View Plenary Synopsis 

It’s pulled millions out of poverty but today global, rationalist capitalism is reeling, trying to explain its role in environmental degradation, inequality, tech monopolies and corporate short-termism. In this session our panel ask: Is it broken. Can it be fixed? And what are the models for a better economic system?

• Chair: Alan Kohler
• Ian Macfarlane – Australian Economist and Central Banker
• Sir Paul Collier - Economist
• Danielle Wood – CEO, Grattan Institute
• Rebecca McGrath – Chairman, OZ Minerals

This session was put together by Organising Committee member Nicolette Rubinsztein

View Concurrent Synopsis 

Chair: Tim Jenkins

What is the right level of capital for Super funds. For not-for-profit funds this question is difficult as you balance whether to return capital to members versus having sufficient capital to invest in the future.

Our holistic capital management approach helps funds understand how to approach this question now and how to use the framework to manage the fund going forwards. It introduces rigour to business cases and helps articulate how the fund is supporting the members best interest lens.

View Concurrent Synopsis 

Chair: Josh Ong

Investment actuaries have made great strides across the investment, wealth management and advice industries but in recent times, many have lost touch with the actuarial profession. We need to analyse why and what can be done, in order to better understand the evolution and challenges faced by today’s investment actuaries, and what lessons can be learnt by the broader actuarial profession.

Hear from investment actuaries who reflect on their career journeys, and provide their thoughts on the actuarial profession.

View Concurrent Synopsis 

Chair: Jason Sun

In mid-2019 the Actuaries Institute set up the Disability Insurance Taskforce (the Taskforce) to conduct a comprehensive review of issues with the Retail Disability Income market.

One issue highlighted was that advisers, when meeting their Best Interest Duties, may overly rely on advising the most feature-rich product and the assessment of rating houses.

Advisers fed back that ratings house should place greater importance on long term pricing stability, and if this was included in the ratings then financial advisers would take this into account. The recommendations of the report were to develop a Sustainability Rating and that Best Interest Duties gave a consideration to sustainability.

In 2021, retail life insurers have introduced a number of new Individual Disability Income Products. The approach taken by Insurers varies significantly across the market. In the absence of clarity on an Adviser’s responsibilities to consider the pricing sustainability of benefits and an objective and independent measurement with which to assess product sustainability, the changes to the market are less likely to endure.

In this session we will provide views on:

• What existing regulation impacts advice, how in practice is it being interpreted and applied*.
• Some case studies will be presented to highlight some of the issues that advisers face
• How a Sustainability Rating is being devised and some of the considerations and issues discussed
• The next steps in developing the Sustainability Rating

* Note: we will also investigate bringing in advisers/ratings houses to participate in the session

View Concurrent Synopsis 

Chair: Young Tan

Actuaries have been involved in fund financial modelling for many years, including with the release of PG499.05 Financial Condition Reporting for Superannuation Funds in 2012.  With the introduction of new regulatory requirements, the need for comprehensive fund financial modelling has increased and actuaries are playing a key role in providing insights across many superannuation funds.  

This presentation will provide an update on actuarial activity involved in preparing fund projections and its uses, including:

• requirements under SPS 515 to inform a fund's Business Plan
•  future scale and sustainability
•  revenue / expense projections
•  merger activity

The working group includes a combination of consulting and internal fund actuaries and will provide case study examples and lessons learned from implementation and stakeholder engagement.  

View Concurrent Synopsis 

Chair: Zhan Wang 

This session will present results of Gen Re’s 2021 experience investigation for New Zealand Individual Disability Income Experience, covering the period 2013-19.

We will highlight trends in the experience, along with other insights. The session should be of particular interest to any actuary involved in pricing or performing valuations for this class of business, or who has a more general interest in the sustainability of New Zealand Disability Income Insurance.

New Zealand Income Disability Insurance has many similarities with its Australian counterpart, but has not had the same disastrous financial results. In reviewing the New Zealand experience between 2013-19 and comparing it to Australian experience over a similar period, we will try to pick apart the reasons for the differences and whether there are any causes for concern.

View Concurrent Synopsis 

Chair: Patricia Berry

At a time when the life insurance sector was under an extreme spotlight and plagued with consumer, regulator and media discontent, EMLife entered the market as a third-party agent, specialising exclusively in life insurance claims management.

The industry had a long remediation road ahead following ASIC’s 2016 Report 498 which scrutinised life insurers’ claims handling performance. Despite ASIC finding that 9/10 claims were being paid, it also found that 47% of all customer disputes about claims were related to evidence collection and delay.

Armed with 100+ years of knowledge and experience in successfully managing workers’ compensation claims from its joint venture owner, EML, EMLife was received in industry with both scepticism and curiosity:

How can a Claims Manager, experienced only in Workers' compensation, bring value to the complex world of Life Insurance claims?

Anticipating these perceived barriers by industry, EMLife understood consumer cravings and designed a unique case management model pulling elements from its long-standing personal injury claims experience. The EMLife Way was born, premised upon disciplined customer engagement to build trust and rapport to support sustainable return to health and work.

Esteemed personal injury industry expert and CEO, EML Solutions, Geniere Aplin, will take summit attendees on a frank and open journey of reflection on the EMLife experience over the last five years.

From EMLife’s very first partnership with a heritage Australian life insurer managing a cohort of long tail retail claims, to our experience working with a major superannuation fund on a runoff policy, to our current partnerships where our model has developed into one of customer centricity and technical excellence – many lessons have been learned along the way.

EMLife’s lessons will be intimately shared in detail – from the highs of delivering some of the industry’s strongest return to work rates of 41% with a low 3% reopen rate to having to reshape

EMLife’s service offering to encapsulate customer centricity and technical excellence to meet industry expectations. These deep insights of the claims experience will be shared along with how it has informed EMLife of its vision for the future of life claims informed by our assessment of the challenges and hurdles that lay ahead.

View Concurrent Synopsis 

Chair: Ian Laughlin

In mid-2019 the Actuaries Institute set up the Disability Insurance Taskforce (the Taskforce) to conduct a comprehensive review of issues with the Retail Disability Income market. For well documented reasons, the Taskforce focussed initially on the IDII product, and the eco-system in which it operated. In late 2021, the taskforce turned its attention to the Group Insurance market and its sustainability. Sustainability in Group Insurance is again under the spotlight, with recent rising prices and industry losses being experienced and APRA also turning their attention to this area. A panel from the DITF’s Group Insurance Working Group will discuss:

• Identified sustainability concerns
• Progress of the working group, including:
  • validation of claimants’ needs,
  • the concept of fairness in group insurance, and
  • a potential good practice framework for sustainability

View Concurrent Synopsis 

Many actuaries bemoan the increase in the proportion of income protection and TPD benefits attributable to mental health claims. Often the actuarial solution suggested is to remove this cover altogether, or restrict the sum insured in some way, for this cause of claim.

A deterioration in mental health can affect anyone. It is a largely a random risk, a risk faced by all of us, a standard actuarial risk to be managed.

My presentation explores the results of a “natural experiment”, where one large company made multi-layered changes to address a spiralling mental health issue, changes that did not remove cover for mental health nor did they discriminate against people with a mental health condition, changes that had a marked impact on the claims experience, the loss ratio and the premium and more importantly on the workers in that company.

My paper sets out the processes and changes put in place and the impact this had. It is possibly a template for other large employers and a solution that actuaries should be looking to suggest and reward not only for their employer’s bottom line but for society generally.

View Concurrent Synopsis 

Chair: Anthony Asher

I recently talked to a retired policemen who was very happy with his CPI indexed pension for life and grateful that he was not convinced to move to the alternative (accumulation) superannuation scheme all those years ago. He seemed to be very comfortable with the concept of a real income stream for life.

The move away from defined benefit retirement schemes to defined contribution retirement schemes creates problems for beneficiaries who are not comfortable with investment and long term financial planning. But it is a part of what the Institute and Faculty of Actuaries in the UK calls “The great risk transfer” – “an ongoing trend to transfer risks from institutions to individuals.” Could the retirement industry offer individuals more than advice to maximise returns (by investing in riskier assets) and temper this objective to reduce risk?

This note looks at ways that the financial industry could offer more by;

• Focusing advice on the real risks for retirement savings;
• Setting the consequences out simply and clearly; and
• Offering clearer choices between risk and return.

Simply put, we can drive better retirement incomes using less subjective models based around real returns. Participants should feel more engaged and Increase their retirement incomes by 25% with the same level of risk. And we create a new trillion dollar industry constructing more suitable retirement savings assets. These assets provide clearer risk/return outcomes in a real return framework driving higher returns for the same risk or lower risk for the same return expectations.

View Concurrent Synopsis 

Chair: Joseph Daley 

Parts of the world have started integrating AI-powered solutions into their life insurance underwriting models. It has many benefits including increasing automatic acceptance rates, reducing the cost of underwriting, and creating a better customer experience. But the benefits are not without risks that need to be carefully assessed and managed. This presentation will share some real-life solutions that have been implemented across Asia, as well as the journey to get there, and learnings so far. We will put an actuarial lens over the topic, covering some practical examples of how actuaries should approach the risk and costing assessments when it comes to taking the initial step to implementing these solutions, as well as the ongoing monitoring and governance considerations.

View Concurrent Synopsis 

Chair: Iris Lun

Setting reserves are tough at the best of times. In more recent years, regime shift events, such as COVID-19 or regulation changes (e.g. in Australia recent years there’s been a lot), makes setting best estimate extremely difficult, but not impossible!

I will take the audience through a journey of discovery, through various “regime shift” challenges across both Asia and Australia. “Workshop” together methods and techniques to consider when setting/re-setting IBNR, DLR and other reserves for pricing and valuation purposes.

View Concurrent Synopsis 

Chair: Nicolette Rubinsztein 

This session details the recommended solution of the Growth / Defensive Working Group. It explores the trade-offs between a quality exposure metric, distorting portfolio decision-making, and operational impact. Learnings around how to develop industry-led solutions will also be explored. 

