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How ‘Analytics as a Service’ can benefit the actuarial world

By COO, Martin Sher

What is analytics as a service?

Over the last number of years, adoption of cloud based “as a Service” offerings such as ‘Software-as-a-Service’ and ‘Platform-as-a-Service’ by insurers has increased significantly. This includes email, data storage, administration systems and many other IT solutions.

The commonality of “as a service” offerings are that they are developed, maintained and hosted online by the vendor, charged for on a subscription usage basis and accessed via a web-browser. This is in contrast to licensed on-premise solutions with associated infrastructure, system integration and IT support costs borne by the insurer.

As cloud computing has matured these “as a Service” offerings have now evolved to include “Analytics as a Service” that covers the end-to-end capabilities of an analytical solution, from data acquisition to end-user visualization, reporting and interaction. (Jayaraman et al, 2016).

This “as a Service” approach to using technology can bring significant benefits in terms of:

  • Speed – the service is available instantly (or at least very quickly).
  • Cost – Low subscription fee instead of making large upfront expenditure on software and hardware coupled with the opportunity to cancel the fees when the service is no longer needed.
  • Flexibility – the amount of user licences and infrastructure usage can be increased or decreased.
  • Maintenance – upgrades and resolving issues are undertaken by the vendor. (Crane, 2020).

According to DSX Hub “This type of (analytics as a service) solution allows companies to access data analysis without having to develop in-house technology, which can reduce costs and reap the benefits more quickly.” (DSX Hub, 2020).

Actuarial “Analytics as Service” – an opportunity to create efficiencies

One area of life insurance IT that has largely retained the historic “licensed desktop on-premise” model is actuarial modelling software. Under this model insurers pay an upfront and annual license fee, actuaries develop and maintain their own actuarial models and run the models either on their own infrastructure or on one acquired from a cloud provider.

At their core these solutions are programming environments in which each client’s models are unique and divergent from any “samples” provided by the vendor.  Any updates to, for example, allow for new regulations or modelling approaches, are the responsibility of the client modelling team. This often leads to large in-house actuarial teams being effectively software development and model processing teams rather than being focused on providing actuarial insights and interpretations of the results.

Further, the need for inhouse teams to develop and maintain the models as well as host and run the models often leads to resourcing constraints. This has a knock on effect in terms of business responsiveness to regulatory and methodological enhancements, additional investigations, product development and general producing of timely management information.  All of which are needed to assist with the strategic governance of the company.

In the face of these bottlenecks, a plethora of “out of model” spreadsheets and other solutions have evolved as well as an increased usage of external contractors and consultants.

The Zenith Solution

Recognising, when we started to develop our actuarial modelling solution to support our outsourced consulting services across a range of clients, that we at Zenith would face similar challenges should we adopt the traditional actuarial modelling technology approach, we have developed and adopted a cloud first actuarial “Analytics as a Service” model.

Our Portal is a single model across all our clients which has been written for and optimised for cloud computing. The model covers all liability product and asset instrument types, has built in Solvency II stresses and analysis of change, as well as a flexible data, product configuration, assumption setting and reporting capabilities to allow for client specifics. Following best IT practices these models have full version control, unit and regression tests and adopt QA standards that would be expected of any corporate IT solutions.

Meaningful analysis in record times

The “maths” is fully integrated with enterprise scalable data and results preparation and storage, workflow and reporting. Rather than having to build and maintain models and infrastructure our users (internal and external) can focus on “Subscribe, Configure and Visualise” with the objective of being able to produce meaningful results within 30 minutes. This may be a full valuation or, for example, an “out the box” product development environment to supplement and existing actuarial modelling solution.

This is coupled with our team of experienced consultants to provide an integrated “people + technology” actuarial “Analytics as a Service” offering either on a fully outsourced or co-sourced solution.

The benefits clients gain from utilising the Zenith Portal

Besides the direct cost (technology and people) benefits that this pre-built hosted solution offers, the Portal also offers a number of additional benefits such as:

  • Increased frequency and timeliness of results including monthly valuations with full analysis of change,
  • Usage of same and consistent model, data feeds, model configurations and assumptions for product development and pricing, valuation and financial reporting, business planning and ORSA, bonus investigations, investment portfolio optimisation and many other actuarial investigations,
  • Reduced audit and compliance costs via the reduce costs of client specific model audit and review,
  • As an integration data validation and warehousing, workflow, processing infrastructure and reporting solution, no need for separate licensed solutions and bespoke system integrations,
  • Ability to move blocks of business internally or between insurers “instantaneously” via the transfer of data, configuration and assumptions files between parties.
  • Standard modern technology interfaces allowing for seamless integration within a company’s wider IT and MI eco-system

Leveraging the Portal in Strategic Decision Making

As with all technology we are continuously enhancing our Portal. Given the breadth and depth of our analytics, our current focus is on bringing the actuarial analysis into the strategic decision making of our clients. This is via a suite of “business applications” and dashboards that allow business users to directly interact with the results and drill down into the results and perform “what if” adjustments to base results. Such business applications include projected year-end capital forecasts, regular business plan updates, investment portfolio optimisations, experience investigations and many other actuarial investigations.

To find out more as to how our technology offerings can drive strategic and cost benefits to your organisation and be seamlessly adopted, please contact me. 

References:

Crane, P. (2020, August 3). What is Analytics as a Service – and what are the benefits? [Blog post]. Retrieved from https://www.augmentedinsights.co.uk/what-is-analytics-as-a-service-and-what-are-the-benefits/?cn-reloaded=1

DSX Hub . (2020, October 5). Analytics as a Service: What is data analysis as a service? [Blog post]. Retrieved from https://www.dsxhub.org/analytics-as-a-service-what-is-data-analysis-as-a-service/

Jayaraman, Perera, C., Georgakopoulos, D., Dustdar, S., Thakker, D., & Ranjan, R. (2017). Analytics-as-a-service in a multi-cloud environment through semantically-enabled hierarchical data processing: ANALYTICS-AS-A-SERVICE. Software, Practice & Experience, 47(8), 1139–1156. https://doi.org/10.1002/spe.2432