Events & Publications

Our Ezra Penland team had the opportunity to participate in the IABA: International Association of Black Actuaries Annual Meeting. Our Actuarial Recruiters, Cecilia Grisolia and Richard Hesky, attended the meeting and learned about industry trends and networking while exploring Philadelphia.

IABA Session Insights

While attending the meeting, they gained many valuable insights, including Generative AI, Auto Trends, Irrational actuaries, and changes in the Climate and the Housing market.

Generative AI’s Role in Actuarial Evolution

The advent of generative AI has ushered in a new era of content creation, capable of autonomously producing text, videos, images, and audio. This innovation contrasts with traditional AI, highlighting significant employment effects, including opportunities and challenges. On the one hand, generative AI can streamline processes by efficiently handling level-one tasks, freeing up time for professionals, such as actuaries, to focus on high-level tasks and complex analyses. On the other hand, there are notable downfalls to consider, such as over-reliance, which can lead to gaps in the workforce, issues of hallucination, intellectual property concerns, inherent biases, and the potential for malicious uses like deepfakes. Despite these challenges, the current state of AI still requires a human element to brainstorm, test, and refine outputs through effective context and prompting, particularly in data and code creation. To navigate these waters effectively, it’s crucial to engage in ongoing practice, communicate with business partners about the risks and rewards, and advocate for responsible AI practices.

Auto Trends

In the post-COVID world, private passenger and commercial auto sectors have undergone significant transformations, prompting a deeper exploration of evolving trends. Notably, loss ratios have deteriorated, primarily driven by an overcorrection that led to an increased frequency of claims. Severity has also risen, with the amount per claim escalating, and there has been a concerning rise in fatalities. This scenario has necessitated reserve strengthening and led to inevitable rate increases. Several factors contribute to these changes, including reckless driving, speeding, and car types and size variations. Social inflation has also impacted commercial auto, further complicating the landscape. Additional considerations include the roles of uninsured and underinsured motorists, auto physical damage, and the increasing influence of artificial intelligence in managing these challenges.

The Value of Annuities

Annuities offer significant emotional and behavioral value, giving retirees the confidence to spend their money without fear of outliving their savings. The guarantee that an annuity provides can alleviate the stress of financial uncertainty in retirement. Interestingly, only 4% of retirees are concerned with leaving a large inheritance, yet many still worry about depleting their nest egg. This dynamic suggests that annuities will likely continue to grow in popularity, as they effectively address retirees’ need for financial security and peace of mind.

Effective Relationships Between Actuaries & Non-Actuaries

A survey reveals that 70% of company mistakes are attributed to poor communication, highlighting the critical need for effective communication between actuaries and non-actuaries. Good communication not only solves problems but also enhances company culture and fosters collaboration. To improve communication, it’s important to ask for input, request feedback, encourage diverse viewpoints, allow time for brainstorming, and manage time efficiently. These practices can bridge gaps and create a more cohesive and productive work environment.

Irrational Actuary

Decision-making pitfalls pose significant challenges for actuaries, underscoring the importance of refining their processes. Biases, such as anchoring, framing, availability, status quo, and optimism, can greatly influence the magnitude of decisions. Meanwhile, noise—encompassing level and occasion variability—adds another layer of complexity. The Good Judgment Project and its Super Forecasters demonstrate the potential of rigorous forecasting methodologies. Actuaries can benefit from best practices that include independent reviews and embracing disagreement, thinking in terms of probabilities rather than certainties, breaking down complex problems into simpler components, applying Bayesian thinking, and continuously reviewing results and processes for improvement. This refined approach to decision-making highlights the dynamic between algorithms and humans, as seen in Google’s hiring process, where both play crucial roles.

Climate/Housing Market

The increasing frequency and severity of severe weather events such as hurricanes, floods, ice/hailstorms, and wildfires are driving up the associated costs and profoundly impacting homeowners and policyholders. This destruction of property leads to higher insurance costs and contributes to financial instability for affected individuals. In response, insurers are raising premiums and sometimes limiting coverage, although there have been positive developments in modeling these risks. Some insurers act as insurers of last resort, highlighting government entities’ critical importance and responsibilities in managing these crises. Homeowners can mitigate risks by avoiding purchases in peril-prone areas identified on flood maps, opting for home inspections, and retrofitting homes for greater resilience. Insurers also face challenges in adhering to net-zero policies and must collaborate with regulators to facilitate additional policies. These issues are not isolated; they reflect broader global trends in frequency and severity linked to climate change, impacting everyone.

In addition to the meeting sessions, Cecilia and Richard participated in the ‘Ready, Set, Walk’ event at Love Park. Over lunch, they listened to the IABA’s new Executive Director, Jeffrey Brown, share his vision for the organization and later heard from IABA President-elect Stephen Abrokwah, Ph.D., FSA, CERA, MAAA.

Before attending the IABA meeting, Cecilia and Richard participated in a roundtable discussion at the Casualty Actuarial Society & Society of Actuaries JCIED event, also held in Philadelphia. Seeing the engagement and passion around Diversity, Equity, and Inclusion initiatives in the workplace was inspiring.

We’ve shared just a glimpse of the insights and knowledge gained during the meeting, so if you would like to learn even more, please contact Ezra Penland if you’d like to connect with Cecilia or Richard.