View Concurrent Synopsis 

Chair: Ilas Leas

In September 2020, the Actuaries Institute Disability Taskforce issued three consultation papers. This introduced the concept of benchmarking for sustainability.

Gen Re took a slightly different approach to the Actuaries Institute and to build our own Benchmarking tool. The main reason for this was to ensure there is consistency between products, over time, and by whom performs the benchmarking.

The session will set out the work Gen Re did, the lessons learnt and the benefits gained. It will also share some of the results of the benchmarking exercise. Including comparison of benchmarking over time and across countries.

Since then Gen Re has expanded this to underwriting and claims and to other benefits. Gen Re will share some of the initial results.

View Concurrent Synopsis 

Chair: Andrew Boal

Should personal financial planning be a recognised area of actuarial practice?

The Committee was formed to consider whether there is scope to support greater future actuarial involvement in personal financial planning. The scope includes considering issues such as:

• Measuring the current level of actuarial activity happening in the financial planning space
• Whether there is demand amongst actuarial university students (especially later year students) to consider financial planning as a potential career;
• Whether there is interest amongst actuaries to establish a permanent Financial Planning stream within the actuarial profession;
• What incremental studies the Actuaries Institute (and/or the universities offering actuarial courses) might include in their curricula towards meeting FASEA requirements for licensing financial advisers;
• Whether there is scope to augment the exemptions that are currently offered towards financial planning qualifications for actuarial students; and
• Whether the Institute could work with external financial planning education providers to strengthen some of their coursework.

We will present:

• Our findings of two surveys:
• One of actuaries who are practicing or have practiced in the financial planning space and this will include a brief outline of the current work actuaries who are licensed are doing in the financial planning space
• One of students to gauge their interest in financial planning
• Our initial review of changes that could be made to the Institute’s program of study students currently undertake on the pathway to become actuaries to achieve FASEA requirements.

Then seek your input on whether the Institute should establish a permanent Financial Planning stream within the actuarial profession.

Once a pathway for new actuaries is resolved then further work can be undertaken to resolve what is needed for actuaries who are currently qualified to satisfy FASEA requirements.

View Concurrent Synopsis 

Chair: Ash Bhalerao

It is a little while since I presented on the topic of house prices, with my previous presentations being Fair’s Fair (2017), All I Want is a Home Somewhere (2018) and Safe as Houses (2019).

My past analysis has shown that, in the long term, median house prices follow incomes growth and mortgage interest rates, with an additional trend growth overlay of 1½ % per annum that can largely be explained by quality improvements. While powerful short-term forces can drive prices well away from this trend at times, I found that Australia was not in a bubble in early 2019.

Since then, things have changed, and median house prices have risen dramatically. Meanwhile, as we learn to “live with Covid”, we are doing so against a backdrop of a high recent household savings rate and low interest rates, but with concern over household debt levels and inflation. In other words, we appear to have a housing bubble and a high risk of a sharp bust rather than a gradual deflation.

In this paper, I will revisit my long-term predictor and test this bubble theory, exploring the implications.

View Concurrent Synopsis 

Chair: Shubham Saxena 

Traditionally, it has been considered adequate to allow for a 1-in-200-year pandemic shock when assessing the adequacy of solvency capital in life insurance products. But additional complexity is added while the world is in the midst of a pandemic and the challenges faced are imminent and unknown. This raises interesting questions around the potential need to include the allowance for pandemics in pricing and reserving bases, TCF and competitive pressures and the long-term impact of COVID-19.

This presentation considers the question of whether pricing bases should be adjusted to allow for the potential shock or long-term impacts of the pandemic? Or should risks be reduced and aligned through the underwriting process? These questions are considered with the benefit of 20/20 hindsight on the historic effect of two pandemics that had a significant impact on the overall level of mortality in South Africa over the past 100 years. This includes the 1918 Flu pandemic where South Africa was proportionally the third hardest-hit nation globally. We also consider the effect of the HIV/AIDS pandemic which South Africa grappled with during the late 1980s and into the 1990s. The latter has many similarities to the current COVID-19 pandemic, including lack of data, misinformation and politization.

We consider what can be learned from the past and what considerations and conclusions can be drawn from these events related to the current COVID-19 pandemic. This includes the approaches used to adapt pricing and underwriting processes, ethical and practical considerations and the lessons learned in the South African market as well as the comparison of approaches adopted between South Africa and Australia. The research also incorporates industry feedback from both the South African and Australian life insurance industries on the approaches currently being used to allow for both shock and long-term pandemics in the capital, reserving and pricing processes.

View Concurrent Synopsis 

Chair: Janice Jones

Modern monetary theory (MMT) has gained notoriety for encouraging government overspending. It holds that governments have no effective limit to what they can spend because they can always print more money. The theory does however recognise the risks of inflation and suggests that these risks to be addressed by raising taxation, rather than interest rates.

This presentation will explore the implications of MMT for our understanding of the nature and role of money in the economy. It will discuss the similarity of the creation of credit (and thus money) by banks and the government, and the need for trust.

MMT provides a basis for discussing novel approaches to currently pressing social and economic issues. Firstly, it highlights the differences between government backed currencies and cryptocurrencies and the vulnerabilities of the latter. While justifying the stimulation packages that have been used during COVID lockdowns, it also focusses on what governments do with the money that they are printing, particularly in the face of environmental risks.

Finally it suggests changes to our system of taxation that address the asset inflation that has followed the stimulation and the further inflationary risks that may follow.

View Concurrent Synopsis 

Chair: Douglas Isles

A return of last year’s successful investment panel discussing the current key issues in financial markets, to help bring fresh perspective to attendees

View Concurrent Synopsis 

Chair: Jason Sun

In mid-2019 the Actuaries Institute set up the Disability Insurance Taskforce (the Taskforce) to conduct a comprehensive review of issues with the Retail Disability Income market. For well documented reasons, the Taskforce focussed initially on the IDII product, and the eco-system in which it operated. In late 2021, the taskforce turned its attention to the Group Insurance market and its sustainability. Sustainability in Group Insurance is again under the spotlight, with recent rising prices and industry losses being experienced and APRA also turning their attention to this area. A panel from the DITF’s Group Insurance Working Group will discuss:

• Identified sustainability concerns
• Progress of the working group, including:
  • validation of claimants’ needs,
  • the concept of fairness in group insurance, and
  • a potential good practice framework for sustainability

View Concurrent Synopsis 

Chair: Jas Singh

Making sense of the uncertainties presented by Covid-19 falls into the actuarial skillset but it has also presented the need and opportunity to advance our data and analytics skills.

Using a model built by the author to monitor Reproduction Numbers in South Africa, along with some other research examples that use pandemic-related data, we will introduce the audience to:

• Open source coding
• Automation of data feeds not in machine readable format
• Infection modelling
• Ensemble modelling approaches
• Applications in traditional pricing

Louis has a related website that gives you a feel for the work he’s been doing in this area:

https://unsupervised.online/static/covid-19/estimating_r_za.html

View Concurrent Synopsis 

Chair: Katja Hanewald

The Annuity Puzzle is that lifetime annuities are not utilized in retirement as often as might be expected. Both academic literature and industry publications provide demand side explanations: bequest motives, liquidity preferences, crowding out by social security and family insurance, unattractive investment returns, poor money’s worth particularly for those with lower life expectancies, and concerns about the solvency of the annuity provider. On closer examination, however, none of these have been found to adequately explain the puzzle. The most widely accepted view is therefore that the reluctance to buy annuities is largely a result of behavioural biases and misunderstanding.

On the other hand, supply side limitations to alternative products have barely been explored; particularly the possibility that it too is due to behavioural biases and misunderstanding on the part of participants in the industry and regulators. Evidence will be presented that the superannuation industry (fund trustees, financial advisors and service providers) are resistant to the idea of offering lifetime annuities. This resistance can partly be explained by the interests of trustees and advisors in ensuring that lifetime annuities to not reduce their funds under management and opportunities to charge fees. Their interests can perhaps explain how the demand side explanations continue to be repeated thus confusing potential buyers of lifetime annuities and influencing regulators.

Even if trustees were to enthusiastically promote annuities, they do face the difficulty of overcoming the behavioural biases and misunderstandings that are prevalent.

This will require a significant developments in in the provision of financial advice. The tension between ensuring that advice is both appropriate and affordable is widely recognised, with the current focus in Australia being on simplification and financial technology.

The paper concludes by identifying challenges to trustees, advisors, regulators and academics.

View Concurrent Synopsis 

Chair: Morgan Glesson

This presentation will consider the claims experience and pricing impacts of large scale disruptions to fund membership. During 2019 and 2020, the Australian superannuation fund landscape provided a live sandbox where we have been able to study and understand what type of claim experience impacts may occur when we go through sizeable one-off membership changes to large group insurance systems. Within the Australian context, such changes may be expected to re-occur in the future as Governments continue to search for ways to regulate and optimise the efficiency of the superannuation system. What are the lessons that we can learn from this, and what are the pricing methodologies that can be used to get behind all the noise around the claims experience?

This presentation will examine the changes for insurance in superannuation that occurred in 2019 and 2020, examining the claim cost impacts and considering how pricing assumptions and decisions need to be considered allowing for claims impacts caused by large membership changes. We will study methodologies that can be used to understand the one-off effects caused by Opt-In processes, and how to understand and be aware of disruptions to the runoff analysis, and to discuss some techniques and observations that can be used to understand the expected claim experience impacts.

• One-off events which may have brought forward claims, require careful consideration in terms of whether they are recurring events.
• What adjustment is needed to traditional run-off technical analysis.

Our presentation will cover some technical examples and outcomes / observations, leading to ways that we suggest to communicate solutions.

View Concurrent Synopsis 

Chair: Kirsty Hogan

Where is life insurance pricing headed?

Balancing complexity and granularity with common sense.

This is an exciting time of change for pricing, modelling and data analytics within Life Insurance. The quality and volume of analytical techniques and data available today means we can provide much greater insights than was historically possible.

