You are here

Data science: Q&A with IFoA President John Taylor

John Taylor, new President of the IFoA, shares his views on the ways in which the actuarial world is being affected by the inexorable rise of data science.

John TaylorIt’s been suggested that, in their approach to Big Data, actuaries are ‘the original data scientists’. Could you explain that connection? What, in their essentials, do actuaries have in common with data scientists?

When I heard actuaries described as the original data scientists, I really liked the phrase. It captures the essence of what actuaries have been doing for centuries. If you look back at the pioneers of the profession, they were analysing what at the time were large data sets to do with longevity, trying to find the truth and insight in them, and then extrapolate into the future. Then if you look back to just a decade or two, actuaries did similar things around Stochastic asset models – and, again, trying to make projections into the future. And that’s the essence of what data scientists try to do. The tools and technology used have moved on massively, of course, but the fundamentals of trying to extract truth and insight from data, and then using that to infer something about the future, are the same.

Why are actuaries so well placed to explain data science? And can data scientists learn from actuarial practice?

What actuaries bring is a sense of business context, commercial value, and of what it all means for their client – be it a pension scheme, an insurance company, or indeed the ultimate end-user, the consumer. Having that sense of business context, as an overlay to the raw insights that a data scientist may bring, makes those insights more useable and valuable to the client.

The IFoA plans to launch a data science certification. What will be its scope and what will members who undertake it gain?

There’s an appetite among IFoA members to learn more about data science, and so we are about to launch a certificate in data science, available to all members of the actuarial profession. They’ll be able to choose from a set of five modules that cover disciplines such as data visualisation, Artificial Intelligence and Machine Learning. They can pick and choose from them, and those who complete the set of five will be awarded the certificate. From this, actuaries will get a much greater appreciation of the art of the possible in data science. It may not make them data science practitioners per se, but it will enable those certified to work more closely with data scientists. And the certificate will also have a currency with employers in evidencing the additional learning that actuaries have undertaken.

The traditional fields for actuaries have been insurance and pensions. Now actuaries are appearing in agriculture, healthcare, climate change initiatives, and even ride-sharing app development. How does this reflect the way data science is developing?

Data science is very empowering for actuaries. Not only does it bestow the ability to re-engineer what they do in traditional fields, but it gives them a platform to move into wider fields. The underlying driver behind this is that other industries, that haven’t been so accustomed to dealing with data, are now being deluged with it. And they don’t really quite appreciate how to derive value from it. Bringing-in a profession that’s long been expert in dealing with that data, and getting insight out of it, is a tremendous opportunity for those industries – even some of the creative industries like advertising. The ‘Mad Men’ are being replaced by the ‘Math Men’, as advertising becomes much more data-driven about defining individual segments and offering bespoke propositions – and actuaries are getting involved in that kind of innovation.

You have spoken about the ethical implications of data science. What are the key considerations around this question, where actuaries can bring thought leadership?

Developments in data science are throwing up some challenging ethical issues. That does create an opportunity for a profession with an established code of ethics to step in and try and make a difference. The IFoA is also working with the Royal Statistical Society to bring forward a code of ethics around data science. And we’re working with government and policy-makers to make sure that the evolving policy keeps up-to-date with data science.

‘Data science’ is often referred to in public debate, but definitions of what ‘data science’ actually means seem to change continually. How well understood do you feel the term is?

I’m not sure that ‘data science’ is a terribly well understood phrase, in fact. I was speaking to an actuary about my ambitions for the IFoA to do more in the field of data science, and his retort was ‘That’s great – but we also need to be doing more on Artificial Intelligence’. Well, actually, I was using a definition of data science that encompasses AI, so that demonstrates that there’s a degree of confusion around the term. It’s such a dynamic field that as soon as you try and pin down what it is today, it’s changed tomorrow. So, I’m fairly relaxed that it’s dynamic and evolving term.

What do you believe makes the contribution of the actuarial profession so uniquely valuable to the emergent field of data science?

As professionals immersed in business context, and in understanding the impact companies can have with end-users, actuaries are well-placed to add value and utilises the insights data scientists can generate. Let me give you a couple of examples. I know an actuary who works in insurance, and who is looking at new ways to deliver service to existing clients, and that’s about understanding individual customers at a very small level of detail, and looking for trigger points when they might be receptive to new service offerings. This approach is really transforming the take-up rate for services. Second, I heard a compelling example at a conference, where actuaries working in the field of marketing were taking huge amounts of data from social media, and again, trying to infer which customer segments might be suitable for which offerings – and at what times – and then making them available in almost a test-and-learn environment.

How important will collaboration between actuaries and data scientists be, going forward?

Collaboration is going to be vital both for the IFoA and for individual actuaries. Now, most actuaries will be very familiar to working in multidisciplinary teams, they’ve done that for a long time, but I believe they will increasingly do so alongside data scientists and other technologists. The blend of skills will make those teams very powerful. But it’s important that they are able to speak the same language as one another.

