Happy Sunday! I’m trying out a new format for the Acturhire newsletter.

Below you’ll find industry insights and trends to help support your actuarial career, and summaries of the latest news items from the world of actuarial.

You’ll receive a new and improved jobs update as normal during the week

Let me know what you think of the next format!

ACTUARIAL NEWS

📈 Major Rate Hikes Coming Amid Market Pressures in Florida

The Rundown: The Florida property market continues to see increased claims cost and rate increases for customers. Citizens, the state-sponsored insurer of last resort have filled for large rate increases and are not currently rate adequate.

The details:

• Rate Adjustment Request: Citizens has requested a 13.5% rate increase for homeowner multi-peril policies due to state regulations that cap annual rate increases. The indicated rate need was +92.8%.

• Market Pressures: Florida homeowners paid an average $10,996 for their home insurance, over 4x the national average. 

• Impact of Natural Disasters: Florida's susceptibility to hurricanes and tropical storms drives up insurance costs, making it the state with the highest home insurance rates. 

Why it matters: The discrepancy between the required and permissible rate increases demonstrate the challenges actuaries face in maintaining financial stability while adhering to regulatory limitations. Always keep in mind that in some states, it can be much tougher to get significant rate increases approved, even when actuarially justified

FUTURE OF ACTUARIAL

🤖 The SOA and the Age of AI: Preparing Actuaries for a Tech-Driven Future

The Rundown: At the 2024 ReFocus Conference, Greg Heidrich, CEO of the Society of Actuaries, spoke about the significant impact of artificial intelligence (AI) on the actuarial profession. He emphasized the challenges and opportunities presented by AI, urging actuaries to innovate and adapt.

The details:

• Professional Adaptation: There is a growing necessity for actuaries and actuarial employers to embrace AI, reflecting historical shifts seen with the internet and computer technologies. It will be important to develop ethical frameworks and comprehensive training programs to ensure AI is used responsibly across insurance.

• Evolving Skills and Roles: The SOA is proactively revising its educational programs and credentialing systems to include AI-related competencies. This ensures that actuaries are prepared with the skills needed to excel in an evolving professional landscape.

• Future Directions: The SOA is pursuing initiatives such as AI-driven personalized learning aids for exam candidates and leveraging AI in actuarial research to discover new data patterns. These efforts aim to maintain the profession’s leading edge in technological advancement.

Why it matters: As AI continues to transform the global economy and redefine professional roles, the actuarial profession must meet these developments proactively. This won’t happen all at once - people overestimate what can be achieved in one year, and underestimate what can be achieved in ten years. 

Integrating AI tools and fostering new competencies enables actuaries to augment their analytical capabilities and productivity. The SOA’s commitment to equipping its members for the Age of AI ensures that actuaries remain vital and adept at navigating future challenges.

ACTUARIAL INSIGHTS

📉 Changes to the Reserving Cycle in Uncertain Times

The Rundown: Damian Sealy from PwC Bermuda gave a wide-ranging interview and spoke about the complexities of the reserving cycle in the insurance market and how external factors like inflation and geopolitical events are challenging traditional actuarial practices.

The details:

• The Reserving Cycle Exists: Research studies have consistently shown that insurance markets’ final reserve estimates tend to be underestimated in financially tough years and overestimated in prosperous ones. Actuarial teams are now doing more to understand and mitigate the current uncertainty

• Challenges with Historical Data: Recent shifts in global economic factors, such as rising inflation and ongoing geopolitical conflicts, have led to historic data being less predictable for the future. Actuaries need to reevaluate how past data is used in predicting future outcomes.

• Impact on Reserve Releases: A PwC study noted that the whole US P&C market had 18 consecutive years or favorable reserve releases. 2019 is the first accident year to experience cumulative adverse development, with 2018 not too far behind. 

Why it matters: Understanding the reserving cycle and adapting actuarial methods to account for new economic realities are critical for insurance companies to maintain financial health and regulatory compliance. Always remember that the past is not a perfect predictor of the future.

ACTUARIAL INSIGHTS

🔄 Rethinking the Concept of "Retirement"

The Rundown: In a head-to-head discussion, Michel St-Germain, a retired actuary, argues that the traditional concept of retirement is becoming outdated due to social and technological changes. Fred Vettese, a pension expert, counters that the fundamental aspects of retirement planning remain essential, despite the evolving nature of work and retirement.

The details:

• Evolving Retirement Models: As life expectancy increases and work becomes more flexible, including the rise of remote work and AI-driven job creation, the idea of stopping work abruptly at a traditional retirement age is outdated. Instead, more people are working beyond the age of 65, which requires adjustments in pension planning and government policies.

• Policy Implications: There are calls for changes to pension plans and social security systems to better accommodate an aging workforce that is not only living longer but also capable of contributing to the workforce beyond traditional retirement ages. This includes rethinking the age people start receiving pension benefits and allowing more flexible withdrawals from retirement accounts.

• Cultural Shifts in Perception: The term retirement might need rebranding to reflect its evolving nature. While the structure of retirement may change, the need for careful planning does not.

Why it matters: The evolving concept of retirement offers actuaries the chance to innovate with flexible pension products and services tailored to longer, more varied career spans. By designing adjustable retirement plans and pricing models, actuaries can better meet the needs of a workforce that retires gradually and lives longer. 

Quick Hits

In the UK, the Bank of England has urged life insurers to enhance risk management and enforce stricter controls on pension protection to prevent the unchecked growth of reinsurance risks, potentially imposing regulatory restrictions on reinsurance deals.

Cyber risk analytics platform CyberCube estimates insured losses from the recent CrowdStrike IT outage could total $1.5 billion, marking it as the largest single insured loss event in the cyber insurance industry's last 20 years.

According to SwissRe, global insured losses from severe thunderstorms hit $60 billion in the first half of 2024, marking a 62% increase over the ten-year average and making it the second costliest period on record for such events.

Thailand's Office of the Insurance Commission has formed a committee to evaluate actuaries' performance and manage the licensing process, aiming to uphold high standards and ensure the stability of the insurance sector.

The CDC confirmed that in early 2024, over 8% of Americans lacked health insurance, marking an increase from the previous year and breaking a record streak of low uninsured rates post-COVID-19 pandemic.

Australia continues to experience higher mortality rates post-pandemic, with a 5% excess death rate in 2023, highlighting the prolonged health impacts of COVID-19 despite high vaccination levels.

Thanks for reading! I hope you find this summary useful. If you have specific feedback or anything interesting you’d like to share, please let us know by replying to this email.