industry. He explains how game developers, struggling with rising costs and technical complexity, adopted game engines. These engines provided essential functionality along with access to the underlying code, giving teams flexibility to innovate without building everything from scratch. The author argues that actuarial software is reaching a similar inflection point. Many firms rely on expensive, rigid tools with limited customization and high vendor dependence. By adopting actuarial platforms that offer source code access, teams can improve model development speed, reduce costs, and apply modern skills more effectively. The article encourages the reader to consider how this shift could enhance operational efficiency, increase team agility, and support long-term innovation. -
Introduction to Bermuda SBA Modeling: Part 1
With this article, we provide an overview of the EBS financial reporting requirements with a focus on the considerations specific to scenario-based approach (SBA) models.
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