Actuarial Innovation & Technology Strategic Research

Actuarial Innovation & Technology Research Reports

2024

• Actuarial Innovations and Regulatory Approval
  September
  The Society of Actuaries (SOA) Research Institute sought to investigate successful approaches to gaining regulatory acceptance for actuarial innovations to expand the industry’s knowledge of effective regulatory approval processes and strategies. The SOA engaged Milliman to conduct in-depth interviews, focus groups, and surveys with select actuaries and regulators who have received or provided regulatory approval for an actuarial innovation. This paper summarizes these results./li>
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• Searching for Simplicity: Using Behavioral Science to make Life Insurance Product Information Simple and Effective
  August
  The research presented in this paper provides practical behavioral insights insurers can use to help narrow the customer comprehension gap of life insurance products and creates a direction for future industry research.
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• Comparison of Regulatory Framework for Non-Discriminatory AI Usage in Insurance
  August
  This report aims to provide readers with an up-to-date overview of the regulatory landscape, but the information contained here is likely to change.
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• Redesigning the Life Insurance Underwriting Journey with Behavioral Science
  May
  This study demonstrates that applying the principles of behavioral science to the design of underwriting questions improves disclosure across a range of conditions and behaviors that are relevant to underwriting decisions.
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• Effectiveness of Health and Wellness Programs
  February
  Learn more about the effectiveness of wellness programs offered by insurers.
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• A Primer on Generative AI for Actuaries
  February
  This paper offers a technical overview of the mechanics of Generative AI, with several actual examples throughout. It is intended to be a practical introduction to the concept, not a comprehensive view. Actuaries should consider this a point-in-time view of this rapidly evolving industry and use the issues presented here to spark conversation within organizations and across the profession.
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• Federated Learning for Insurance Companies
  February
  Federated learning (FL) describes a distributed machine-learning framework enabling multiple devices or organizations to collaborate on a machine-learning model without having to share their raw data with each other or with a central server. One promising application of FL lies in the insurance industry, where each firm harvests a vast amount of client and claims data. There has been little to no previous literature on the applications of FL on insurance data. This paper aims to fill the gap and to offer researchers and practitioners an introduction, the pros and cons of FL, as well as potential use cases.
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• Using Interpretable Machine Learning Methods: An Application to Health Insurance Fraud Detection
• January
• This project establishes a foundational framework for implementing interpretable machine learning techniques in the context of health insurance fraud detection. Machine learning algorithms excel at constructing intricate models by discerning patterns in data, yet the risk of overfitting to training data necessitates rigorous testing by modelers and users. While certain validation practices for linear models apply to machine learning, the challenge of interpretability remains pronounced. This report endeavors to enhance transparency and understanding in the realm of health insurance fraud detection through interpretable machine learning.
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• Behavioral Economics and Individual Discounting Observed Behaviors in Deferred Retirement Option Plans
• January
• This paper explains the concepts of hyperbolic discounting and provides a tool for improving the modelling of individual decisions. Some individuals appear to use economically discounted cash flows in their decision-making processes, whereas others appear to incorporate some values to cash flows which are not purely economic. This paper provides some tools for improved modeling of the decision-making process for those individuals who do not rely as heavily on economic valuations. The paper also provides some tools for predicting how changes in plan design can impact the demographics of the plan participants.

