This programme seeks to explore current approaches in economic modelling and identify gaps requiring future research

Actuarial practitioners have traditionally utilised conventional economic theory to identify the approach to adopt in economic and financial issues. For example, using the Black-Scholes formula to value options held by their client companies, or relying upon the Efficient Markets Hypothesis to explain and validate the valuation of shareholdings.

The experience of the 2008 economic and financial crisis challenged conventional economic tools, with other schools of economic thought brought into sharp focus.  This has opened up a number of questions that the IFoA would like to explore through a research programme focused on economic modelling.

Project Summary

Dr Iain Clacher of Leeds University Business School was engaged in June 2017 to undertake the first phase of the research; a survey of the economic theories used, both explicitly and implicitly, by firms which employ actuaries in the UK. Dr Clacher undertook a series of detailed interviews with a range of experts, both internal and external to the Profession, looking at economic theories in common use in actuarial practice. Dr Clacher's initial findings were discussed at an Actuarial Research Centre (ARC) event, held in May 2018 with senior actuaries and experts, looking at how the Profession could improve economic understanding in areas that inform actuarial work. Following these thought-provoking discussions, the ARC and IFoA actuarial volunteers will be progressing further research and stakeholder discussion to ensure the profession is contributing to, and learning from, this important debate. Dr Clacher's report - summarising his research findings - has been published. Download the report.

Research Methodology (Qualitative)

Face to face interviews with relevant individuals working in firms including, but not limited to, insurance companies, consultancies, banks and pension funds. The research was carried out in two phases to allow for a round table event at which preliminary results were discussed and used to guide the second phase of research.

Research Outputs

The initial output of this research was a report summarising Dr Clacher's findings as well as presentations at relevant IFoA events.

Dr Clacher's initial report, June 2019: The report provides a picture of the current opinions of a range of actuaries and economic experts on the subject of economic thought, how the traditional concept of economic thought is changing and the likely impact this change could make on approaches towards long-term investment and risk. 

ARC Launch Event, May 2018: The ARC hosted a round table launch event on 29 May 2018 at Staple Inn Hall, to share thinking so far, following a series of confidential interviews of leading actuarial thinkers in a wide range of roles. An introduction to the ARC's Economic Modelling programme was given by Professor Mark Cross, chair of the IFoA's Research and Thought Leadership Board (RTLB), 2015-18. Dr Iain Clacher and Professor Steve Keen also presented at this event. View Dr Iain Clacher's presentationView Professor Steve Keen's presentation.

IFoA Life Conference, November 2017: Dr Iain Clacher (Leeds University Business School) delivered a workshop on "Economic Theory and Actuarial Practice". Following this, the economic modelling programme will host a round table event to share thinking and look at how the Profession could improve economic thought in actuarial practice. View Dr Iain Clacher's presentation

In the News

Diversity of economic thoughts - why it matters. An article in The Actuary highlights key areas for consideration by the actuarial profession, following Dr Iain Clacher's report on 'Economic Thinking and Actuarial Practice'. Erik Vynckier's response to the report is also included in the article. Erik is the chair of RTLB, 2018 - present. 

'Animal spirits' vs the efficient market hypothesis. Alex Waite asks whether actuaries are evolving to remain relevant in their economic predictions. Read the full article in The Actuary.

In a letter to The Actuary Mr W John Bishop, FIA responds to the article.

Contact Details

If you want more information about our research programmes please contact the IFoA Actuarial Research Centre:

arc@actuaries.org.uk

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Events calendar

  • Asia Conference Webinar Series

    Webinars
    7 September 2020 - 25 September 2020

    Spaces available

    There will be a prestigious line-up of international speakers discussing the insurance and financial industry’s innovation and change in Asia.  The conference will take place throughout September via an online platform. The webinars consist of plenary speaking sessions and a series of workshop sessions including Life, GI, Data Science, Sustainability, Risk Management and Investment.

    This will be the perfect opportunity for you to discover,ask questions and be at the forefront of current and developing actuarial/financial topics and trends in Asia.

     

  • Spaces available

    This free 90 minute webinar is designed to support the IFoA CPD Co-ordinators, and others, involved in supporting our members to achieve their CPD requirements. 

    The programme will include an overview of the new CPD Scheme; specifically sharing with you key messages to support you implement and embrace the new CPD Scheme for our members within your organisation and regional community; how to arrange a reflective practice discussion; and an interactive reflective practice discussion learning exercise.  In addition, delegates will gain information about accessing, and making the most of the IFoA event Toolkits which you can make use of to run your own in-house events and events for regional communities. 

  • Spaces available

    16.00-17.00 GMT+8

    Consumer expectations are changing Insurance. The Royal Commission in Australia, Design Obligations in the UK, the insurtech ecosystem, and digital-first consumers demanding personalised solutions will all revolutionise how insurance looks like in the future.

  • Spaces available

    12.00-13.00 GMT+8

    This presenter / panel workshop hybrid will be anchored by two presentations examining the socioeconomic, medical and technological factors that will have a significant impact on mortality and our pricing over the next 20 years and beyond. It will also discuss whether significant mortality improvement will continue in Asia or whether varying experience of low improvements or deterioration. 

  • Spaces available

    12.00-13.00 GMT+8

    This presentation aims to provides an overview of the reformation of current Chinese regulatory solvency regime, how industry coping with the new normal after pandemic time and how the reformation of the regulation could help the insurance industry gets back on its feet as well as coming back to the “protection” core value for the policyholders. The presentation would include:

  • Spaces available

    16.00-17.00 (GMT+8) | 09.00-10.00 (BST)

    The basic data of China’s 2nd Critical Illness Mortality Table covers 2000+ products in Chinese market, including about 340 million insurance policies and 5.1 million claimants. Presenter will give the audience a general understanding including but not limited to the following contents:

  • Autumn Lecture 2020: Professor Elroy Dimson

    Online webinar
    14 October 2020

    Spaces available

    Many individuals and institutions have a long-term focus, and invest funds for the benefit of future generations. Their strategy should reflect their long horizon. University endowments are one of the oldest classes of institutional investor, and I will present the first study of the management of these endowments over the very long term.

  • GIRO Conference 2020 Webinar Series

    Available to watch globally in November.
    02-13 November 2020
    Spaces available

    This year's GIRO has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the general insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's GI Online Learning Resource area.

  • Spaces available

    Cash-flow driven investing is a game-changer for DB pension funds navigating their end-game. Suitable for sponsors who want to reduce risks on their balance sheets. And for trustees, it shifts the focus to providing greater certainty of returns, managing funding level volatility and ensuring they have enough income to pay cash-flow requirements.

  • Spaces available

    The talk will provide an understanding of the priorities and relationships between deficit reduction contributions, in the context of wider scheme funding, and different types of value outflow from the employer based on the working party’s recently published report.