But just how far can, and should, we go?

Today’s software, analytics and computing power allow more granularity and predictive value than has ever been possible within Life Insurance and Superannuation. In this session we compare the different schools of thought, from the old-style Excel-based modelling, through the more advanced modelling and software techniques – including GLM’s involving R and Python - to the boundary of where statistical analysis meets AI. We will compare the results and insights gained from these different techniques, and hear from different practitioners who advocate for different approaches: “simple and safe” vs “complex but risky”.

But surely maximising granularity and pricing accuracy is always best? Particularly as group insurance becomes more tailored, more voluntary in nature, and fund membership becomes more heterogenous due to stapling of super. And since trends in individual DI claims experience arise from a multitude of risk factors, surely actuaries and data scientists must always strive towards greater predictive modelling and trend identification?

Or conversely, is all the extra complexity worth the increased overhead of investment in skills and model development, the increased “black box” risk and extra challenges of communicating insights to stakeholders in a simple way? What use are such newfangled techniques without old-fashioned actuarial judgement? Surely there is no point in developing new skills to ‘stay relevant’ if we lose our audience along the way?

We invite our audience to vote on these different schools of thought.

We anticipate our session may be of interest to senior leaders considering what modelling and analytics platforms are best for their actuarial teams, trustees seeking greater insights from their membership and claims data, and actuaries and data scientists thinking about where they should specialise.

View Concurrent Synopsis 

Chair: Colin Yellowlees 

With all life insurance companies launching new IDII products in 2021 the Australian IDII market now sees more differentiation than ever before. This has implications for all companies in terms of how they look at historic and new experience as well as credibility and market trends. This discussion will focus on the range of products across the market, what this means for IDII and rehabilitation in particular and how actuaries should look to at their experience in light of this. Alisha Jones FIAA is a Business Development Manager at RGA Australia with extensive experience in providing creative and innovative solutions to life companies in Australia. Linda Winterbottom is Claims Rehabilitation Consultant at RGA with over 20 years experience in rehabilitation and case management and a passion for supporting return to good work. Michael Richardson is Technical Product Consultant at RGA Australia with over 35 years in the industry he has seen the up and downs of the Australian market and has powerful insight into the challenges we face. Together they are all passionate about customer outcomes and the societal benefits of a robust and innovative insurance industry.

View Concurrent Synopsis 

Chair: Brnic Van Wyk

The Retirement Income Covenant requires trustees to formulate a retirement income strategy that needs to help members achieve and balance three objectives:

• Maximising their expected retirement income
• Managing expected risks to the sustainability and stability of their expected retirement income; and
• Having flexible access to expected funds during their retirement.

However, balancing these objectives is not a trivial task and communicating the trade-offs involved presents a challenge for trustees, who need a way of doing this to a largely unadvised member base. By implementing algorithms to help members balance their objectives, whilst simultaneously abstracting away the detail to keep the messaging simple, trustees can retain and improve retirement outcomes for members, reduce costs associated with advice and satisfy their covenant obligations.

In addition to developing simple messaging to suit members, trustees need to develop frameworks and criteria for selecting products/strategies to offer. This session therefore also considers the action required by trustees including research, data gathering and modelling to support these assessments.

View Concurrent Synopsis 

Chair: Anthony Asher

The core of the talk is to look at corporate mortality / longevity through an actuarial lens, studying datasets of Australian corporates at a broad level, and then at a more focused level (large, listed companies) where this can be overlaid against financial data. A look at the literature and qualitative approaches will also be considered to provide areas for further exploration.

View Concurrent Synopsis 

Chair: Stuart Mainland

A Polygenic Risk Score combines various genetic markers into a score or number that is a predictor of a person’s likelihood of developing a particular condition. This is a developing field that is of interest to life insurers from both a future of underwriting perspective and an anti-selection perspective,

With this in mind, RGA collaborated with King’s College London to further understand the efficacy of polygenic risk scores and the potential impacts on life insurance. The report titled “Multifactorial disorders and polygenic risk scores: predicting common diseases and the possibility of adverse selection in life and protection insurance” has been published in the November 2021 issue of the Annals of Actuarial Science.

Richard and Scott will outline the latest science in this area, where it may be interesting for insurers including in terms of anti-selection.

This will be a must-see as we as an industry look beyond the Genetic Testing Moratorium to our long-term solution as an industry.

View Concurrent Synopsis 

Chair: Hazel Bateman

We evaluate the Home Equity Access Scheme (HEAS), an Australian government-offered reverse mortgage designed to help supplement retirement income. The HEAS allows older homeowners to continue to age in place while receiving loans with their home equity as security. We construct a multi-period simulation model with financial uncertainty and health and longevity risks, and use this model to consider welfare gains from HEAS use across various household structures and wealth levels. We run scenario analyses that consider different methods of utilising the current HEAS and assess the proposed introduction of lump-sum advances in the future HEAS (effective from 1 July 2022). We also perform policy experiments that consider improvements to HEAS design, aimed at increasing welfare gains. We show that a government-offered reverse mortgage scheme, in which loan payments are linked to public pensions, is a welfare-enhancing method of supplementing retirement incomes. We find that choosing to receive the maximum payment is the most welfare-enhancing method of utilising both the current and future HEAS for most households. The results of different policy experiments show that increasing the maximum permissible payment from the HEAS does not benefit most households, but that reductions in the interest rate do.

View Plenary Synopsis 

Was the pandemic a “time machine to the future”? Or just a temporary disaster we’ll push to the side as we search for the comfort of the old normal? In this plenary a diverse group of thinkers sketch the shape of post-pandemic life, the future of the office and what a great post-Covid leader will look like.

• Chair: Naomi Edwards – Summit Convenor/Non-Executive Director
• Alison Pennington – Senior Economist, Centre for Future Work, The Australia Institute
• Adam Geha – CEO and Co-Founder, EG
• Elise Sharpley, Partner, Deloitte Consulting and author of The Future of Work

In a special session, we follow up with an interview of Ilan Leas, Managing Director of Retender, to discuss the release of his book about the reality of the first few years of a start-up, titled ‘The Improbable Entrepreneur’.

This session was put together by Organising Committee member Naomi Edwards.

View Plenary Synopsis 

Practice at the highest levels and one day you’ll find your judgement under question when the stakes are at the highest. In this plenary our eminent guest speaker Dr Ken Henry AC will talk through his thoughts on the challenges of doing the right thing, particularly when events go awry.

• Chair: Ian Laughlin
• Dr Ken Henry AC
• Danny Gilbert – Managing Partner, Gilbert + Tobin
• Dr Simon Longstaff – Executive Director, The Ethics Centre
• Margaret Cole – Board Member, Australian Prudential Regulation Authority

This session was put together by Organising Committee member Ian Laughlin.

View Mini Plenary Synopsis 

The Diversity & Inclusion Group presents the results of the survey of the membership into the diversity of the membership, member's experiences, and views on priorities for Diversity and Inclusion. This includes some proposed recommendations for next steps for the Institute and the Membership.

• Chair: Jennifer Lang
• Chen Yang
• Margarita Paras
• Harrison Gee
• Ayeeda Akhand 

View Concurrent Synopsis 

Chair: David Knox

The Australian superannuation industry manages over $3.5 trillion dollars, more than double the national GDP. Super funds have become mega funds, and their ownership of listed companies, unlisted assets, infrastructure and impact investments have made them major players in Australia’s corporate decision making. They have been major drivers of increased focused on climate change, modern slavery, corporate responsibility and gender equity.

And yet, fewer and fewer people entering the actuarial profession are choosing superannuation as a specialty subject. Super’s reputation as a world of highly technical defined benefit funds is decades out of date but it persists in current low take up of super as an actuarial specialty.

View Concurrent Synopsis 

Chair: Shubham Saxena 

General insurers are keenly aware of the impact of climate change on their liability portfolios. Investment managers are conscious of the impact on the value of assets as we move away from fossil fuels transition to more carbon neutral energies. APRA has asked insurers to consider the impact of climate change on their business. So from a life or health insurer perspective what is there to worry about if you cover the investment side?

Internationally the expectations are being increased across all ESG dimensions and ultimately stakeholders are going to set the higher bar if the government and regulators don’t.

This session will provide an introduction to the general concepts, an update on international developments and insight into what the future will look like.

View Concurrent Synopsis 

Chair: Hazel Bateman

The sharp market fall in March 2020 at the start of the COVID-19 pandemic saw many superannuation members switch their investment options, reduce their voluntary contributions and/or withdraw from their super account under the early release scheme. While some of these changes are well-thought-through decisions, many others are likely to lead to worse member outcomes in the long term.

This research uses a large-scale survey to study how superannuation fund members respond to market volatility by adjusting their investment options and voluntary contributions. The research also investigates how different types of member communications, such as sending members a reassuring letter or providing retirement benefit projections, could influence the members’ decisions.

Participants are placed in a hypothetical superannuation fund and randomly assigned to different treatment groups. They are asked to make decisions about their superannuation investment options and additional contributions in each of four periods (years). Each period is subject to differing levels of market volatility. The stock market returns in year 1 are average. Participants experience a negative shock in year 2 and year 3, and a positive shock (or recovery) in year 3. The sizes of the shocks in year 2-4 are randomly assigned.

The research findings provide insights into the key drivers behind members’ decisions in periods of unusual market volatility, and evidence of the effectiveness of alternative communication strategies to facilitate better member outcomes. The results will also inform crisis response policies."

View Concurrent Synopsis 

Chair: Jason Yu

A discussion of how forward-looking risk metrics can be effectively applied in the risk management framework, with a particular focus on non-financial risk management.

Current Status

One key strength of actuaries is quantifying future uncertainty. Common actuarial analysis techniques such as projecting future cash flows, managing the capital position and determining business margins, require actuaries to consider the future using quantitative models, based on reviews of historical experience and qualitative information. Such techniques are mainly currently used to manage financial and insurance risks.