2023

• Generative AI – A Roundtable Discussion – October 2023 Update
  November
  On October 7, 2023, the SOA Research Institute assembled an industry expert panel to discuss current issues in GenAI. The group was diverse in terms of employment, including company actuaries from life, health and property/casualty backgrounds, as well as consultants from various kinds of firms. This document summarizes the discussion that occurred during the three-hour meeting.
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• Quantum Computing and its impact on Actuarial Modeling
  October
  This report introduces quantum computing to actuaries. In addition, this research will assess and identify areas in the insurance field where quantum computing can make a difference, accompanied with suggested algorithms.
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• Primer on US Regulation of InsurTech Applications
  October
  This report examines the role of the National Association of Insurance Commissioners (NAIC) in making recommendations to states on model laws to enact which effect the insurance industry.
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• Zero Knowledge Proof
• October
• Zero-Knowledge Proofs (ZKPs) represent an innovative suite of cryptographic algorithms that empower various parties, especially the insurance community, to validate the accuracy of sensitive information without revealing the actual information itself. This report introduces the diverse applications and emerging opportunities that ZKPs offer to the insurance community, especially in the health insurance space.
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• Alternative Data Report 
• October
• Alternative data sources beyond policy in-force data and claims data are increasingly seen as a valuable resource for life and health insurance. These non-traditional data sources can have many advantages. However, such data sources must be carefully evaluated to ascertain if the benefits outweigh the costs. This research utilized an interview-based approach that delves into the utilization of alternative data in the Australian life and health insurance markets.
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• Top Actuarial Technologies
• September
• This research study aims to understand the current and planned use of various technology types and tools and to highlight those technologies that are anticipated to grow the fastest.
• Updated Materials:
• The following report provides updates on the current and planned uses of various technology types and tools and assesses the status of adoption versus expectations from 2019.
• Top Actuarial Technologies of 2023
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• June 2023 – InsurTech Update
• June
• These contextualized insights were gathered during the InsurTech Insights USA Conference, held on June 7-8, 2023 in New York with numerous SOA members attending.
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• Actuarial Technology Issues – A Roundtable Discussion – April 2023 Update
• May
• In April of 2023, the SOA Research Institute assembled an industry expert panel to discuss current issues in actuarial technology. This was the fourth time such a panel was assembled, and most panelists had participated in the previous discussions.
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• Predictive Analytics and Machine Learning – Practical Applications for Actuarial Modeling (Nested Stochastic) (Addendum added August 2023)
• May
• The objective of this paper is to provide a practical guide with concrete case studies to help actuaries implement artificial intelligence and machine learning (AIML) to help accelerate the speed of analysis for life and annuity actuarial modeling. We do so by researching the existing literature regarding AIML and its applicability to stochastic modeling and exploring case studies.
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• Innovations Potentially Affecting Underwriting: An Initial Review with a Focus on Epigenetics, Medical Tests, and Wearables
• May
• The global doubling of information content has been estimated to occur at a rate of every 12 hours, and conceivably faster. This ‘infowhelm’ is a double-edged sword for insurers. While maximization of the global knowledge base can fuel innovation, it can occur only in the context of reasonable cost for a higher benefit. The insurance industry – underwriters and actuaries in particular – are challenged to constantly examine new innovations that promise to raise confidence and protective value for insurability, within legal limits. This report aims to be the first of several to alert the SOA of promising innovations for the profession.
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• March 2023 InsurTech New York
• April
• Words from the Ecosystem following a 2022 Sober Act!
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• Microinsurance in a Nutshell: Only for Africa?
• April
• The journey for microinsurance, nowadays called inclusive insurance, started a long time ago and is not complete in the majority of the low-income and low middle-income markets. When seeking to enhance inclusive insurance markets, it is useful and necessary to have a good understanding because it entails a different treatment of customers, distribution, products, pricing, client management, premium collection, claims declaration and settlement, and reporting.
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• What Can Insurers and Pension Funds Learn from Bank Failures – Expert Panel Discussion
• April
• Over a short span of two weeks, the financial system has observed the collapse of two mid-sized U.S. commercial banks, California-based Silicon Valley Bank (“SVB”) and New York-based Signature Bank, and a takeover of troubled Credit Suisse by a rival in Europe. The current turmoil in the financial system is a stark reminder of the importance of effective risk management and regulation.
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• Life Insurers’ Actuarial Transformation Journey and the Impact of Analytics
• March
• This research assesses the evolution of life insurers’ Actuarial Transformation efforts and the future outlook, with a focus on emerging Advanced Analytics techniques.
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• Blockchain Opportunities for Insurance and Financial Industries
  March
  On January 12, 2023, the Arizona Blockchain Applied Research Center (AZ BARC) and the SOA Research Institute jointly ran a workshop on the use of blockchain technology in insurance and financial industries. The workshop included presentations focused on academic research in the blockchain space by Arizona State University, AZ BARC and an industry expert panel assembled by the SOA Research Institute. This document summarizes the research highlights and the discussions that occurred during the two-hour workshop.
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• Cyber Risks in the Smart Home Ecosystem: Identification, Modeling, and Pricing
  February
  This project enhances the current understanding of cyber risks in the smart home ecosystem from the insurance industry's perspective. In particular, the quantitative framework and pricing strategies developed in this project can be immediately adopted/adapted by actuaries to price the cyber risks for smart homes, a fast-growing insurance market.
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• Data Challenges in Building a Facial Recognition Model and How to Mitigate Them
  January
  This paper is an introduction to AI technology designed for actuaries to understand how the technology works, the potential risks it could introduce, and how to mitigate risks. The author focuses on data bias as it is one of the main concerns of facial recognition technology.
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• Fostering Innovation: A Guide for the Actuarial Profession
• January
  The Society of Actuaries (SOA) sought to investigate methodologies and characteristics associated with actuarial innovation, aiming to expand the industry’s capabilities for creativity. The SOA engaged Milliman to conduct in-depth interviews and focus groups with select actuaries who have demonstrated innovative skills, in order to derive key behaviors and characteristics that encourage innovation.

