While the prospect of radically reimagining the insurance industry is an enticing one - there’s one particular key role that we believe is extremely valuable for any insurtech to bring along for the revolution. There’s great opportunity for new entrants to vastly alter the customer experience and business model of a traditional insurer, but the fundamentals of pricing and risk remain core - making the actuary a continued great asset.
Within legacy insurance carriers, actuaries are often pigeon-holed into pricing and modelling risk - and for such a well salaried and highly employed profession, many of their colleagues outside the actuarial team don’t even fully understand what it is they actually do.
At Montoux, we boast a growing team of highly skilled, treasured actuaries - almost a third of all our staff come from actuarial backgrounds, including our co-founder and global CEO, Klaas Stijnen. Despite being our colleagues and friends, what actuaries really do can be one of the trickiest things for new Montouxvians from other backgrounds to wrap their heads around. North America CEO Geoff Keast has described actuaries as ‘wizards’, and says it has taken him time and a lot of conversations with our lead actuary Ben Tran to develop a deeper understanding of their expertise.
We believe actuaries hold a broader set of skills than many give them credit for, and these can be applied to many aspects of an insurance business - whether a traditional carrier, or the new tech kid on the block. When American Family Chief Actuary Prakash Shimpi sat down for a conversation with Geoff recently, he said actuaries are excellent problem solvers. "The base skill set of an actuary is highly analytical - if you have a problem that requires critical thinking, an actuary should be able to just as well, maybe better than, most people."
Actuaries have a deep understanding of insurance
In an insurtech, often the founders may be well versed in building tech companies and even disrupting other industries - but it’s unlikely they have encountered one with such legacy and tradition as insurance. It’s not only the industry that has remained largely unchanged for hundreds of years, but often the actual companies themselves. At Montoux we’re really excited by the new players entering the game with truly innovative ideas but, at least for now, these new companies are still required to fit within the regulatory framework of the insurance industry - and an actuary can be a huge help to navigate this. Insurance can be a complicated web of compliance regulations - often differing significantly between each market. No one understands how an insurance company operates financially better than their actuaries.
Actuaries are dedicated learners
Actuaries undergo exams over many years to become fully qualified, and are required to continue their education while working. An actuary is used to constantly learning and growing their knowledge base even well into their professional career, making them less susceptible to becoming stuck in their ways and far more likely to be excited about the prospect of change and evolution - which is obviously well suited for the insurtech startup.
Actuaries are data translators and excellent communicators
Actuaries are highly mathematical, with a deep focused understanding of data analysis and modelling. However outside their actuarial team at an insurance company, many of the colleagues they are interacting with and reporting to are business-focused executives. One McKinsey report showed only 18% of surveyed companies believed they could gather and use data insights effectively, so achieving effective communication from an early stage is a significant advantage.
Actuaries are looking for new challenges and can afford to take a risk
A common theme we see from talking to both our own actuaries, and those working for other insurtechs, is that they were passionate about the industry they were working in during their time at larger carriers, but were looking for a greater challenge and often more autonomy.
During a recent interview with Geoff, Blueprint Income’s Lauren Minches said she took a ‘calculated risk’ in leaving her position as a Senior Actuarial Associate at New York Life to join a young company, saying she figured she had nothing to lose and everything to gain. Lauren wanted to take on a new challenge, and said “I had already achieved what someone would call ‘success’ there, people were happy with my performance, and I had the feeling that I wanted to be somewhere where people weren’t necessarily happy with my performance.”
Haven Life Actuarial Lead Matt Wolf has a similar perspective, and said he was drawn to the smaller MassMutual subsidiary because of the opportunity it gave him to initiate new ideas and drive innovation that really benefits the customer. “You’re not stuck with the legacy way of doing things, and you can build things from scratch and do it the ‘better way’.”
Actuaries’ skills are highly valued, providing them excellent job security and consistently naming the profession at the top of employment figures, so in Lauren’s eyes it was worth taking the risk of moving to an early stage company, because she saw the worst case scenario as going back to her previous position so seemed ‘pretty reasonable’.
Lauren also believes actuaries’ deep understanding and appreciation of risk is a huge benefit to a startup itself. During their conversation, Lauren told Geoff, “‘Risk’ is really what differentiates our approach at Blueprint Income from most other financial software or financial startup approaches, in that we're really focused on reducing the downside - for someone who could run out of money if they don't think about it the way we do.”