Most companies tend take a much simpler approach to assessing non-financial risks. One of the greatest challenges in this space is the complexity involved in obtaining and effectively using relevant data and converting it into simple risk metrics. ASIC has commented that the use of risk appetites and accompanying risk metrics for non-financial risks as “immature” .

Forward-Looking Risk Metrics (FLRMs)

Operational, compliance and conduct risks have all been highlighted in recent regulatory inquires. Such risks are often specific to each business, emerging in nature and can escalate quickly into financial risks. Hence, to better understand the risk exposures, it is useful to estimate potential positions into the future using recent, if not real-time, data so that the business can continue to operate within their risk appetite.

Organisations commonly seek to identity non-financial risks by investigating feedback from customers via complaints information. However, most companies either do not have standardised formats for collecting such data or granular methods for recording the details. Valuable data is not captured by current risk metrics, leading to a lack of predictive information and impediments to insightful root cause analysis.

Developing Forward Looking Risk Metrics (FLRMs) involve observing the patterns from recent standardised, granular data and highlighting trends that could lead to risk limit breaches in the near term and support forward-looking risk assessment and management strategies including stress and scenario testing and business planning processes are vital tools.

Our presentation

The outcomes of new regulatory regimes, such as Design and Distribution Obligations (DDO), require industry participants to ‘lift their game’ in collecting more targeted and relevant information and apply improved techniques to assess and mitigate the uncertainty of non-financial risk exposures. The demand for actuaries to support the development and implementation of FLRMs for managing non-financial risks is growing,

Our presentation will discuss some key design principles for developing FLRMs, important criteria to meet and better practice in their design and implementation. We will illustrate how to apply traditional actuarial techniques in FLRMs and explore the feasibility and benefit of using Machine Learning. The presentation will then conclude with some case studies of potential FLMs that actuaries can utilise. The content will be applicable to all industries.

View Concurrent Synopsis 

Chair: Genevieve Hayes 

In 2020, ASIC hosted an open problem-solving event seeking solutions to improve compliance with responsible lending. ASIC provided 20 synthetic loan files (mortgage and car loans) and asked participants to submit innovative machine learning solutions that can leverage the loan file data to help improve compliance with responsible lending1.

In this presentation, I would like to expand on the shortlisted solution I presented at the ASIC hosted event by providing insights on using machine learning techniques from an actuarial perspective and other potential applications of NLP to actuarial problems.

The presentation will cover:

• The responsible lending compliance problem
• The loan file data which was synthetically created to be under the open banking data regime.
• Alternative data sources considered
• Consideration of open-source approach and platform choices for developing front end tools
• Summary NLP model developed
• Summary of risk scoring approach
• Summary of developed
• Analysis of results from the responsible lending review tool
• Reflection on using machine learning techniques from an actuarial perspective
• Potential applications of NLP techniques in life insurance

Note 1: Responsible lending legislations require that “credit licensees must not enter into a credit contract with a consumer, suggest a credit contract to a consumer or assist a consumer to apply for a credit contract if the credit contract is unsuitable for the consumer “. This requirement was wound back by the government in September 2020 to help speed up economic recovery post COVID.

The data provided by ASIC was detailed transaction data compliant with ACCC’s Consumer Data Standards.

• Reference Presentation

For your consideration, I’ve attached the presentation from the 2020 ASIC event. This presentation will be expanded upon for the Actuaries Summit.

View Mini Plenary Synopsis 

Your actuarial “tour guides” will take you on a journey through the Australian actuarial education landscape. The tour will visit three regions – Foundation, Actuary and Fellowship – and assess their relevance to the actuary of the future.

Before we set off, we’ll take a glance in the rear-view mirror to check where we’ve been, and the changes implemented over the last three years. We will also monitor the dashboard to review our progress and chat with recent tourists (graduating students) on their experience. Next, we’ll invite prospective travellers and keen observers from outside the financial services sector to assess our itinerary (courses) and consider if an actuarial education meets their needs. And finally, there will be an opportunity for our guests to propose new destinations for the future.

• Chair: Tim Jenkins

View Concurrent Synopsis 

Chair: Matthew Buckle

The purpose of this session is to present and discuss illustrative key disclosures to meet the requirements of IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments related to groups of insurance contracts accounted for under the general measurement model (GMM) and under the premium allocation approach (PAA) described in IFRS 17. The disclosures are presented as a series of extracts from a set of full financial statements for two fictious entities called Good Life Insurance and Good General Insurance for the year ended 31 December 2023, including disclosure of the transition to IFRS 17. This session aims to provide actuaries with a solid fundament and understanding of disclosure requirements that historically are the responsibility of Finance / Accounting Departments within a (re)insurance company. We believe that the nature of especially IFRS 17 requires that every actuary has a basic (or even advanced) understanding of practical application of the presentation & disclosure requirements outlined in IFRS 17.

View Concurrent Synopsis 

Chair: Win-Li Toh

Can actuaries influence how and when Australia adapts to climate change? Our multidisciplinary Climate Risk Research team are exploring the factors to be considered to assess the costs and benefits of adapting our built environment to a changing climate.

Our framework for a resilient adaptation investment decision will explore

• the evaluation of long term intergenerational benefits through social discounting,
• the benefits of resilience to prevent damage through physical risks, and
• intangible factors such as social and health that are difficult to quantify.

Scope of our research is targeted at individual, corporation and government policy decision makers. Influencing action and application of our framework is expected to be a challenge. We would also like to share how we are exploring the opportunities to amplify our actuarial insights to drive change.

View Concurrent Synopsis 

Chair: Srikar Velivela  

Climate risks are undoubtably the most pressing issue humanity faces and we all have a role to play in meeting targets. Whilst Australia remains divided over the implications, more business leaders are advocating for proactive responses to reaching net zero. Financial services businesses have a key role to play.

In April 2021, the BCBS released a report on Climate-related financial risks – measurement methodologies, providing a guide for their practical implementation. More recently, APRA formalised its Prudential Practice Guide CPG 229 Climate Change Financial Risks (CPG 229) in late November 2021 which provides guidance for financial services firms (banks, insurers and superannuation funds) to allow for the financial impact of climate change within their risk management frameworks.

In this session we will analyse financial services actions and reporting in respect of climate risks, presenting a detailed overview of the current landscape and future developments that are needed. We will describe an analytic approach to measuring both the risk to the firm’s balance sheet and the impact of firm’s climate change policies on the net zero proposition.

View Concurrent Synopsis 

The National Disability Insurance Scheme (NDIS) was set up to allow people with disability to live “an ordinary life”: to fully realise their potential, to participate in and contribute to society, and to have a say in their own present and future – just as other members of Australian society do.

These aims are embedded in the legislation which established the Scheme, the National Disability Insurance Scheme Act 2013. The Act further indicates that the Scheme adopts an insurance-based approach, which considers the lifetime cost of participants (including early investment), and the outcomes achieved across participants’ lifetimes. Measurement of outcomes and costs is critical in understanding the success of the NDIS and is a legislative requirement.

The NDIS Outcomes Framework questionnaires have been developed to measure progress towards a common set of accepted goals for each participant, so that the results can be aggregated to provide a picture of how and where the Scheme is making a difference. In addition, a common set of goals allows benchmarking to Australians without disability and to other OECD countries.

Participants and their families and carers respond to the outcomes framework questionnaires at baseline (Scheme entry), and approximately annually thereafter. The longitudinal history built up from their responses is used to analyse progress at an individual and Scheme level, to provide insight into how the Scheme is making a difference and point to areas where improvements may be required.

This presentation will cover some of the recent research conducted on data collected from the outcomes framework questionnaires. This includes:

• Research into specific domains, such as health and wellbeing, including mental health outcomes, and employment.
• Research into outcomes for specific cohorts, such as participants with psychosocial disability.

View Concurrent Synopsis 

Chair: Zhan Wang 

We develop a new modelling framework for the mortality of the oldest-old, the population aged 80 and over. We propose a multifactor model that combines a classic parametric oldest-old mortality model, such as the Kannisto model, with the survival tree. To improve the model accuracy, we implement the survival tree in the ensemble bagging technique. We formulate the framework to apply to left-truncated and right-censored data. To illustrate the use of the model, we apply the model to individual-level data for individuals aged 80 to 115 from the Chinese Longitudinal Healthy Longevity Survey (CLHLS) from 1998 to 2018. Model comparisons show that our proposed model outperforms other candidate models in fitting and prediction based on the oldest-old sample from the CLHLS. We find that in the CLHLS sample, the rate of increase in the force of mortality decelerates with age at around age 105. In addition, we analyse the impact of different covariates on the oldest-old mortality rate. We report and visualise the new estimated force of mortality for a range of subgroups based on different covariates.

References:

• Huang, F., Maller R., & Ning X. (2020). Modelling life tables with advanced ages: An extreme value theory approach. Insurance: Mathematics and Economics, 93, 95-115.
• Rau, R. et al. (2017). Where is the level of the mortality plateau? Living to 100 Symposium of the Society of Actuaries, Orlando, FL.
• United Nations (2017). World Population Ageing 2017-Highlights. New York: Department of Economic and Social Affairs, United Nations. Retrieved from: https://www.un.org/en/development/desa/population/publications/pdf/ageing/WPA2017_Highlights.pdf
• Zhu, H. & Xie Y. (2007). Socioeconomic Differentials in Mortality Among the Oldest Old in China. Research on Aging, 29(2),125-143.

View Mini Plenary Synopsis 

Chair: Hoa Bui

During the pandemic, we have seen governments, organisations and the people  make tough decisions to ultimately try and keep the pandemic under control. Now that some of the dust has settled, who was responsible for helping solve the problem and make those decisions? Was it the scientists who worked on the vaccines? Governments who imposed restrictions, lock downs and gave financial support to people to stay isolated? Or is it the people themselves who voluntarily restrict their movement ? 

In this session we look at the facts and look at this issue from the perspectives of the scientist, the government vs what the data reveal.

