Levelling Up: SaaS for Actuaries
On-demand is in high demand: from the way we watch TV, to the way we pay for our smartphones, gym membership and now even car insurance - customers want to pay only for what they need, when they need it.
The value and benefits of this increasingly popular on-demand model can apply to the actuarial function, too - in small to medium sized businesses in particular. Without the luxury of a large IT infrastructure, actuaries are beginning to recognise the way in which a proportionate use of the cloud has the power to reshape the function by improving processes, providing access to more granular analysis to help them produce more closely refined assumptions, and upgrade reporting and governance processes.
According to figures released this year by Gartner, global IT spend on external IT services among insurers is developing at a Compound Annual Growth Rate (CAGR) of 5.1 per cent and is expected to reach $71.1bn by the end of 2020, and managed services around cloud infrastructure services are thought to have the best outlook. SaaS is the foremost dominant cloud services model, with the number and type of products and users increasing rapidly over the years, and most recently boosted amid global lockdowns. In July, Gartner predicted that the global SaaS market across all industry sectors would grow to a staggering $104.7 billion by the end of this year.
The benefits of a lightweight application deployed as a SaaS solution combine low maintenance and lower enterprise and personnel costs with great value - levelling up smaller organisations with their corporate counterparts and allowing them to upscale or downscale quickly and easily. Such a solution could allow users to upload a model, inputs, run or schedule a model, save the results to a cloud database and then download or view them in a customizable dashboard. Dashboard apps provide even more control for actuaries as they look to present information on risks for new products, board presentations, and even expand their horizons through the use of new and different analyses now available to them in the form of machine learning and predictive analytics - tools which have until now been inaccessible due to their restrictive processing requirements and associated costs.
In an increasingly digitized world, access to enterprise-grade security and storage is a major enabler for small and medium sized businesses looking to compete on the global stage; the security offered by automatic software updates and patches is a far cry from the days of purchasing hard copies of software that need to be repurchased and replaced as newer versions are released. For actuaries in particular, this deals with risky version control issues which can result in differences in underlying algorithms or sampling methodologies to produce inconsistent results. In a cloud architecture, shared computing resources ensure that one single version of the software is in use by everyone collaborating.
Integrated model governance, centralized data and other modelling benefits can also be added to this list of benefits. Cloud computing and SaaS in particular has already begun to transform the business of insurance and the future is even more promising - giving small and medium sized insurance businesses the ability to compete in an exciting new digital age.