Why investment doesn’t always improve actuarial performance
Introduction
Actuarial modernisation has become a strategic priority across the insurance industry. Increasing data volumes, evolving regulatory requirements and the growing demand for forward-looking insight have placed greater pressure on actuarial functions to improve how they operate.
In response, many organisations have invested significantly in modernisation initiatives. Systems have been upgraded, data platforms enhanced and models refined. These investments are often well considered and, in many cases, have delivered clear benefits within specific areas of the function.
However, a more fundamental question remains: why do these investments so rarely translate into sustained improvements in overall actuarial performance?
The issue is not simply whether organisations are investing enough. In many cases, they are. The more difficult question is whether investment is being directed towards the areas that will make the greatest difference to the performance of the actuarial function as a whole.
Significant Investment, Limited Performance Improvement
Investment in actuarial modernisation has accelerated significantly over recent years.
Organisations have invested in new modelling platforms, enhanced data capabilities, automation initiatives and increasingly sophisticated analytical tools. In many cases, these investments have delivered tangible benefits. Processes have become faster, reporting has become more automated and technical capabilities have improved.
Viewed individually, many of these initiatives can be considered successful. However, a recurring challenge remains. While investment often improves specific components of the actuarial function, it does not consistently translate into broader improvements in overall performance.
Actuarial teams frequently find themselves operating with better systems, more data and increasingly sophisticated models, yet still facing many of the same challenges. Manual workarounds persist. Processes remain difficult to navigate. Dependencies continue to constrain delivery. The function becomes more capable, but not necessarily more effective.
This creates an important distinction. The challenge is rarely the quality of the investment itself. More often, it’s the assumption that improving individual components will automatically improve the performance of the function as a whole.
In practice, this is rarely the case.
The Attraction of Visible Change
One reason investment does not always translate into improved performance is that organisations are naturally drawn towards visible forms of change.
New systems can be implemented. Data platforms can be enhanced. Models can be redesigned. These initiatives produce tangible outputs, clear milestones and demonstrable progress. They are often easier to define, fund and govern than broader operational change.
This is not surprising. Technology investments frequently have well-defined business cases, dedicated budgets and measurable deliverables. Progress can be tracked, benefits can be quantified and success can be clearly communicated.
The most significant constraints on actuarial performance, however, are not always found within technology or modelling capability. More often, they emerge through the interaction of people, processes, methodologies, systems, data and models.
Processes evolve over time with workarounds becoming embedded. Responsibilities become fragmented across teams. Data preparation activities become accepted as a part of normal operations. Individually, these issues may appear manageable. Collectively, they can have a significant impact on efficiency, responsiveness and overall performance.
Unlike technology investments, these challenges are often less visible. They do not sit within a single project. They are difficult to quantify, harder to prioritise and rarely addressed through a single initiative. As a result, organisations can find themselves investing heavily in areas that are easier to improve, while overlooking the underlying factors that continue to constrain the effectiveness of the function.
The challenge is not that these investments are wrong. The challenge is that they are rarely sufficient on their own.
Directing Investment Where It Matters Most
High-performing actuarial functions take a broader view of investment. Rather than focusing solely on individual initiatives, they consider how improvement efforts contribute to the effectiveness of the function as a whole.
This often means looking beyond technology alone. Investment is directed towards improving the way work is performed, reducing operational friction and strengthening the connections between different parts of the function. Processes are simplified. Roles and responsibilities are clarified. Methodologies are applied more consistently. Data is structured to support efficient decision-making rather than repeated preparation.
Importantly, these organisations recognise that sustainable improvement rarely comes from a single initiative. Instead, performance improves through a series of coordinated changes that collectively enhance the way the function operates.
This does not mean investing less in systems, models or data. These remain critical components of modern actuarial functions. The difference is that investment decisions are made with a clearer understanding of how each improvement contributes to overall performance, rather than the performance of an individual component.
As a result, improvement efforts become more targeted, more coordinated and ultimately more effective. The focus shifts from implementing change to improving outcomes.
A Better Direction
Investment remains essential to the future of the actuarial function.
New technologies, enhanced data capabilities and increasingly sophisticated models will continue to play a critical role in how actuarial teams operate and deliver value. However, investment alone does not determine performance.
The greatest improvements are often achieved not by investing more, but by investing with a clearer understanding of where the real constraints exist and how different improvements contribute to the effectiveness of the function as a whole.
The challenge is not directing investment towards visible opportunities for change. It is ensuring that investment is directed towards the areas that will have the greatest impact on overall actuarial performance.
This article forms part of MBE Consulting’s “Missing Link in Actuarial Modernisation” series, exploring why improvement efforts stall, and what it takes to achieve meaningful, system-wide performance improvement.
