Will AI Replace Actuaries? What The Future Holds

As artificial intelligence continues to advance, the question of whether it will replace actuaries has become a hot topic. Actuaries have traditionally relied on their expertise and experience to analyze risk and make predictions for the future. 

However, AI is proving to be increasingly adept at handling these tasks, leading many to wonder if the days of human actuaries are numbered. 

We’ll explore AI’s potential impact and probability on the actuarial profession and consider what skills we should learn in the future.

Will Ai Replace Actuaries?

While AI has the potential to automate certain aspects of the actuarial profession, it is not likely to completely replace actuaries. Actuaries bring a unique combination of skills, including advanced mathematical and statistical knowledge, risk analysis expertise, and business acumen, that are difficult to replicate with AI alone.

AI can certainly assist actuaries by streamlining calculations, analyzing large sets of data, and identifying patterns and trends.

It can help actuaries make more informed decisions and improve the efficiency of their work.

However, actuaries also play a critical role in interpreting and applying the results generated by AI algorithms.

They provide the necessary context, assess the quality and reliability of the data, and make subjective

Probability of Actuary’s Job Displacement by AI

AI in the Insurance Industry, Including the Actuarial Field

AI is increasingly used in the insurance industry, where actuaries are employed.

AI is transforming insurance companies’ operations, from natural language processing and chatbots for claims resolution to big data and algorithms in the actuarial back office.

However, this does not necessarily mean that AI will displace actuaries.

Instead, AI will likely be used to augment and improve the work of actuaries rather than replace them entirely.

Actuaries Have a High Median Wage

The website willrobotstakemyjob.com reports that actuaries have a median annual wage of $105,900, which is 131.4% higher than the national median wage.

This suggests that the actuary profession is relatively secure and valuable, which could make it less susceptible to job displacement by AI.

Predictions of AI Job Losses Vary Widely

An article from the American Action Forum explores various predictions of job losses due to AI.

The article provides a table of occupations with the highest predicted probability of job loss, but actuaries are not listed among them.

However, it is important to note that predictions of AI job losses vary widely and are often uncertain.

Actuaries Have Unique Skills that AI Cannot Replicate.

An article from AR.CASACT.ORG argues that actuaries have unique skills that AI cannot replicate.

Actuaries use statistical decision-making that incorporates probability, which is a complex and nuanced skill that AI may struggle to emulate.

Additionally, actuaries work in a field that requires ethical considerations and human judgment, which may be difficult for AI to replicate.

Actuaries are Still in Demand Despite Automation

An article from smithhanley.com reports that the number of actuaries has continued to grow despite the automation of some actuarial tasks.

This suggests that actuaries are still in demand and that their skills are valuable to the industry.

The Probability of Job Displacement Varies by Country and Occupation

An article from the World Economic Forum reports that the probability of job displacement due to AI varies by country and occupation. 

The article estimates that only around 20% of existing UK jobs may actually be displaced by AI and related technologies over the 20 years to 2037. However, actuaries are not specifically mentioned in this article.

Some Jobs Have a High Probability of Automation

The website zippia.com reports that about 47% of total employment in the US is at risk of computerization, and workers have a high probability of seeing their jobs automated over the next 20 years.

However, actuaries are not listed among the jobs with a high probability of automation in this article.

AI is Already Affecting the Actuary Profession

An article from The Actuary Magazine reports that AI is already affecting the actuary profession.

Big data, predictive analytics, machine learning, and AI all contribute to the actuarial field’s development. 

The Impact of AI on the Future of Actuaries

AI and Actuarial Analytics

One way AI impacts the actuarial profession is by enhancing the role of actuarial analytics.

With the help of AI, actuaries can now process large amounts of data quickly and accurately, allowing them to identify and analyze risks more effectively.

This, in turn, helps organizations to make better decisions and improve their risk management strategies.

AI and Data Management

Another area where AI has a significant impact on the future of actuaries is data management.

AI can help actuaries streamline their data management processes making it easier to collect, process, and analyze large amounts of data.

This not only improves the accuracy of their work but also frees up more time for them to focus on strategic initiatives.

AI and Efficiency

AI is also helping to improve the efficiency of actuarial work.

By automating repetitive tasks and processes, actuaries can focus on more complex work that requires their expertise.

This improves job quality and efficiency, saving time and resources.

AI and Business Strategy

One of the most significant impacts of AI on the future of actuaries is its ability to help actuaries become more strategic in their roles.

With the help of AI, actuaries can now provide key insights and recommendations to business leaders, helping them to make better decisions and improve their overall strategy. 

This enhances the value of the actuary’s role within an organization and helps drive business growth and success.

