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Lack of automation affecting actuarial processes

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Insurers aiming to increase reserving process automation in response to rising pressures are continuing to battling multiple data sources and legacy systems, a Willis Towers Watson survey finds.

“Insurers commented that they still believe there is insufficient automation across their processes and that they are still dependent on actuaries to perform repetitive, manual data processing tasks,” the firm says in a report.

“This is an inefficient use of highly skilled resources and can additionally lead to job dissatisfaction and retention issues.”

Automation scores for each core area of the property and casualty (P&C) reserving process showed 31.9% for data, 22.1% for results production, 22% for loss calculations, 14.6% for assumptions and 13.8% for audit trail.

The P&C insurance industry overall automation score was 21.7%, while its aspirational score for the next five years was 44.9%.

Data quality and validation remain pain points, with a strong reliance on spreadsheets that typically require manual updates and adjustments, making them cumbersome and prone to human error.

The life industry’s overall current automation score was 21.5%, versus a five-year aspirational score of 49.1%.

Willis Towers Watson says survey results are set against a backdrop of increasing regulatory, management and auditor demands that are putting pressure on actuarial processes, including the need for transparency on calculations.

The impact of COVID-19 and various global lock-downs has also accelerated the drive for automation, moving it rapidly up the C-suite agenda over the past year, it says.

The report says automation ambitions need to have “complete and total buy-in” from employees and key stakeholders and insurers need to adopt a culture of change that “actively enforces and encourages” the vision.

“Otherwise, there is high risk of wasted spend, low employee engagement and rejection of new systems,” it says.