The challenge

Demanding regulatory reporting timescales and governance requirements, cost pressures and new technologies are forcing insurers to work smarter and achieve more. However, for many companies, analytics processes are not fit for purpose today, not least the future, with legacy systems and processes having evolved in an ad-hoc fashion resulting in inefficiencies, lack of governance and exposure to process failure. The future will require analytics that underpin timely decision making and support the transformation of day to day business.

Life insurers need their business to be:

  • Capital efficient
  • Produce stable earnings
  • Increasing revenue
  • Reducing cost
  • Compliant

To support these ends the actuarial function should be:

  • Providing insightful analysis
  • Using robust processes
  • Cost efficient in its own right
  • Able to respond quickly and adapt

However, in many cases a number of roadblocks are holding companies back, namely slow, inflexible, inefficient, unreliable processes with a focus on regulatory tick boxes.

Figure 1. Moving actuarial systems to an efficiency beyond regulation
Moving actuarial systems to an efficiency beyond regulation

A pathway to overcoming these obstacles is not easy. A life insurer is a web of interconnected systems and processes. In order to understand where efficiencies can be realised, connections between these processes need to be considered. That way, an insurer is able to see which individual components need to be improved and give priority to the most important elements. By taking this approach an insurer can make improvements incrementally in a consistent and coherent way and achieve the ultimate goal of transforming the whole analytical landscape.

Our vision

Our vision is an integrated analytical systems architecture, building from where an insurer is today, to transform and deliver solutions that address the whole risk and actuarial modelling process to enable them to deliver in a challenging marketplace.

Solving the whole problem requires an end-to-end integrated approach, not just point solutions. However, this can be a daunting and challenging concept, with many projects failing to deliver on their promised benefits. To ensure success, software tools and processes should be integrated so that they work seamlessly together and they should be hosted on appropriate infrastructure, underpinned by world class services.

Solutions for Life

In response to these challenges, we have developed ‘Solutions for Life’; a comprehensive portfolio of integrated software, technology and consulting services that provide cutting-edge solutions across all areas of the modelling process. Individual elements are designed to work together or stand-alone within existing eco-systems and so can either replace entire processes or just sub-optimal elements. It allows an organisation to save time and money, comply with regulatory demands and optimise legacy systems.

Solutions for Life is made up of four main components:

  1. Best of breed software tools
  2. Flexible infrastructure
  3. An integration and automation platform
  4. World-class advisory and support services
Figure 2. Key components of Solutions for Life
Key components of Solutions for Life

Best of breed tools

Flexibility is a key consideration when choosing the right software solution. It is important to build upon components already in place and only select new tools where existing systems are not fit for purpose or where gaps exist.

Solutions for Life draws upon market-leading tools specifically designed to support end-to-end modelling needs, using a modular system to facilitate a ‘best of breed’ approach, enabling an organisation to leverage new capabilities whilst protecting the investment in existing products that have already been made.

The Solutions for Life software portfolio:

DataValidator Validates, cleanses and transforms data, preparing it for use in downstream financial modelling and reporting processes. It helps to ensure the accuracy, consistency and completeness of your underlying data, providing easily auditable reports to bring a level of rigor and governance to your data processes.
RiskAgility Financial Modeller A financial modelling tool that enables life insurers to run financial models that accurately reflect their company’s products and to run them in ways that are easily adapted to their business processes.
RiskAgility Proxy Modeller Standardises and automates all stages of the proxy modelling process, reducing the manual effort in what can otherwise be a resource intensive process.
STAR ESG Generates economic scenarios and asset returns under risk-neutral or real-world bases in a globally consistent framework.
RiskAgility Economic Capital Aggregator Calculates and embeds flexible economic capital models in day-to-day risk management with greater speed and precision.
RiskAgility Standard Formula A tool that models the solvency capital requirement (SCR) using the EIOPA Solvency II standard formula for life, health and PC business across single entities and Groups.
RiskReporter Transforms raw data from multiple internal and external sources to produce validated reports and XBRL in the format required for regulatory reporting, such as Solvency II Pillar 3.
Unify Unify is a systems integration workflow platform that helps automate and govern the end-to-end financial modelling and reporting process by incorporating a wide variety of software applications into user-defined workflows.
Customised applications Applications and libraries to accelerate model implementation: country and product-specific applications, ALMs and model pointing tools.

Figure 3 below outlines an end-to-end capital modelling process with our best of breed software tools available at each stage.

Figure 3. Possible target model

Flexible infrastructure

Infrastructure options have evolved. The evolution started by moving from desktop to data centre, but now the data centre is moving into the cloud. The cloud delivers on-demand, flexible performance, so that model runs and process times become a choice rather than a constraint. There are a number of infrastructure options an insurer can choose to complement our tools, they include:

  • Microsoft HPC: Access to a fixed, on-premise, high-performance computing (HPC) grid for distributing model calculations across calculation cores in a physical data centre. Software can scale processing demand to utilise all in-house grid computing infrastructure, efficiently handling many thousands of cores. Standard Microsoft technology means that companies can utilise their own IT support staff, with the necessary Windows software administration skills, to manage the data centre rather than putting the burden of managing the actuarial computing resources on the modelling teams. Windows HPC Server is simple to deploy and operate, and is as secure and stable as a single system. It automatically handles failed jobs without user intervention. If more power is required, additional capacity can be added with ease.
  • Microsoft Azure: Provides fully scalable, on-demand, access to compute resource in conjunction with a Microsoft Azure Cloud subscription. It enables in-house computing infrastructure to handle typical base workloads and then seamlessly expand available resources on demand to include cloud services. This option is both highly reliable and available with a 99.95% service-level agreement in which Microsoft takes care of the Windows Azure server infrastructure. It enables automatic operating system and service patching, built in network load balancing and resiliency against hardware failure. Data is exchanged using internet security protocols commonly used in banking and other sensitive online computing scenarios.
  • vGrid: Provides a provision of fully scalable, on-demand access to compute resource, delivered as a fully outsourced service by Willis Towers Watson. This is a straight forward option for distributed processing as an alternative to purchasing and maintaining an on-premise computational grid or managing a Microsoft Azure account. This is a pay-as-you-go service with a single price per core/hour of use. There is no upfront investment, no on-premise hardware is needed and no additional annual maintenance or distributed licence fee. vGrid is reliable, secure and provides a user friendly interface that makes compute usage transparent and easy to manage.

Integration platform

A complete solution requires a level of integration and automation to orchestrate the end-to-end process and should be subject to mandatory levels of governance. Only then can genuine efficiencies and new capabilities be delivered to provide an assurance around analytics that can truly drive business decisions.

Unify is an enterprise risk and actuarial systems integration platform that enables an insurer to integrate, automate and govern the systems and workflows in risk and actuarial reporting which in turn allows for better business decisions. It can fundamentally transform financial modelling and reporting processes.

World class services

Our world class consulting services inform our tools meaning they continue to be leading edge and remain at the forefront of the insurance industry’s latest thinking. This same capability ensures that solutions can be bespoke to fit your needs.

Our services continue to expand as the business reacts to new challenges and opportunities in the market. This means that Solutions for Life moves beyond the traditional actuarial services, encompassing IT integration services and Software as a Service (SaaS) to bring you an innovative solution for your risk technology demands.

Conclusion

By taking a holistic approach through four main components: best of breed tools, flexible infrastructure, integration platform, and world class services, Solutions for Life provides an answer to the full analytics delivery problem. It opens up possibilities to a very different future; a future where models and processes work seamlessly as an enabler of analytics, driving better business decisions where resources are freed up to think, analyse and act in a more efficient and effective way.