View Concurrent Synopsis 

Chair: Jennifer Lang

A major regulatory event in New Zealand was the failure of licensed insurer CBL Insurance in 2018.  This failure caused the RBNZ to review its prudential regulatory and supervisory arrangements for insurance companies licensed by the Bank. To this end the Bank commissioned an independent review and appointed John Trowbridge, former Member of APRA responsible for insurance, and Mary Scholtens QC, experienced administrative counsel, to conduct the review.

The essential purpose of the review was to identify the lessons of this important episode (both the positives and the negatives) by opening the Bank’s processes to independent scrutiny and, in doing so, to provide an independent and expert perspective on how best to strengthen the regulatory and supervisory framework for the future.

The paper for the Summit session is the public report on the review released in July 2019 and the RBNZ’s accompanying media release. The report runs to 144 pages but the background and the principal findings and recommendations are conveyed in the Executive Summary on pages 3 to 9.

From an actuarial perspective, the report is a valuable document for the profession regarding concepts and practices for prudential regulation and supervision of insurers and banks generally, not just in NZ. It is valuable regarding some of the wider issues around liability assessment, solvency, capital management and the role of the appointed actuary.

The distinction between regulation and supervision is an important one and receives quite some attention in the report. Also the RBNZ solvency regime and hitherto ‘light touch’ approach to supervision showed up in the investigation as risks for the Bank as regulator.

There is an important chapter on actuarial matters associated with claims reserving. It was difficult to compose and is worth a read for anyone interested in how one might respond to sceptical questioning about what to believe or who to believe when there is a material divergence of opinion between two actuaries.

View Concurrent Synopsis 

Chair: Matt Noyce

The purpose of this session is to present and discuss key AASB 17 implementation challenges that we have observed in the Australian market over the past year. Areas covered will include project management, processes, data, systems & technology, and business impact.

As part of the session, we also provide and discuss insights gained from the second industry-wide APRA AASB 17 Quantitative Impact Study (QIS) from the point of view of prepares as well as the regulator. These insights will cover qualitative as well as quantitative aspects of the QIS results.

We will also cover the current status of APRA’s key prudential reporting proposals and the expected implications.

View Concurrent Synopsis 

Chair: Jason Sun

Underwriting is changing with AI and Automation. Carmel is the Head of Underwriting at RGA Australia and will discuss the technology transformation of consumer and distribution expectations and its impact on the way insurers will underwrite with a particular focus on the Australian market. Alissa is the Head of Business Development at RGA Australia. She will extend on Carmel’s thoughts to consider what it means for actuaries in terms of product development, pricing, monitoring and data and how companies around the world are already adapting to these technologies.

View Concurrent Synopsis 

Chair: Anthony Asher

We design a “pooled health care annuity product” to allow mortality risk sharing according to individuals functional disability and health statuses in the presence of systematic trends and uncertainties. In particular, we apply the model proposed in Sherris and Wei (2021), which considers both functional disability and health status to estimate transition rates using survey data from the U.S. Health and Retirement Study.

We illustrate the importance of pooling mortality risk on heterogeneous individuals by quantifying the annuity payments for each state and as individuals move to different states. We show that pooling enhances the annuity payouts for those in worse conditions such as disability and chronic illness due to mortality and morbidity credits. Individuals moving into the dependent state have a higher death probability than people staying in good health; hence, the mortality credits in a pooled health care fund account increase the payments in dependency and chronic illness.

Finally, we incorporate equity investments into the pooled health care annuity product and compare the benefits with a standard life care annuity. Compared to the standard products, the pooled health care annuity product with equity significantly reduces charges, leaving risks to the pool members while providing enhanced benefits.

View Concurrent Synopsis 

Chair: Jason Yu 

The survey of emerging risks in China will be open in early 2022 and attempt to address the thoughts of actuaries and risk managers in the post-COVID-19 era. The proposed study is jointly sponsored by the Society of Actuaries (SOA) and the China Association of Actuaries (CAA).

The pandemic has drastically changed the risk landscape across the world. Direct and indirect costs associated with the lockdown policies present significant economic uncertainties. While the world economic recovery roadmap is still rolling, the COVID-19 has reshaped the digitalisation and technology transformation of business operations. Financial companies face significant new challenges in cyber resilience and data security. Despite many countries gradually lifting lockdown restrictions, China is currently pursuing a hard COVID-zero policy. The survey report is expected to collect the views from actuaries and identify top risk concerns in China in a post-pandemic future.

In terms of study design, five categories of 23 risks are embedded in the survey, including economic, environmental, geopolitical, societal, and technological risks. Respondents are asked to rank the top five emerging risks in their views. They can also nominate additional risks in open-ended questions if they consider missing a particular important risk. The results will be compared with the annual emerging risk survey reports conducted in North America. It is anticipated that the study will provide actuaries and practitioners with a reflective sharing of the current risk outlook in China and help plan the future risk management strategies globally with the unknown knowns.

View Mini Plenary Synopsis 

Chair: Douglas Isles

A group of actuaries look at a range of high profile problems facing society including climate change, generational equality, government policy and even the future of the profession, and ask the question, drawing on one of the profession’s core, but sometimes, overlooked deeply embedded skills, and ask the question “is demographics the answer?”. This should be a thought-provoking session with some high profile, deep thinking panellists.

View Concurrent Synopsis 

Chair: Kirsten Armstrong 

This paper from the COVID-19 Mortality working Group looks at a number of ways COVID-19 mortality has been measured around the world and in Australia by examining various datasets and discussing different statistical techniques observed. We then take a closer look at the mortality experience of Australia during 2020 and 2021, including experience by Cause of Deaths (including COVID-19), by age group, and experience during different COVID-19 waves . And finally, we take a brief look at the impact of COVID-19 on long term illness, based on studies from around the world.    

View Concurrent Synopsis 

Chair: Ryan Boyd

Presenting the results from an international survey and targeted interviews, as well as our own professional experiences, we seek to answer some of the questions we've heard from our fellow actuaries in recent times; did I err in choosing an actuarial career path? What skills do I really need to stay relevant and ahead of automation? Where else should I focus my energy? How can I become more fulfilled?

We examine how actuarial roles are changing, the resulting skill gaps and how we might navigate the threats and opportunities to future-proof our individual career paths.

We also discuss what actuaries really want, including current career satisfaction and skill levels, the additional support and skills required for great actuarial careers, as well as how actuaries can contribute to Corporate Social Responsibility.

Finally, we consider what we can do collectively to maintain the relevance of our profession and ensure a bright future for the next generation of actuaries.

View Concurrent Synopsis 

Chair: Catherine Robertson-Hodder

Insurers worldwide are grappling with the ever increasing pace and volume of data available in many markets.

This includes both the availability of new data fields and the potential use of a wider variety of data sources leading to changes and enhancements to both underwriting and how insurance products are constructed, sold and managed. Automated underwriting and using different (better) rating factors with the potential to accurately track risk and improve mortality and morbidity if optimised, are at the forefront of many of these emerging changes.

This presentation considers the impact and implications of sleep patterns as a new rating factor for life insurance products. Recent developments in sleep science have highlighted that sleep may not only be one of the three pillars of health but the foundation on which the other two pillars, exercise and healthy eating are built. Ultimately impacting all causes of mortality and linkages to dread diseases. Historically, accurate and independent data on sleep patterns were not available. But sleep data is now readily available and reliable with the improvements to the accuracy and cost-effectiveness of modern wearables. This offers insurers access to consistent and reliable data which provides an accurate view on the sleeping patterns of policyholders over time.

Sleep is also one of the easier patterns to improve and could yield significant value in both absolute longevity and the quality of the last years of life if optimised. This combination of biological importance, availability, trackability of data, general scientific consensus on the impact and importance of sleep and the potential benefit to consumers make it one of the most interesting and exciting potential new rating factors to be considered.

Note: As part of our presentation, we will also showcase a software platform that can provide insight to insurers regarding the information captured from wearables to guide their underwriting decisions. We consider the impact that this could have on the underwriter's role and potentially move from a moderator and risk manager to a mentor who simultaneously improves policyholders' health and reduces the cost of claims for the insurer.

View Concurrent Synopsis 

Dr Plana-Ripoll will present a summary of key findings resulting from his research exploring Danish population registry data. His highly regarded and relevant work has been published in The Lancet, The Journal of the American Medical Society, and the New England journal of medicine.

His work and his presentation explores the relationship between:

• Prior mental disorder diagnosis and subsequent increased mortality risk
• Prior mental disorder diagnosis and subsequent increased risk of medical co-morbidity
• Prior mental disorder diagnosis and subsequent increased risk of psychiatric co-morbidity
• Prior mental disorder diagnosis and subsequent impact on disability

This research is unique and highly relevant to life insurance in Australia given the focus on mental health in recent years and the need for the industry to make evidence based decisions.

References relating to above abstract for further detail.

• Exploring Comorbidity Within Mental Disorders Among a Danish National Population.
• Oleguer Plana-Ripoll, Carsten Bøcker Pedersen, Yan Holtz, [...], Preben Bo Mortensen, John J. McGrath
• JAMA Psychiatry
• A comprehensive analysis of mortality-related health metrics associated with mental disorders: a nationwide, register-based cohort study. Oleguer Plana-Ripoll, Carsten Bøcker Pedersen, [...], John J. McGrath, Thomas Laursen
• The Lancet Association between Mental Disorders and Subsequent Medical Conditions. Natalie C. Momen, Oleguer Plana-Ripoll, Esben Agerbo, [...], John J. McGrath
• The New England journal of medicine Changes Over Time in the Differential Mortality Gap in Individuals With Mental Disorders. Plana-Ripoll O, Weye N [...], McGrath JJ
• JAMA Psychiatry Association of Specific Mental Disorders With Premature Mortality in the Danish Population Using Alternative Measurement Methods. Weye N, Momen NC, Christensen MK [...], McGrath JJ, Plana-Ripoll O
• JAMA New Open Comorbidity within mental disorders: a comprehensive analysis based on 145 990 survey respondents from 27 countries. McGrath JJ, Lim CCW, Plana-Ripoll O, [...], Kessler RC, de Jonge P Epidemiol Psychiatr Sci.
• Nature and prevalence of combinations of mental disorders and their association with excess mortality in a population-based cohort study. Plana-Ripoll O, Musliner KL, Dalsgaard S, [...], John J. McGrath
• World Psychiatry Register-based metrics of years lived with disability associated with mental and substance use disorders: a register-based cohort study in Denmark. Weye N, Santomauro DF, Agerbo E, [...], McGrath JJ, Plana-Ripoll O Lancet Psychiatry

View Plenary Synopsis 

The new strategy of the Institute and profession is focussed on Purpose in our Community and Growth. In this plenary, the Presidential Trio and CEO of the Institute look back and celebrate how our Australian profession has served business, government and the wider community over the last 125 years; and the future horizon opportunities for career growth, growing the profession, and the importance of purpose.

