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Actuarial Post: Honey I’m still free take a chance on me

Actuarial Post: Honey I’m still free take a chance on me

By Tom Murray, Head of Product Strategy, Exaxe.

ABBA’s 1970s hit “Take a chance on me” has enjoyed a recent revival based on the success of the musical “Mama Mia”. While the musical is light and fluffy, designed to give a blast of nostalgia to those now racing towards their fifties, as ever the lyrics of Bjorn and Benny have more depth than they are generally given credit for.

This lyric in particular could be the anthem for spreadsheets; software freely available to all actuaries within an organisation and straightforward to use in comparison to getting more complex systems in, the type of systems that would enforce discipline and process into any organisation. It certainly makes it easier for any particular project to avoid the installation of good software modelling engines in order to ensure the solvency, not to mention profitability, of the firm. The lure of a short-term, low-cost solution is also prevalent in the individual policy management – spreadsheets allow an immediate gung-ho approach to the project – let’s just do it. This might sound cool and modern but when it comes to financial services and solvency, as opposed to tablets and smartphones, this is not an intelligent approach for a company operating in the financial sector.

The trouble is that operating procedures that are defined and auditable requires something more than the garage approach of the hi-tech consumer companies. Too much is at stake for both the consumer and the provider company itself. Poorly vetted products have brought down life and pension companies before and will do it again if product development gets their job wrong.

Actuarial departments within life and pension companies are the heart of the organisation. There the research and testing is carried out that will influence the key corporate decisions about products; decisions that will fundamentally influence the profitability and therefore the longevity of the firm. Yet, surprisingly, it is the actuarial department that is generally the most free-form in its approach to its work. Over the years, systems that would appear to restrict creativity by imposing controls were resisted and the department remained a low-cost, lightly computerised area within organisations that otherwise would have enforced processes and procedures that were highly auditable...

Read the full article in the Actuarial Post: Actuarial Post - Edition 27

Actuarial Post is an online publication offering actuaries insight into the market, an extensive library, news and the latest job listings. With a dedicated comment section; the most talked about topics in the actuarial market are discussed by actuaries dealing with the issues on a daily basis. Articles focus on the latest trends changes in regulation and the areas of pensions, investment, life and insurance.

Interested in an annuities administration solution? Income Plus is a highly flexible, scalable, web-based policy administration solution for the Pensions, Annuities and Wealth Management sectors supporting wealth decumulation and at-retirement products (e.g. Annuities, Income Drawdown, etc.). Find out more about this Exaxe product here: http://www.exaxe.com/incomeplus/
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