Insurers re-engineer actuarial departments to adapt to new economy

Canadian insurers are re-engineering their actuarial departments to improve performance while at the same time dealing with current regulatory challenges and increased accounting requirements, PricewaterhouseCoopers says.
In its report, Adapting to a New Economic Reality, PwC notes that insurers are undertaking initiatives that focus on reducing complexity (in processes, controls, valuation models and spreadsheets) and increasing standardization, automation, process efficiency and effectiveness.
Examples of general process improvements identified by insurers in the report include:
•    coordinating a closing calendar with the company’s overall timeframes and dependencies;
•    developing company policy that covers cut-off dates, calculation methodologies and process dependencies;
•    shifting non-critical activities outside the critical close cycle;
•    establishing guidelines for materiality and the use of estimates, as well as developing methods for continual monitoring of materiality; and
•    maximizing efficiency of controls over data accuracy and completeness (performing key controls as efficiently as possible, for example, and removing non-essential controls).
“Increasing pressure for continuous improvement, raising quality and service levels and [an effort] to reduce costs is driving actuarial departments to leverage new practices,” the report says.
“The challenge of staying abreast of the business leaders’ demands plus changing accounting and regulatory requirements has made effective process management an imperative, not a choice.”