2022

• Actuarial Technology Issues - A Roundtable Discussion - August 2022 Update
  November
  On August 29, 2022, the SOA Research Institute assembled an industry expert panel to discuss current issues in actuarial technology. This was the third time such a panel was assembled, and most panelists had participated in the previous discussions.
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• US and Canada: An Era of Value-added Enterprise Risk Management
  September
  Enterprise risk management (ERM) is an orderly or guided conduct of an enterprise to deal with risks. For insurers, ERM requires full support and commitment of the senior management. ERM in the U.S. and Canada has evolved over the years into a complex ecosystem.
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• India: Growth Opportunities on the Rise
  September
  The Indian market holds tremendous potential for insurance products, especially in segments that remain untapped. The market is evolving in terms of market penetration, product innovation, regulatory changes, government initiatives, capital adequacy and customer experience. In this report, we have highlighted insurance trends in India based on insights gathered from practitioners' interviews, available research and literature, with a particular focus on the enterprise risk management (ERM) function of insurance companies.
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• Decentralized Insurance Alternatives: Market Landscape, Opportunities and Challenges
  September
  Decentralized insurance alternatives is a rapidly expanding sector of Decentralized Finance (DeFi), an emerging and growing financial ecosystem powered by blockchain technologies. The purpose of this report is to review and discuss the business models and operating designs of decentralized insurance alternatives, which may have significant implications for traditional insurance businesses, as well as the actuarial profession.
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• A Risk Classification Framework for Decentralized Finance Protocols
  September
  Decentralized finance (DeFi) is an emerging and rapidly growing financial ecosystem with the defining feature that it is powered by blockchain technology. The focus of this paper is on risks for DeFi protocols that could lead to economic losses that could be insurable. This framework was designed around the risks associated with the existing and emerging DeFi protocols.
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• Avoiding Unfair Bias in Insurance Applications of AI Models
  August
  Here’s a framework for avoiding or mitigating risks of unfair bias when developing insurance industry AI models, developed from interviews with industry leaders on the topic.
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• China: An Era of Insurance Innovation
  July
  The Chinese insurance market is grappling with product innovation, business growth and regulatory oversight as it tries to keep pace with a sharp growth in demand across product segments. In this context, the authors have highlighted insurance trends in China, based on available research and literature, with a particular focus on topics that will drive the enterprise risk management (ERM) function of insurance companies. ERM provides an opportunity for insurers to identify and mitigate potential insurance risks by enhancing their policies and risk management activities. This report explores the insurance trends in detail, drawing on findings from interviews of practitioners in the Chinese market, to provide context for the drivers of ERM transformation.
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• InsurTech Insight Americas Correspondent Report
  July
  The Society of Actuaries (SOA) Research Institute released a report summarizing the InsurTech Insights Americas conference held May 24-26, 2022. InsurTech, a concept created 10-15 years ago, is maturing and currently western financial markets are recording a downward trend while inflation is rising. While this downward pressure on financing makes investors more cautious, stakeholders are working towards partnerships to improve the overall effectiveness and purpose of the insurance industry.
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• Actuarial Technology, A Roundtable Discussion on Current Issues – March 2022 Update
• June
  On March 21, 2022, the SOA Research Institute gathered a panel of insurance industry experts for an update on current actuarial technology topics to help identify directions for future research efforts. This was the second time the panel was assembled; the first was on November 30, 2021. This report summarizes their discussions.
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• Decentralized Finance for Actuaries
  March
  Decentralized finance, or DeFi, is an emerging financial system powered by blockchain technology. This research report aims to introduce actuaries to DeFi and help them develop a solid understanding of DeFi.
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• Actuarial Technology, A Roundtable Discussion on Current Issues
  January
  On November 30, 2021, the SOA Research Institute assembled an industry expert panel to discuss current issues in actuarial technology. Each participant who volunteered to be part of the discussion was selected because of their management-level responsibilities for the application of technology in an actuarial context. This document summarizes the discussion that occurred during the three-hour meeting.

