The Creative Actuary: a contradiction in terms or a match made in heaven?

Have you heard the one about the man who met a genie?

“I’ll grant you one wish,” the genie says. “What will it be?”

“I wish I could live forever,” the overjoyed man replies.

Your wish is my command!” cries the genie and, with a puff of smoke, the man finds himself married to an actuary.

“Does this mean I’m going to live forever?” he asks the genie.

“Not exactly,” says the genie as he disappears back into his lamp, “but your remaining time on earth will seem like forever.”

Jokes about the tedium of actuaries have become solidified in actuarial lore. We, the actuaries in question, even seem to believe this ourselves and have resigned ourselves to assuming the persona of the bumbling, socially awkward nerd, who favours tweaking spreadsheets over human conversation and sunlight.

But we don’t need to accept this status quo. Actuaries can be creative!

If you have ever opened a valuation spreadsheet, you will have seen manipulations of data that you never dreamed possible. To solve sticky problems, we have come up with numerical gymnastics that would make an acrobat dizzy.

Often, these solutions can be described as genius and, most definitely, creative. This proves that we do have the capacity to think of unique and original ideas. So how do we allow ourselves to be creative outside of our very narrow comfort zone and demonstrate the value we can add to the organisation as a whole, the wider industry and (even) society?

Creativity is vital to the survival and growth of any industry, and every profession. Furthermore, the opportunity to exercise creativity is what generates job satisfaction at a personal level.

So, to stay relevant in an evolving market and continue to attract the best talent, we need to counter this concept of the uncreative actuary, not only to change the impression we make on the outside world but also for the sake of our self-image.

Fear of failure > hunger for success

Actuaries at senior levels already make valuable contributions to strategy and business development, but why aren’t more of us thinking about how to contribute to strategy on an operational level?

Most of our time is spent not in the boardroom, but in the detail. We should have a mindset of continuous improvement, constantly thinking of ways in which we can make our operations more efficient to support business needs and to differentiate ourselves from competitors. Why aren’t we taking advantage of the quick wins? Why do we allow our creative muscles to atrophy?

Perhaps the answer is that we are scared of getting it wrong, or, in actuarial parlance, we are risk-averse. And we know that getting it wrong can come with a heavy price. But focusing on this limited downside risk often results in actuaries overlooking the unlimited upside potential and value new ideas can create for all stakeholders, within and even beyond the traditional actuarial space.

Herein lies the conundrum. To generate value, we need to innovate; we need to create better solutions that incorporate the new technologies and ways of thinking that weren’t available before. But inherent in any form of genuine creativity is a measure of risk. Even actuaries at board level baulk at the idea of unnecessary risk, an attitude which filters down to actuarial teams.

No one wants to be the first to try something new; no one wants to stand out from the crowd, even if such inaction inhibits shareholder value. And so, it appears to me that insurance remains an industry where not differentiating oneself from competitors in any meaningful way is seen as a good thing.

IFRS 17: An opportunity for creativity

If we, as actuaries, are not as creative as we could be, we need to think of what we can do to encourage creativity and innovation in our day to day jobs, as well as in bigger projects.

A number of firms attempted large scale transformation projects under the banner of Solvency II. For many, preparation probably didn’t go as smoothly as it could have gone, but IFRS 17 implementation presents us with another opportunity to rejig our systems and processes in a way that adds value beyond regulatory compliance.

Approaching IFRS 17 from a holistic viewpoint and encouraging all strata of actuarial resources to use creative thinking can result in the design of responsive, adaptable solutions – to last not just until we’ve cleared this regulatory hurdle, but for a lifetime.

Opening the portals of discovery

The suggestion that Artificial Intelligence (AI) and robotics will steal our jobs and destroy the profession may sound a little dramatic, but we do need to acknowledge that, sooner or later, we are going to be forced to consider the insurance industry and the services we, as actuaries, provide under entirely different terms. It will be the creatives, the early adopters, the ones willing to embrace the changes and use them to redefine the industry in a way that benefits everybody, who will survive.

To foster creativity within individuals we need strong leadership to set an example, we need incentives that reward lateral thinking. We need to spark a childlike curiosity in issues that affect not only our day-to-day lives, but also our shareholders, our customers, and our profession. We need the space to experiment and a more tolerant attitude when the experiments go wrong.

This belief and attitude is what led MBE to develop the Actuarial Performance Management (APM™) Framework enabling actuarial teams to boost their potential and allow creativity and innovation to flourish.

The way for individual actuaries and actuarial businesses alike to differentiate themselves is by adding creativity to technical competence. The words “creative” and “innovative” are not generally associated with the actuarial profession. But as the profile of the typical actuary changes, we should also think about updating our outlook and our image. 

Only when we permit ourselves to nurture our creativity will we become associated with the beneficial and original solutions to industry problems that will make the profession flourish.

The APM™ is MBE’s unique and proprietary methodology for transforming actuarial performance. The Framework is a comprehensive, structured approach that underpins our actuarial transformation projects.

By using the APM Framework, we assess your actuarial operation’s performance relative to six enablers to clearly identify what and how you need to improve to achieve actuarial excellence.

Contact us for your complimentary APM™ Assessment and a bespoke report containing detailed and actionable insights on how you can improve your actuarial operational performance and achieve actuarial excellence.

Update of the original article posted 15 February 2020.

Andries Beukes