self driving autonomous car
Data Science, Future of The Profession, Technology

What Will Autonomous Vehicles Mean for Actuaries?

“This is a guest article written by Niamh Loy. Niamh can be found on LinkedIn here.”

In 1886 the first true automobile powered by a combustion engine was created. Radio broadcasts could be enjoyed while driving by the creation of the first car stereo in 1930 and the year 2000 saw the first hybrid car powered by electric energy and petrol. In 2003 cars could parallel park themselves and the year 2014 saw the creation of Tesla autopilot technology. The innovation and technological improvements that have been seen through the evolution of vehicles is astonishing and it only continues to become more impressive. You therefore may be asking yourself ‘What will be next?’. It is the belief of many car manufacturers like Volvo as well as tech-giants like Google that the next step forward in the area of transportation is fully autonomous vehicles.

What Exactly Are Fully Autonomous Vehicles?

autonomous vehicle

Simply put they are vehicles that will be able to drive themselves with no human interference. Yes, you did read that correctly and no, this isn’t something taken from a sci-fi film set hundreds of years from now! A report from Statista claims that one in ten cars will be self-driving by 2030. Five levels of self-driving have been clarified. Level 1 should sound familiar where the vehicle is controlled by the driver with some driving assist features included in the design – think cruise control. There a steady progression through levels 1 to 5 with 5 being the ultimate goal. Under level 5 the car is fully automated and can carry out all driving functions under all conditions. This means there would be no necessity for a wheel or accelerator (although it is still likely there will be the option for driver control). It is difficult to imagine that a car could follow all the road rules and driving basics that we have all had to do numerous driving lessons and tests to be allowed to do. However advancements in technology has made it that sensors can pick up everything a human would with the key benefit of autonomous vehicles being that they can actually pick up more than a human would.

What Are the Benefits and Concerns of Autonomous Vehicles?

The most beneficial impact of self-driving vehicles is that the risk of human error when driving would be eliminated. In a world where autonomous vehicles are part of normality no one could do things like speed, text while driving or run red lights. All of these things contribute to the number of road accidents but no driver means no human error. In fact, US Department of Transportation researchers estimate that road traffic fatalities caused due to human error could be reduced by as much as 94% by using autonomous vehicles. According to the World Health Organisiation, approximately 1.35 million people die due to road accidents each year. Imagine this number sliced by as much as 90% and the amount of lives that could be saved.

As well as the striking benefit of a reduction in road deaths McKinsey research suggests that as much as 50 minutes per day could be deducted from each person’s driving time (that’s 50 more minutes to watch Netflix per day) and the issue of parking spaces will be hugely decreased, reducing the need for space to park in the US by more than 5.7 billion square meters. Say goodbye to the days of looping trying to find a parking space for half an hour or worrying that someone is going to bump into your parked car! The same report also claims the reaction time of self-driving vehicles is already a third of that of a human with engineers continuing to work to further improve this time. These vehicles can therefore pick up on potential hazards much quicker than a human and avoid even minor road accidents. With all these potential benefits associated with self-driving vehicles you might imagine there should be a huge global push for them to be rolled out as soon as possible. Unfortunately as we well know (through many a zoom meetings/quizzes and online classes) technology, no matter how advanced, can sometimes malfunction and this is where issues arise.

man in a self driving car

Autonomous vehicles cannot 100% guarantee that no road accidents will occur because there will always be the risk (no matter how small) of a technical failure. In March 2018 an Uber self-driving car collided with a 49 year old pedestrian killing her, after struggling to correctly identify her on the side of the road and therefore not stopping as she crossed. It is accidents such as these that have contributed to the public concern over the true safety of self-driving vehicles. However, although this accident is tragic and could have been avoided, research still suggests that the overall number of road traffic deaths will be decreased. After all this exact event has occurred time after time due to human error and the probability of it occurring because of humans is much higher than it occurring due a technical fault of self-driving vehicles. A lot of people exhibit over confidence bias and have more trust in their own abilities than that of someone else or in this case something else and this brings a lot of opposition to the forefront of the topic.

