From data scientist to actuary

Data Science & Actuarial Science

Digitization and new technological developments have a strong impact on society and the economy. The insurance industry is also badly affected by these changes. This also changes the everyday life and activities of an actuary.

The most important aspects of the actuary are the modeling, detection and management of financial and insurance risks. Knowledge of mathematics, statistics, economics and law is crucial for these tasks. Due to the new technological possibilities, competencies in the areas of data science and machine learning are also of great importance.

Analyzes show that the big data sector continues to grow rapidly in parallel with the increasing volume of data in companies. Global big data revenues have tripled in the past five years and are expected to triple again by 2021.

Actuaries and data scientists have many related roles and have similar training and skills. They use many of the same techniques when analyzing data to make informed predictions about the future. Techniques include statistics, data visualization, and pattern recognition.

Algorithms for machine learning and data science can be used in the following areas of actuarial mathematics:

-Pricing (GLM / Random Forests / Neural Networks)

-Loss and risk forecasts

-Detection of fraudulent claims

-Automation and planning of actuarial reporting processes

-Time lapse predictions

-Proxy modeling in life insurance

-Visualizations of model results and data.

The application of data science techniques increases the level of predictive accuracy of the model, automates and speeds up the reporting processes. The constant monitoring and validation of actuarial models is considerably simplified and controlled. This in turn minimizes risk, lowers costs, which leads to lower insurance prices, higher equity and competitive advantages.

As a result of these technological advances, actuaries have to undergo more advanced training in this area in order to master skills in new technology areas and to integrate them into their tasks in the finance and insurance industry.