AI and the Actuarial Profession

As AI continues to evolve, the actuary’s role is also evolving. Rather than just “crunching numbers,” actuaries are now becoming more strategic, providing key insights and recommendations to business leaders.

This enhances the value of the actuary’s role within an organization and opens up new opportunities for actuaries to grow and develop their careers.

How Can Actuaries Adapt To The Rise Of Ai?

Understanding AI’s role in insurance

Artificial intelligence has been increasingly used in the insurance industry to process and analyze large amounts of data.

As an actuary, you must understand how AI works within the insurance context and what it means when assumptions are unmet.

AI insurance models rely on real-world events, matching risk data points to claims data points across the largest training set available, which is the recorded history up to the present. 

By understanding how AI is used in insurance, you can better analyze data and provide insights to help mitigate risks.

Incorporating machine learning and deep learning

AI uses machine learning and deep learning most often. Actuaries can benefit from applying these techniques by using them to analyze and understand complex data.

By incorporating these new techniques and methodologies, actuaries can enhance their ability to predict risks and outcomes.

Adapting to the education process

The education process to become a fully qualified actuary takes 6-10 years, and it is well-suited for machine learning algorithms of artificial intelligence (AI). 

As a result, actuaries need to adapt to the changing landscape and incorporate these new techniques into their education and training.

Focus on analysis, less on data management.

Actuaries are expensive professionals, and by automating data management, they can spend more time providing insights into data analysis.

Automation technologies such as robotic process automation (RPA) can help actuaries to streamline their data management processes, freeing up more time for analysis.

Accelerating automation

According to a recent survey, life and property and casualty (P&C), insurers are set to accelerate their use of automation over the next five years.

This means that Actuaries will need to adapt to these changes and incorporate automation into their work processes to remain relevant.

Changing mindset for sustainability

Actuaries can play a role in delivering a better future by contributing to and advising on issues of sustainability.

Actuaries can work on climate risk modeling, sustainable finance, and impact investment. By changing their mindset, actuaries can help to change the world.

The skills Actuaries need to stay relevant in the age of AI

Here are some of the most important skills that actuaries need to develop to keep pace with the changing landscape:

Technical skills: 

Actuaries need to have a strong foundation in mathematics, statistics, and computer science.

They must be proficient in programming languages such as R or Python to work with data and develop predictive models. 

Moreover, they should be able to use machine learning algorithms, data visualization tools, and cloud computing platforms to analyze data and build predictive models.

AI and Machine Learning

To stay relevant in the age of AI, actuaries must be familiar with machine learning algorithms and techniques, which are increasingly being used to automate processes and improve accuracy.

They should have a working knowledge of neural networks, decision trees, and other AI tools.

Creativity

While AI can automate many routine tasks, actuaries still need to be creative problem-solvers who can develop innovative solutions to complex challenges.

They must be able to think outside the box and come up with new approaches to modeling and risk assessment.

Communication skills: 

Actuaries must be able to communicate complex technical information to diverse audiences, including non-technical stakeholders.

They should be able to explain the results of their analyses and models to decision-makers in a clear and concise manner.

Effective communication skills are also essential for collaborating with colleagues and clients.

Soft skills: 

Actuaries should possess a range of soft skills, including creativity, critical thinking, and problem-solving.

The ability to challenge ideas and come up with new and unique solutions is becoming more important as the business environment shifts progressively competitive and global. 

They must also be able to work in interdisciplinary teams and collaborate with professionals from different fields, such as data scientists and business analysts.

Adaptability: 

Actuaries must adapt to shifting business environments and use their skills in new ways. Staying ahead requires learning new technologies, computer languages, and tools.

Fusion skills: 

Fusion skills are the must-have skills in the age of AI that result from human and machine interactions.

Actuaries should develop data literacy, digital intelligence and cognitive flexibility skills to work effectively with AI and automation tools.

Continuous Learning

To stay relevant in the age of AI, actuaries must be committed to continuous learning.

They should attend conferences and workshops, read industry publications, and take courses to stay up-to-date with the latest trends and technologies.

Professional Ethics

Actuaries must follow ethics like any other job. They must work with the utmost ethics, honesty, and impartiality.

When handling sensitive info that could affect policyholders, this is crucial.

FAQs

Conclusion

AI could automate many actuary jobs, transforming the field. AI will not fully replace actuaries.

While AI can perform calculations and analyze data at a faster rate actuaries bring valuable human insights, intuition, and judgment to the table.

Ultimately, AI and actuaries will work together to provide more accurate and efficient risk assessments, making the future of actuarial science exciting and promising.