What would you say to actuaries who have forebodings that some data science may prove a future threat to their expertise and livelihoods?

It’s very hard to say what the future will look like in, you know, a hundred years’ time. What I can say is that, for the foreseeable future, I think that there’s a  fantastic opportunity for actuaries because of data science. The fact that data is proliferating in not just traditional industry sectors, but everywhere else, means that there’s a kind of crying-out for a profession that can understand the value of data and make predictions based on that understanding. That’s where the essence of the opportunity is for us, I believe. 

Filter or search events

Start date
E.g., 27/11/2021
End date
E.g., 27/11/2021

Events calendar

  • The Growth Mindset for Actuaries

    13 October 2021 - 8 December 2021

    Fully booked.

    This practical course is aimed at actuaries at any stage of their career who want to develop their own growth mindset and apply it to their work setting and personal or professional lifelong learning. The content of the course builds on the lecture given by Dr Helen Wright on Growth Mindset as part of the President’s 2021 Lecture series, and will be delivered over a period of 2 months, from mid-October to early December.

  • Spaces available

    The role of actuaries within the health sector varies considerably from one country to another, due to differences in the local evolution of health systems and the funding models for health services. 

  • Spaces available

    This paper outlines key frameworks for reserving validation and techniques employed. Many companies lack an embedded reserve validation framework and validation is viewed as piecemeal and unstructured.  The paper outlines a case study demonstrating how successful machine learning techniques will become and then goes on to discuss implications.  The paper explores common validation approaches and their role in enhancing governance and confidence.

  • Spaces available

    Content will be aimed at all actuaries looking to understand the issues surrounding mental health in insurance and in particular those looking to ensure products and processes widen access for, and are most useful to, those experiencing periods of poor mental health.
     

  • Spaces available

    The IFoA Policy Briefing 'Can we help consumers avoid running out of money in retirement' examined the benefits of blending a lifetime annuity with income drawdown. Panellists, including providers and advisers, will look at the market practicalities of taking the actuarial theory through into the core advice propositions used by IFAs and Fund Managers. They will share a number of practical issues such as investment consequences before and after retirement and the level of annuity that is appropriate and answer questions from the audience.

  • Speech from the Governor of the Bank of England, Andrew Bailey

    Lincoln's Inn The Treasury Office, London WC2A 3TL
    1 December 2021

    The IFoA is pleased to be hosting the Governor of the Bank of England, Andrew Bailey, to deliver a speech on delivering policyholder protection in insurance regulation.

    The speech will be presented to an in-person audience, and simultaneously live-streamed, at 14.00 on Wednesday 1st December.

  • The Many Faces of Bias

    2 December 2021

    Spaces available

    This webinar looks at the many types of biases, both conscious and unconscious and the impacts they can have in the workplace.  Raising our own awareness and understanding of the issues can help us avoid the pitfalls of unconscious bias in particular.  We’ve all heard the phrase ‘office banter’ but are we sure that’s how those on the receiving end perceive it and is it ok to go along with it?

  • Spaces available

    Actuaries need to take action now - but how?  With a focus on climate change, this session will provide informed insight to enable you to improve your knowledge and understanding of the issues involved, demonstrate how it will impact advice to your clients, and highlight prospective opportunities for actuaries within pensions and wider fields.

  • Spaces available

    Pension scams have become more prevalent as a result of the pandemic, and Trustees have increased responsibilities to protect members, which means that actuaries need to be in a position to provide advice in this area. Our specialist panel will include a professional trustee, an IFA and head administrator, two of whom are members of PASA.

  • Spaces available

    The covid-19 pandemic creates a challenge for actuaries analysing experience data that includes mortality shocks.  To address this we present a methodology for modelling portfolio mortality data that offers local flexibility in the time dimension.  The approach permits the identification of seasonal variation, mortality shocks and late-reported deaths.  The methodology also allows actuaries to measure portfolio-specific mortality improvements.  Results are given for a mature annuity portfolio in the UK

  • Spaces available

    In this webinar, the authors of the 2021 Brian Hey prize winning paper present a new deep learning model called the LocalGLMnet. While deep learning models lead to very competitive regression models, often outperforming classical statistical models such as generalized linear models, the disadvantage is that deep learning solutions are difficult to interpret and explain, and variable selection is not easily possible.

  • Spaces available

    The dominant underwriting approach is a mix between rule-based engines and traditional underwriting. Applications are first assessed by automated rule-based engines which typically are capable of processing only simple applications. The remaining applications are reviewed by underwriters or referred to the reinsurers. This research aims to construct predictive machine learning models for complicated applications that cannot be processed by rule-based engines.

  • Spaces available

    With the Pension Schemes Act 2021 requiring a long term strategy from Trustees and sponsors, choosing a pensions endgame strategy has become even more critical. However, it is important that the endgame options available are adequately assessed before choosing one. With an ever-increasing array of creative and innovative options available, this decision may not be straightforward.