2021

• InsureTech Connect 2021
  October
  InsureTech Connect 2021 covered emerging trends and future opportunities for insurance technology. In addition, Society of Actuaries (SOA) staff along with key SOA volunteers who work in the insurtech industry interviewed a variety of attendees to gather further information on these trends. This report covers key trends in the insurtech industry, opportunities for actuaries, and future considerations and observations.

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• Emerging Technologies and their Impact on Actuarial Science
  October
  The Society of Actuaries Research Institute commissioned this study to highlight the leading emerging technologies that may significantly affect the actuarial profession over a three-year horizon. This study will act as a guide and a resource for actuaries or potential employers to identify the prospective tools to enhance or expand actuarial work, for people collaborating with actuaries who may be affected by these technologies, and for leaders looking to enable teams employing actuaries through the introduction of these tools.
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• InsurTech and Venture Capital Survey
  August
  

  InsurTech is commonly described as providing insurance protection and services through new technology innovations and is seen as a growing place, where the actuarial profession provides expertise and services. To understand the impact of venture capital and insurtech, a survey was released to key members of both the actuarial profession and the InsurTech industry. This report summarizes survey results.

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• Discussion of Efficient Computational Structure of Nested Stochastic Modeling
  July
  Actuaries have a long history with stochastic modeling. Nested stochastic modeling (NSM) is often used when the modeling components under each economic scenario are themselves determined by stochastic scenarios in the future. In this paper three methods are suggested that can be added on top of existing enhancement methods to improve NSM efficiency.
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• Automated Vehicle Systems Outlook, 2021 Update
  June
  Despite the advent of COVID-19, autonomous vehicle (AV) market leaders continued to invest in technology and to establish partnerships with vehicle original equipment manufacturers (OEMs). This report provides a 2021 update on autonomous vehicles.
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• InsurTech: A Guide for the Actuarial Community
  April
  This report is intended to serve as a guide to the InsurTech landscape for the actuarial community and insurance practitioners.
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• Interpretable Machine Learning for Insurance
  April
  Machine learning algorithms fit models based on patterns identified in data and can be very complex. In this report, we describe and illustrate a range of methods for interpreting machine learning models from the growing field of Interpretable Machine Learning (IML).
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• A Primer on Insurance Policies and Genetics
  March
  This primer paper seeks to introduce and update the actuarial profession to the topic of insurance policies and genetics and study the impacts on insurance and potential responses.
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• Peer-to-Peer Insurance: Blockchain Implications
  March
  Peer-to-peer (P2P) insurance is one such business model where individuals or economic agents join together and pool their resources for mutual aid. The aim of this project is to showcase the development of a P2P insurance model and analyze it from both technological and product perspectives.
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• Taking Life Insurance Customer Engagement to the Next Level
  January
  Taking Life Insurance Customer Engagement to the Next Level, commissioned by the Society of Actuaries and produced by Aite Group, uses consumer insights, market trends, and domain expertise to provide ideas that can help insurers create better customer relationships and drive better outcomes for customers and their organizations.
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• Fintech and the Retirement Savings System
  January
  The Aging and Retirement and Actuarial Innovation and Technology Strategic Research Programs are pleased to make available a report that provides a sampling of new financial technologies (fintech) and their applications related to retirement savings systems affecting participants, plan sponsors and service providers.

2020

• Selected Report Summaries in Chinese
  October
  The SOA has translated four of its AIT report summaries into both Traditional and Simplified Chinese. They are “Behavioral Science”, “Big Data and the Future Actuary”, “Cancer Genomics”, and “Cloud Computing and Machine Learning Uses in the Actuarial Profession”.
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• Epigenetics: A White Paper on Technology and Innovation
  September
  This paper explores how molecular biology, specifically epigenetics, may impact the life insurance industry, and considers the effects of utilizing epigenetic biomarkers for underwriting.
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• Exposure Measures for Pricing and Analyzing the Risks in Cyber Insurance
  June 2020
  This report identifies and makes recommendations regarding possible exposure measures for pricing and analyzing the risks in cyber insurance.
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• Quantification of Cyber Risk for Actuaries
  May
  This study aims to develop a generic model that can be applied by any organization. For the validation of the developed cyber risk analysis method, simulations and sensitivity analysis will be performed.
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• Actuarial Practice Innovation Call for Essays
  May
  This report is a compilation of the prize winning essays from the recent Actuarial Practice Innovation Call for Essays.
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• Validating Algorithmic Underwriting Models – Expert Panel Report
  March
  On December 11, 2019, the Actuarial Innovation and Technology Steering Committee of the Society of Actuaries (SOA) assembled an industry expert panel to discuss the key considerations and challenges of algorithmic underwriting model (AUM) validation.
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• Electronic Health Records (EHRs): A White Paper Summary
  January
  Electronic Health Records, or EHRs, are a major worldwide initiative to eliminate paper recordings – including the Attending Physician Statements (APSs) – of an individual’s medical history and current treatment. This paper explores Electronic Health Records in depth.

