Actuarial Science and Data Science

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With the development of information technology, there has been an ascending need to apply technology to improve data analytics in both insurance companies and financial institutions. For one to discover any competitive intelligence and differentiate the competition for a given market segment, there is always an aspect of data analysis involved. In insurance companies, there is always constant study of claims experience which is embodied in a process called experience investigation.

The call for integration between data science and actuarial science in learning institution can help improve predictive analytics in the industry. Though it is prudent for companies not to share their consumers’ data, a cross the market study and big data analysis can easily reveal new business opportunities. How can you know whether a current policyholder can purchase an additional product from your company? It can be a life insurance cover or a pension annuity.

As an actuarial graduate it is essential to be versatile and learn at least two programming languages that are used in data analysis and predictive analytics. The most common computer applications used in data analysis that will probably be useful are:

• R or Revolution Analytics- this is an improved version of R and can handle Big Data. It is an open source which makes it an obvious fit for student actuaries and small insurance companies that can not afford expensive actuarial systems. Check out Revolution Analytics for useful information tutorials.

• Microsoft office (Excel and Access) – Knowing how to program with VBA and SQL is an essential for one to fit in a reserving and pricing role. Using these two together with other Actuarial systems, one can create a powerful tool for analysis. Most of the tutorials for data analysis using  office is available on Youtube, while some are usually provided in the companies’ intranet for the employees.

• Prophet Software- This is mostly used by large life insurance companies and mutual funds/Investment trusts. Used to calculate embedded values for actuarial liabilities and other complex actuarial process. More information can be found on Sungard.

• Axis and I-Gas- this is fairly new software in the market, together with Milliman, a good number of these have been recently introduced to the market. The above systems seem quite costly, but greatly reduces the variable expense involved in the valuation process. More information about them can be found on Axis, I-Gas and Milliman websites respectively.

• SAS and SPSS- These are major statistical software’s that have the same functionality as R. SAS is a commercial version. They can be used to handle big data analytics in insurance or health sector. More Information can be found on SAS site and SPSS site.

These are example of software’s that a math, statistical or actuarial graduate should be aware of. Being really good and having advanced skills in handling Microsoft office will always be a definite advantage. So make an effort and improve your coding skills.

Disclaimer: The opinion expressed in this posts are purely that of the writer and not of any company or employer. The writer will not also be liable as a result of any second party or reader using the information in this post.