• Chair: Mark Samuels
• Annette King
• Naomi Edwards
• David Whittle
• Elayne Grace
  

This session was put together by Organising Committee member Annette King

View Plenary Synopsis 

In this special session we’re giving the job of saving the world to the youngest, brightest actuaries in the business. Each of the panel will have ten minutes to call out the issue of the day – and to solve it. Radical, tongue in cheek and daring, it’s the perfect session for those who want to know what the future will look like – and who’s going to shape it.

This session was put together by Organising Committee member Jeffrey Chan.

View Keynote Synopsis 

Chair: Annette King

Australian of the Year 2022, Dylan Alcott AO, is one of the country's most successful and well recognised Paralympians. In 2021 he became the only male tennis player to win the 'Golden Slam', winning the Australian, French, Wimbledon and US Open Championships, together with his gold medal from the 2020 Tokyo Paralympic Games making him the greatest player in wheelchair tennis history.

And if that's not enough, Dylan was awarded 2022 Victoria Australian of the Year and 2022 Australian of the Year.  He was appointed an Officer of the Order of Australia (AO) in 2022 for distinguished service to paralympic sport, particularly to tennis, and as a role model for people with disability, and to the community through a range of organisations.

View Plenary Synopsis 

Digitalisation and artificial intelligence will transform everything and there is nowhere to hide. In this plenary our experts look to the future and assess the skills – judgement, an ethical grounding, communication and creativity – that will turn this mastery of data into a competitive advantage and social good in the context of the evolving regulatory environment.

• Chair: Elayne Grace, CEO - Actuaries Institute
  
• Dr Catriona Wallace – Artificial Intelligence Expert, Adjunct Professor, Director, Gradient Institute
  • Dr Catriona Wallace’s presentation available live only
• Alison Bliss - General Manager of Data, Analytics and Insights, APRA
• Craig Price – Head of Data Science, & Artificial Intelligence CoE, Suncorp
  

This session was put together by Organising Committee member Vanessa Beenders

View Concurrent Synopsis 

The mutual benefit from sharing data across organisations can be a game-changer for businesses, however serious privacy challenges exist for all stakeholder, and navigating these challenges has historically left significant value in data-sharing uncapturable.

However, emerging Privacy Enhancing Techniques (PETs) are enabling institutions, customers and regulators to share data in a way that helps to achieve a balance between competing opportunities and obligations, allowing for data-sharing that protects the privacy of customers and safeguards the confidentiality of institutions’ business processes. These techniques have the potential to expand the range of feasible data-sharing opportunities, effectively allowing institutions to “see the whole elephant” and unlock new value for themselves, their customers, regulators and societies at large.

This presentation will explore the most popular solutions for sharing key market insights with ecosystem partners without exposing the underlying data providing a new avenue of collaboration and hence, richer insights.

View Concurrent Synopsis 

Many organisations are using AI to make consequential decisions, such as deciding who gets insurance, a loan, or a job. When humans delegate decisions to AI, problems can happen because AI lacks elements often required for good decision making, such as common sense, moral reasoning, and a basic understanding of the law. Many incidents have made it clear that AI has the potential to produce unlawful, immoral, discriminatory outcomes for individuals through opaque and unaccountable decisions. This includes issues such as AI discriminating against women and minorities. What can organisations do to reap the benefits of using AI for decision-making while preventing these issues from happening? This new report provides general guidelines for organisations to reduce the risks of using AI for automated decision making. It explains some novel risks introduced by AI, provides illustrations through case studies, and suggests a range of preventative, detective, and corrective actions to reduce and manage those risks.

View Concurrent Synopsis 

Chair: Jas Singh

The world is warming, fast, and bringing with it a host of negative impacts – intense and unpredictable storms, ice sheet loss, destruction and alteration of natural habitats, biodiversity loss, drastic changes in local temperatures, sea level rise, drought and wildfires. Climate science shows that these effects will become significantly worse if we continue on this path. The insurance industry will have a crucial role to play in mitigating these risks as they intensify.

Our global society, governments, regulators, businesses and financial institutions now recognise the imperative of combatting climate change. Many corporations have responded to societal and regulatory pressure by committing to achieving ‘net zero’ emissions or to ‘decarbonise’ their financed emissions. Whilst non-financial sector businesses have made significant strides over the past year in creating tools and strategies to reduce – or entirely negate – their greenhouse gas (GHG) emissions, the financial sector is on the whole still looking to understand exactly what this will mean for their business models in practice. The pace of change in this area will only accelerate as more and more financial institutions continue to recognise net zero as a strategic imperative.

In the context of net zero, financial institutions differ from other economic sectors: they provide finance and other services like insurance to the companies that are responsible for reducing GHG emissions, rather than exercise direct control over GHG emission reductions. In recognition of the important role of finance in combatting climate change, the Paris Agreement specifically calls for finance flows to be made “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.

Our paper will explore the role of the insurance sector (both Life and General Insurance) as risk managers, insurers and investors in the drive to net zero. Climate change is increasingly considered by insurers in a risk management context, and while some leading insurers and reinsurers in particular through the UN-convened Net-Zero Insurance Alliance (NZIA) have committed to individually transition their underwriting portfolios to net-zero GHG emissions by 2050, consistent with a maximum temperature rise of 1.5 degrees Celsius above pre-industrial levels by 2100, no insurers have released detailed strategies to achieve net zero emissions across:

• internal supply chains
• investment portfolios
• development of products, arrangements and nature-based solutions
• underwriting criteria and guidelines and environmentally sustainable claims management
• integration of decarbonisation-related risk criteria into their risk management frameworks

We will suggest a framework covering both the liability and asset side, with which insurers can work to assist them in meeting their decarbonisation targets. This framework will help insurers understand the footprint of financed emissions, develop net zero ambitions and targets and design and implement the decarbonisation strategy.

As insurers transition to net zero they will need also require a reporting and measurement framework that enables them to show progress against stated goals. We will look at progress of insurers in other jurisdictions and the efforts being driven by regulators (both locally and internationally), through the Task Force of Climate-related Financial Disclosures (TCFD) and the recently established International Sustainability Standards Board (ISSB), with the aim of forming a view as to what might face Australian insurers in the near future, in terms of developing globally consistent sustainability reporting and disclosures.

View Concurrent Synopsis 

Chair: Hugh Miller

Recent years have seen rapid increase in the application of machine learning to insurance loss reserving.

These machine learning methods are hungry for data. While the ultimate objective of these methods is application to real data, the availability of synthetic data is important for at least two reasons: (i) real data sets, especially of granular nature and of large size, are in short supply in the actuarial literature for reasons of confidentiality, (ii) knowledge of the data generating process (impossible with real data) assists with the validation of the strengths and weaknesses of any new methodology.

Against this background, we introduce a simulator of individual claim experience, called SPLICE (Synthetic Paid Loss and Incurred Cost Experience). On a high level, SPLICE consists of a paid loss unit (claim payments) and an incurred loss unit (case estimates). SPLICE simulates individual claims at the transactional level, i.e. key dates associated with a claim (e.g. notification and settlement dates), individual claim payments and revisions of case estimates. An individual claim’s transactions are generated in a manner that is intended to reflect transactional sequences observed in practice.

Our simulator is publicly available, open-source (on CRAN), and fills a gap in the non-life actuarial toolkit.

The simulator specifically allows for desirable (but optionally complicated) data features typically occurring in practice, such as superimposed inflation and various dependencies between claim features. For ease of use, SPLICE comes with a default version that is loosely calibrated against a specific real CTP portfolio and that has a structure suitable for most lines of businesses with some amendments. However, the modular structure of SPLICE ensures that the user has full control of the evolution of an individual claim (occurrence, notification, timing and magnitude of individual partial payments and revisions for case estimates, closure).

Indeed, thanks to this flexibility, SPLICE may be used to generate a collection of data sets that provide a spectrum of complexity. Such a collection may be used to present a model under test with a steadily increasing challenge.

View Concurrent Synopsis

Chair: Stuart Rodger

It is only the concise and accurate measurement of the outcomes of healthcare interactions, that makes it possible to determine the value of healthcare services. Until recently, the PHI market has had to infer the value of benefits from base metrics and proxies like volumes, sentinel events, and fees. These are poor approximations and cannot account for all the nuances that need to be considered to provide a true reflection of the value of healthcare services.

This paper considers the impact and results of a outcomes measurement platform called The Voice of the Patient that has recently been implemented across more than 20 PHI funds. The platform is a market-first initiative that enables measuring, quantifying, and comparing healthcare outcomes across different hospitals, PHI funds and risk groups. The platform articulates patients' perspectives into meaningful data points. These are then combined with cost and clinical information to form a complete picture of healthcare interactions from multiple perspectives.

The findings illustrate how patient-reported data is shedding new light on the performance of hospitals. The data illustrates correlations between patient-reported metrics, clinical and cost information. In this paper we take a closer look at that data and find that the best hospitals are the ones that treat their patients better, and they do not necessarily cost more. The initiative is an exciting step toward better healthcare systems and funding models that support value.