2019

• Literature Review: Artificial Intelligence and Its Use in Actuarial Work
  December
  The purpose of this report is to review research on how artificial intelligence is used in actuarial work.
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• Summary of Innovation and Technology Research Reports
  November
  A brief overview of recent AIT research papers in summarized format.
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• An Update on the Outlook for Automated Vehicle Systems
  October
  To help describe current trends and highlight differences between the cars we see on the street today and driverless vehicles, this report relies on three market-related definitions; safe, self-driving and driverless.
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• Ethical Use of Artificial Intelligence
  September
  The purpose of this report is to highlight the ethical risks arising from the application of AI in actuarial practice and to have tools to use to identify and manage it.
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• A Tour of AI Technologies in Time Series Prediction
  July
  In this report, we will try to provide an in-depth review of current Machine Learning and Deep Learning models and will explain how those models works and their possible applications in the actuarial field.
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• Emerging Data Analytics Techniques with Actuarial Applications
  July
  The aim of this research is to survey emerging data analytics techniques and discuss their evolution and growing use in the actuarial profession. Data analytics’ applications in life and non-life insurance will also be provided.
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• Cloud Computing and Machine Learning Uses in the Actuarial Profession
  July
  Actuarial modeling has gone through several distinct phases largely defined by the underlying technology platform. Today, cloud computing is again redefining the technology foundations of actuarial modeling and related processes.
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• Behavioral Science Report
  June
  Situated at the intersection of psychology, neuroscience, sociology, and economics, behavioral economics (BE) centers on applying an honest understanding of human behavior to practical problems.
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• Insurance Regulatory Issues in the United States
  May
  This research examines the intersection of U.S. insurance ratemaking and analytics techniques in advanced modern rating systems and associated regulatory considerations in the U.S.
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• Technology In Microinsurance
  May
  This literature review provides insights on emerging technologies that interact with the actuarial profession within the space of microinsurance for the purpose of establishing a frame of reference for actuaries to use in their work.
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• Cancer Genomics
  May
  

  The treatment of advanced cancer is undergoing a major paradigm shift. Traditional pillars of cancer treatment – surgery, radiation, and chemotherapy – are moving to two new efficacious approaches: tumor genomics and immunotherapy. This analysis report introduces SOA stakeholders to these brand-new areas, examines the growing clinical evidence, and sets initial projections for cost effectiveness.

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• Big Data and the Future Actuary 
  April  
  The purpose of this report is to review the existing literature on how today’s unprecedented access to data is reshaping the capabilities of insurance actuaries. Topics covered in this report include the ways in which actuaries are using non-traditional data sources, how this is likely to evolve into the future, and how the typical roles, technologies, and skillsets of the future actuary will look different than they do today.
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• Top Actuarial Technologies of 2019 
  April 
  This research study aims to understand the current and planned use of various technology types and tools and to highlight those technologies that are anticipated to grow the fastest among actuaries in 2019. It also explores the growing set of emerging technologies and discusses perspectives on the abilities of actuaries to adopt them.
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• Machine-Learning Methods for Insurance Applications - A Survey 
  January    
  The Society of Actuaries is pleased to make available a research report that provides a literature survey of methodologies applying machine learning to insurance claim modeling.

2018

• The Development Of WeChat Marketing 
  December  
  WeChat is gradually becoming the main force of insurance online marketing for insurance products in China. With the popularization of WeChat communication technology, more and more insurance companies have started to use the WeChat platform.
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• Market Framework and Outlook for Automated Vehicle Systems 
  November 
  The surface transportation industry is in the early stages of a series of profound changes, stimulated by the development of increasingly sophisticated driving safety and automation technologies.
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• The Impact Of Genetic Testing On Life Insurance Mortality 
  October 
  The Society of Actuaries (SOA) Reinsurance Section, Product Development Section and the Committee on Life Insurance Research, are pleased to make available new research exploring genetic testing and U.S. life insurance mortality.

2017

• Cybersecurity Insurance: Modeling and Pricing 
  March   
  This research paper develops a framework for modeling and pricing cybersecurity risk.