Lewis Fogden - Actuary, Scottish Widows

Lewis Fogden - Actuary, Scottish Widows

How long have you worked as an actuary?

I did a university degree in actuarial mathematics, mostly because I couldn’t decide between going into computing or maths. I’ve been qualified for about 8 years, and took a bit of a roundabout way to get to where I am (via working in a coffee shop at one stage!), but I’m grateful for where I’ve ended up.

Which markets have you worked in as an actuary?

I’ve been at Scottish Widows since 2003, so I’ve really only worked in the life insurance sector. Within life, I’ve focussed on pricing, valuation, and strategic transformation. This helped give me a better understanding of the different customers and stakeholders you ultimately deal and work with as an actuary.

What do you see as key characteristics of innovative actuaries?

I think it’s a combination of curiosity and challenging sacred cows. Being curious about things is important for the profession to ensure we remain relevant.  I believe you can’t just be an actuary and sit and do the same things all day long, you have to look at what’s coming up on the horizon and what’s available to help you do your job better and drive more insight. I think a lot of it is looking at what others outside the profession are doing. In the pricing capacity, it’s about how you can compete and outperform your competitors, so there’s some healthy competition around which is a driver of innovation.

Then there’s challenging sacred cows, which is to say that just because we do it this way doesn’t mean it has to be done this way. That’s sometimes quite tricky because there’s very well defined processes and some people are comfortable with the way they’ve always done things. So challenging this has the potential to add value, but is quite tough to get through because people are resistant to change. It’s important to take people on the journey with you.

What are some key ways you see the actuarial profession evolving in the next few years?

I don’t know whether it will evolve that much, it’s a tricky one. I view us more as a hybrid profession, borrowing the useful ideas from other disciplines. I think we’ll see more of this because there’s a lot of visible opportunity, particularly from areas like data science, software development, and machine learning. They’ve been in the toolkit for a while, but not at the forefront, and there’s an awful lot we can learn. Really learning these tools, incorporating them, and simplifying them is where we’re going to see real growth.

Do you see teams becoming more interdisciplinary and more collaborative?

Certainly that’s already the case in some companies, including my own. There are software developers integrated with actuaries and data engineers to create interdisciplinary teams, working in partnership. This means that if you don’t know something you have an expert by your side that does, and you jointly know what your use case is when you’re finding your solutions. So I think this is already in place in some areas, and then there are areas where it’s less common. It also depends on urgency. When Solvency II came along it drove a lot of companies to begin thinking and working this way just to deal with the calculations and the volume of data.

Despite there being significant collaborative potential between data science and actuarial science, the two don’t always mesh in insurance. What are your thoughts on the intersection between these two fields?

I think there’s a lot of synergy as far as the toolkit goes, which I would say is very useful because a lot of companies, not just insurers, are seeing data science as a big thing. They feel they need to start being able to conduct those kinds of analysis - but they’re not always sure what that analysis is. So that’s quite useful because it’s opened up many of these ideas of actuaries and given us opportunities to use them.

In the past it would sometimes be a case of ‘well, we’ve got this modelling tool that’s proprietary that we use or we’ve got Excel, so that’s what we’re going to use.’ Now, we can say ‘well, we’ve got these people in the company doing things this way, why don’t we go and try that out.’

There is an intersection, I suppose, between the two professions. There’s many places where they overlap, but also many where they don’t really. Clearly there are certain questions you can answer through data science models as well as actuarial models, but there’s a lot of areas where it’s more about judgment and assumptions and making sure those assumptions are appropriate. These concepts aren’t necessarily a part of the data science mindset, at least at the moment. 

What makes innovation impactful?

The first question is who is it impacting - is it impacting shareholders and shareholder value? Is it for customers and driving value for them? I think the best innovations are when there are wins for both simultaneously, which can honestly be quite tricky to do and get right.

In terms of the shareholder side, a lot of it is simplification, which innovation often is. It’s about making things easier to understand. You can certainly create something complex that’s innovative, but usually the innovation is actually the simplification itself and making your stakeholders and senior management understand and believe in it too. In some ways, selling the innovation is what makes it impactful.

As actuaries, I think we need to be mindful when innovating, perhaps more so than in some other areas. We have long term implications to consider and a responsibility to protect our customers as well. Innovation is very important, but not more so than maintaining this balance between moving things forward and considering longer term implications.

What’s one of the most interesting and innovative projects you’ve been able to work on as an actuary?

There’s been a few, and the most recent one is price optimization. Possibly because it’s been a chance to really think about things from first principles and really work through what the problem is. It’s interesting because there’s quite a tangible target at the end of it, including increasing our sales, improving our income, and more. Coming up with a model that works to explain how you would do this and then running through different scenarios has been an innovative experience.

What advice would you give someone considering an actuarial career today?

I think really it would be getting the basics right, which is just maths and English. Make sure you understand math, communication, writing, etc. With those two, you can almost do anything, so really make sure you’ve got those nailed down. After that, find things that interest you, and try and incorporate them into your career, because that’s what will keep you going and give you the opportunities as well.  Don’t be afraid to be a geek sometimes.

The other side is learn how to communicate your opinions professionally and carefully. You will inevitably disagree with people, so learning how to communicate and disagree in a constructive manner is important