View Concurrent Synopsis

Chair: Hugh Miller 

On the issue of insurance discrimination, a grey area in regulation has resulted from the growing use of big data analytics by insurance companies – direct discrimination is prohibited, but indirect discrimination using proxies or more complex and opaque algorithms can be tolerated without restrictions. Meanwhile, various fairness criteria have been proposed and flourish in the machine learning literature with the rapid growth of artificial intelligence (AI) in the past decade, which generally focus on a classification decision. However, there is little research on insurance applications, particularly on insurance pricing as a regression problem. In this paper, we summarise the fairness criteria that are potentially applicable to insurance pricing, match them with different levels of anti-discrimination regulations, and implement them into a series of existing and newly proposed anti-discrimination insurance pricing models. Our empirical analysis compares the outcome of different models and shows the potential of indirect discrimination.

Keywords: Indirect Discrimination, Fairness, AI, Big Data, Insurance Pricing

View Concurrent Synopsis

Chair: Ramona Meyricke

One of the most direct impacts of climate change is the shift in the frequency and magnitude of extreme weather (“tail”) events and the changing damage incurred on assets and infrastructure. However, measuring the fiscal impacts of physical climate risk – and distinguishing between losses due to climate change and those that may be expected due to natural climate variability – is a non-trivial task.

Catastrophe loss (CAT) models have a huge role to play in this area. CAT models are complex, probabilistic weather risk models that are deeply embedded in re/insurance to help understand natural hazard risk and aggregate portfolio management. CAT models are now becoming “climate-conditioned” meaning they are able to model losses under future climate scenarios.

Here we outline the baseline conditions that a CAT model will determine prior to consideration of climate change, along with presenting results of an analysis using climate-conditioned CAT models on an insurance market portfolio in Australia under low (~ 2-degree) and high (plus-4-degree) warming scenarios.

We show how physical climate risk can be measured in terms of the change in Average Annual Loss and how we can distinguish a climate change signal relative to the stochastic climate variability. This allows us to discuss how regulatory capital for insurers may be affected due to a change in the “1 in 200 year” loss frequency and how results can be used by actuaries and insurance risk professionals to identify risk concentrations and mitigate the financial impact of climate risk.

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Chair: Hannes Boshoff

As advances in technology enable new ways of delivering value, actuaries have the opportunity to lead the transition from traditional excel based models to modern cloud based connected models that unlock the power of advanced analytics. This study walks through a recent implementation in a major PHI business, unpacking the various challenges and opportunities faced. The discussion focuses on the way actuaries can drive business impact using these developing technologies and explores the value delivered in the domains of governance, efficiency and integration.

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Chair: Iris Lun

As 2023 draws near, most insurers are on the final stretch to have their IFRS17 implementation completed. In this presentation, we take a look at how different insurers have gone about their IFRS17 roadmap over the past few years in Asia, which were the success stories, what were the lessons learnt, how challenges were overcome, and what are the key steps remaining. We will also discuss the influence from IFRS17 to the future of transformation with our industry. 

The presentation will cover the early stages of IFRS17 program design back 3-4 years ago when the standards were still being finalized; then moving onto financial impact and business impact analyzes whereby the IFRS17 concepts were first introduced to senior management of insurers; then moving onto defining portfolios in the IFRS17 categories and requirements; before the data, modelling and assumptions setting were in place. Lastly, and where most insurers are still working on, the testing, transition and parallel run phases. We will discuss how actuaries have been involved and interacting with accountants and data technology specialists in all parts of the journey.

The presentation will draw on experiences from different type of insurers: Life Insurance, General Insurance, Reinsurance, whilst also observing multi-national programs whereby insurers have subsidiaries throughout Asia.

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Chair: Genevieve Hayes 

Our daily interaction with Siri, Alexa, Hey-Google, and Bixby, which are Natural language processing (NLP) based automation systems is just another cool feature in our everyday life. Imagine using this cool feature to solve a fundamental problem for a business – preventing churn of customers.

Predicting customer churn is an important consideration for financial service businesses because acquiring new customers often cost more than retaining existing ones. Different customers exhibit different behaviours and preferences and cancel their subscriptions for various reasons. Most of the existing models in the industry use demographic and transactional data of customers, which do not contain a proper reflection of customers’ intentions. In this paper, a customer churn prediction model is developed using Natural Language Processing (NLP) by extracting the feature and patterns available in the unstructured data available against every customer policy. These unstructured data are mostly stored in form of texts, calls, and notes format and thanks to the advancement of NLP technology, these data have now become key information representing the customers’ intention for churn.

The existing commercial NLP models which predict customer intention based on text, are still in their early stage of operation. With the fast emergence of new NLP features, many have become outdated. The model proposed in this paper takes advantage of the latest NLP tools and features to develop a state-of-the-art customer churn prediction model ensuring higher prediction accuracy. The model uses keyword matching to mine expressions of interest and profiles of people corresponding to customer criteria. Using the Natural Language Understanding (NLU), the model performs sentiment analysis which determines if a comment is positive, neutral, or negative. The model also presents customer sentiment in a manner that expresses the intention as an index of similarity against a set of hypotheses. Through this model, companies can analyse the digital footprint of a customers to learn about their needs, opinions, and intentions. With the power of NLP, the customer churn prediction models is more effective and precise than the best performing model available in the market.

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Exchange of information is a critical part of insurance pricing and underwriting. Traditionally, this is in the form of mandatory question sets, which the prospective insured person must answer to a suitable level of reliability before obtaining a quote for cover. In Australia, the Insurance Contracts Act sets out some rules around this, and other analogous systems exist in various other countries around the globe. The traditional manner of data collection had inherent practical limits. Questions had to be easily understood by laypeople, readily answerable by them, and not so extensive as to be off-putting. With the advent of open data regimes around the globe, many of these traditional limitations may be reduced or removed.

By a mere press of a button, consumers may be able to share extensive and unprecedented data with an insurer, in order to automatically and accurately answer detailed questions that they might not necessarily understand or be able to answer if asked directly. In this paper, we analyse whether open data regimes can be used in this manner to replace existing underwriting questions or to create new ones. We then examine the impact that this change may have on various cohorts of customers, particularly considering the potential impact on those without access to data, who may be more likely than average to be otherwise vulnerable or disadvantaged. We suggest thematic areas to consider for further guidance or reform, based on our analysis.

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Chair: Hannes Boshoff

Forecasting the expected utilisation of health services is crucial to planning and pricing within the health sector. Typically, forecasts of expected health service utilisation are estimated by modelling historical data under the assumption that historical trends hold for the forecasting period. However, in the context of large exogenous events such as the COVID-19 pandemic, there have been prolonged periods of disruption to trends in health service utilisation. The pandemic has displaced utilisation that would otherwise have occurred at a different time (displacement by time), and the type of healthcare individuals use (displacement by type). In the case of elective surgeries, service use may have been avoided all together. 

With no precedent of an event of the type or scale of COVID-19 within recent history, novel techniques for forecasting are required. In this presentation, we propose a methodology to monitor the impact of the pandemic on service utilisation and to estimate the distribution of displacement of health service use by time and by cause. We first describe the methodology, then implement it on an exemplar population of hip fracture patients, using mortality displacement as an example.  We describe how the methodology can answer a multitude of questions and estimate the long-term impact of any large-scale events, providing critical information for business planning.

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The quantification of model error is a desirable component in many aspects of actuarial work.

A prominent example is the calculation of risk margins in loss reserving because regulatory standards implicitly require the inclusion of model error. Current risk margin frameworks identify potential risk indicators and utilise the experience and judgement of actuaries to score model error. However, existing methods of quantifying model error do not directly reference and incorporate observed data, resulting in undesirable subjectivity. In this research, we propose a data-driven framework to quantify model error in loss reserving, using generalised linear models (GLM). In practice, GLMs have been adopted due to their tractability and interpretability. The choice of a GLM as the reference benchmark model is then justified by its successful application in a variety of settings. Despite this widespread usage, model error may still be present even within the best fitting GLM. Consequently, our approach focuses on quantifying the risk inherent in the features that are not captured by the chosen benchmark GLM.

Specifically, we propose to quantify model error by deriving a universe of alternative models. Model diversity is achieved in the universe of models by permuting across variants of neural network model structures. The benchmark GLM lies at the core of each neural network model to maximise explainability. Model elimination procedures are used to detect and remove anomalies. This enables the viability of alternative models to be retained.

Finally, Bayesian inference is applied across model forecasts to obtain a risk measure. The risk measure then provides a quantitative assessment of model error, which forms one of the components of forecast error. The model error framework may then be used in conjunction with existing forecast error analyses to support risk margin calculations.

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Chair: Aliza Yau

This presentation will cover a gentle introduction to what is commonly known in the crypto world as “defi”, or decentralised finance, with a deep dive into some of the insurance protocols.

The aim would be to give the wider actuarial community a peek into this new and evolving world, and leave you with some practical tips on how you can start getting involved.

Topics covered:

• 1. Crypto insurance protocols - what problem are they currently trying to solve
• 2. State of the market, and a snapshot of the top 5 insurers in defi
• 3. What do core operations such as effort co-ordination, claims, capital management, product and pricing look like in the decentralised world
• 4. Some practical tips on how you can get involved

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Chair: Adam Stolz

The recent Royal Commission into Aged Care Quality and Safety found that “the current state of Australia’s aged care system is a predictable outcome of measures to limit expenditure and ignore the actual cost of delivering aged care” (Commonwealth of Australia, 2021). The ageing population will cause significant financing sustainability issues in the next 20 years, on top of the budget crisis from COVID-19. This research, for the first time, determines the cost of aged care from a demand-driven perspective. By applying previous actuarial literature in disability transition models, we are able to project the population within different core activity limitations (mild, moderate, severe, and profound). The quantification of aged care costs under different sensitivity assumptions informs policymakers and academia on the risks the aged care financing system will face. If supply constraints are removed, the current financing system is not sustainable, and the cycle of sub-standard care will continue.

This research provides evidence that an aged care levy, a recommendation from Commissioner Pagone which was not accepted (Department of Health, 2021), alleviates the burden on government expenditure and should be investigated as a viable financing option for Australia. Co-contributions, currently applied through meanstested arrangements, are necessary for a sustainable financing system and mitigate intergenerational equity concerns. However, current means-testing arrangements are vertically inequitable, and their indexation causes a loss of purchasing power over time. If future supply of aged care is to be uncapped, private financing mechanisms, for example, private long-term care insurance, annuities, and reverse mortgages, are avenues of funding that ensure public aged care costs do not exceed their projected value.

The interaction of mortality and disability improvements creates the greatest change in future aged care costs. Whether Australia falls into a ‘dynamic equilibrium’ or a ‘compression of morbidity’ is an important concern for policymakers, and future research is needed in analysing disability experience for older Australians. The current supply of aged care, based on the aged care target provision ratio, does not account for changing disability patterns. However, the risk of differing disability improvements is placed on the government expenditure.

If Australia’s aged-care system is to “provide a system of care based on a universal right to high quality, safe and timely support and care” (Commonwealth of Australia, 2021), the current financing system needs to be reformed as it will not be sustainable.

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Chair: Sting Xu 

A case study from the largest NEV market in the world

• Global trend of new energy vehicle (NEV)
• The booming NEV market in China
• What NEV means for motor insurance risk selection
• NEV vs Internal Combustion Engine (ICE) vehicles
• Emerging challenge: risk segmentation for NEV’s
• NEV risk solutions empowered by a wealth of external data
• NEV-specific data attributes
• Exploring the use of telematics data and charging data
• NEV risk score
• NEV risk based pricing model

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Chair: Paul Driessen 

Homelessness is a significant and growing problem in Australia. About 1% of the Australian population accessed homelessness support services in 2019-20, Further, people who are homeless or at risk of homelessness are much more likely to have other vulnerabilities such as low incomes, mental health issues or being victims of family and domestic violence. However, the understanding of how homelessness services fit into the broader picture of support for vulnerable people has been largely unexplored.

Pathways to Homelessness is a research project we carried on behalf of Homelessness Strategy team within the NSW Department of Communities and Justice. To help develop new support and early intervention programs aiming to prevent homelessness they wanted to better understand:

• Key risk factors for homelessness and precursor services accessed, in order to support early identification of groups at higher risk
• The elevated government service use and associated costs following homelessness to inform investment in initiatives.

To provide this understanding we used linked cross-sectoral government data to examine pathways to homelessness. This data is well suited to this task. For many people experiencing homelessness, the experience follows an extended period of financial hardship (which many associated factors like mental illness). This often means they have made heavy use of government support services over the preceding period. This group are potentially well suited to targeting for prevention programs, and linked government service use data provides a very informative lens.

The linked dataset created for this project is one of the most comprehensive datasets related to homelessness in Australia, covering over 625,000 people across 19 NSW and Commonwealth services. The study population is formed using a case and comparison design. The dataset is large enough to be able to meaningfully analyse homelessness risk across the entire NSW population. This is in contrast to existing research which tends to consider small cohorts who all have experiences of homelessness, so there is no ability to provide comparisons to a baseline.

Using this data we carried out a series of analyses:

• Descriptive statistics to understand the key characteristics
• Predictive modelling to identify groups at high risk of homelessness
• Two-way pathway analysis to compare potential intervention points and estimate the elevated costs across government services for people experiencing homelessness
• Additional analysis on vulnerable cohorts.

This presentation will cover the:

• Value of linked government data and the rich picture it can provide.
• The design of analysis to support policy development. Risk-modelling of homelessness translates fairly naturally between an insurance premium setting context. Providing comparisons of intervention points has less history in the actuarial context but is of interest in claims management.
• Analysis undertaken and key results, including providing interpretable results for policy makers.

We expect the full research report to be publicly released in the next couple of months, which will serve as the paper for our talk.

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Chair: Aliza Yau

Climate risk poses major risks and opportunities for organisations in Australia. The complex interdependencies and cascading impacts of climate are already driving changes across social, economic, and political dimensions to which the full extent remains unknown and somewhat chaotic. These changes will challenge almost every aspect of how firms do business, setting apart winners and losers in a low emission world.

General insurers, however, are no stranger to disruptive events, having emerged from events such as world wars, inflation of the 1970s, the dot-com crash of 2001, 9/11, the rise of the internet, and the current global pandemic. While the impact of climate change could be much more severe and disruptive than many of the ones cited above, these events have demonstrated the remarkable capacity the industry has to adjust to unforeseen risks through mitigation, adaptation, new technologies, and improved risk management.

For the climate-ready insurer, climate risk is embedded in decision-making at all levels of the organisation, with existing systems continuously challenged for their resilience and applicability to the evolving external environment. Climate positioning and strategic vision are driven by leaders who have a holistic view of the organisation’s relationship with climate while individual business units leverage their understanding of products and services to conduct and communicate the outcomes of detailed risk and opportunity assessments.

In this session, we will dive deeper into the operating model of a climate-ready insurer. We will discuss practical ways senior management can take to leverage existing risk management capabilities to embed climate risk in their organisation, helping them map their path to success in a decarbonised world.

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Our presentation will provide an overview of the Consumer Data Right (CDR) regime in Australia, its applications and the roles for actuaries. CDR is being rolled out starting with the banking industry under the banner of Open Banking. Our presentation covers:

• Introduction and current state of CDR in Australia: This covers principles of open data, legislative and technological requirements, overseas experience in introducing open data, and the current status in Australia within banking.
• Applications of open data: Currently there are several areas within banking affected by CDR, such as, credit application and underwriting, pricing, customer value and retention, risk and compliance. The presentation will also cover related applications such as delivering personal advice and in superannuation. In time, CDR will also be rolled out to other industries including energy and insurance.
• Actuarial involvement: Actuaries have an opportunity to contribute across technical, commercial and regulatory domains. CDR will impact strategy, product design, pricing, risk and capital management. Actuaries through their strong quantitative background as well as training in long term financial management are well placed to support financial services institutions with CDR.

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Chair: Mudit Gupta 

Retail insurance pricing has been a prolonged and complex process involving many technical and practical considerations. The rapid market changes require insurers to not only have an established framework to conduct pricing reviews, but also the capabilities to translate data into market pricing responses in an accurate and efficient manner. One particular challenge faced by the insurers is how to deal with data from most recent period. The latest experience may include valuable insights into emerging market trends yet is often underdeveloped. Another challenge is the GBM modelling results are not directly implementable since the rating engine can only accommodate the GLM-like rating tables.

In this paper, we propose an intelligent pricing approach to better utilizing machine learning models to improve insurers’ pricing capabilities, which could be well integrated into insurers’ existing pricing algorithms. The approach aims to overcome the previously highlighted two challenges and to enable an efficient risk modelling and pricing delivery process, by directly leveraging the machine learning modelling results. A case study is presented to demonstrate the viability and highlight the advantages of the intelligent pricing approach using actual insurance claim data. The accuracy and efficiency nature of the pricing solution is expected to largely boost insurers’ pricing capabilities under rapid changing market conditions.

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Chair: Hadyn Bernau

PHI funds have increased their focus on prevention and risk management through health support programs. There is international evidence that well-crafted programs can reduce costs and improve patient outcomes. However, it is often difficult to measure the benefit of these programs in absolute terms and determine if they are generating savings in excess of program costs. These programs are often designed from a clinical perspective and not for direct measurement of monetary outcomes.

This paper considers the results of a specific quantitative evaluation method that has been used to evaluate health support and intervention programs. The methodology considers particular aspects of each program and provides a framework that can be used to measure and track the efficacy of program interactions. The methods also enable suggestions on program alterations and improvements to increase the program ROI.

This methodology has been applied to a range of health intervention programs in both local and international markets. There are generally wide ranges in program effectiveness and value. The results emphasize that measurement is a first and necessary step to improving. It is further found that programs that actively seek to measure and track performance often have better outcomes.

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Loss reserving typically focuses on identifying a single model that can generate superior predictive performance. However, different loss reserving models specialize in capturing various aspects of loss data. In practice, results from different models are typically at least considered and sometimes combined. For instance, actuaries may take a weighted average of the prediction outcomes from various loss reserving models, often based on subjective assessments. However, such methods have typically been based on ad-hoc rules. This is further complicated in situations where the full distribution of claims (as opposed to just the mean) is of interest.

In this talk, we propose a framework to combine (i.e., ensemble) multiple loss reserving models such that the strengths offered by different models can be utilised effectively. The framework is tailored to account for features of reserving data, such as the presence of accident, development, calendar, and claim maturity effects.

There are two advantages to this proposed approach. Firstly, by letting the data decide the weights, this new approach reduces the amount of manual adjustment required by the actuary, particularly in cases where a new experience has emerged. Secondly, the optimisation procedure allows us to make maximum use of the strengths offered by different models to enhance the ensemble’s predictive performance over the whole distribution of claims.

We illustrate our approach by applying the ensemble modeling framework to a highly complex synthetic dataset, where the resulting optimised ensemble is shown to outperform both (i) traditional model selection strategies and (ii) an equally weighted ensemble. In particular, this outperformance occurs at both the central estimate and the 75th percentile of reserves, which are of interest to both insurers and regulators.

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“When you come out of the storm, you won’t be the same person who walked in.” (Murakami)

In this session, we look forward from the events over recent years, and using this real life experience, explore how we can improve our preparation for dealing with disasters. We speak to leaders across a number of Actuarial practice areas on their perspective of projections and preparation, how individuals and institutions have been able to bounce back, and strategies to ensure we emerge more resilient and stronger and better prepared.

• Chair: Suzanne Patten
• Andrew Matthews – Principal, Finity
• Brett Ward – Chief Actuary, IAG
• Nghiep Luu – GM Data Analytics & Optimisation, AIA

This session was organised by Organising Committee member Suzanne Patten