Insurance and Pricing Actuaries – Why Are They Involved?

Engineers, scientists and test drivers are the first that come to mind when considering who are the people most important to getting autonomous vehicles on the road. It would be easy to forget that insurers are also extremely important in the process- remember an uninsured vehicle is not allowed on the road. In particular, pricing actuaries working for these insurance companies will be extremely important and play a key role to get these vehicles on the road.

Taking a step back let’s answer a basic question that very few people know the answer to and I know I get asked on the regular- what is an Actuary? Simply put actuaries are concerned with managing financial risk. Everything we do has risk associated with it. We take out insurance policies to protect against the risk of uncertain future events that could have a high adverse impact on us whether this be life insurance, health insurance or car insurance. The premium insurance companies quote you for insurance isn’t plucked out of the sky! It is actuaries that we trust to access specific risks and come up with an informed and reasonable premium to charge for insurance coverage in the event these risks occur. Much like the weather risk is not stagnant but it is constantly changing and actuaries need to continue to adapt and respond to changes in this risk through updating their models, statistical methods and mathematical techniques to keep up to date with new innovations and changes in the world that affect the risk they access. Autonomous vehicles are one of these changes.

Fewer vehicle crashes means fewer claims to an insurance company but the company cannot simply take this claims reduction as a win and continue to price in the same way. General insurance actuaries will need to adjust their pricing to reflect the expected reduction in claims so we could expect lesser premiums. Further to this, how the policies will be priced will be entirely different. Currently, insurance companies price their personal vehicle insurance using models based on a range of factors that include driver age, gender, number of additional drivers and many more factors related to individual driver characteristics but if there is no driver these factors become irrelevant. Even the no claims bonus that all insurance companies implement in their policy pricing will have little meaning when it comes to autonomous vehicles because there will be a random nature to when malfunctions occur that result in a claim rather than an indication that there is a lack of driver skill. When considering autonomous vehicles the risk will shift from the driver to technical failures. Therefore things such as connectivity issues, equipment failure and even cyber-attacks will be extremely important. How to collect data, model and incorporate all these new risk factors will be a big challenge that pricing actuaries (who build the pricing tools you would input your details into online to get a quote) will need to overcome.

Another difficult question becomes one of liability in the event of an accident, which is extremely important in the case of insurance. If a malfunction occurs while the car is driving itself then surely it must be the fault of the vehicle manufacturer and not the owner of the vehicle? Therefore it is possible that future vehicle insurance will shift from individual policy holders to car manufacturers instead. But wait- does there will be no need to buy car insurance? Unfortunately, if this became the case then manufacturers will experience higher operating costs and therefore this insurance cost will passed through in a higher vehicle price. To bring the prices of autonomous vehicles down then more likely is that of a joint ownership between vehicle manufacturer and individual holder meaning that insurance companies and in particular pricing actuaries will have to find a way to balance individual coverage with product liability coverage on the manufacturer’s part. If this doesn’t sound like a difficult enough task as it is the question of liability and the implications for insurance companies becomes even more difficult when we consider the transition period where we have both human operated vehicles on the road along with partially and fully autonomous vehicles. It could be very difficult to argue whether human error caused a crash or a technical failure and finding a way of accessing this will need to be addressed. Insurance companies will need to be able to provide a new form of insurance for autonomous vehicles while also providing traditional vehicle insurance and both will need to be separated in terms of claims and for pricing actuaries to examine the profitability of their pricing. This could lead to double the workload!

Will Other Types of Actuaries Be Affected?

It is clear general insurance pricing actuaries will face the most drastic changes and challenges due to autonomous vehicles but other types of actuaries will see some changes too. Reserving actuaries calculate what cash an insurance company should hold in order to be able to pay out expected claims. Since general insurance companies will see a reduction in claims it is likely that their reserving actuaries will see a reduction in their necessary reserves. Incorporating past claims experience to calculate their reserves could pose a challenge for the first number of years due to a lack of data in relation to autonomous vehicle claims and they will need to be careful not to overestimate the improvement in claims experience each year as autonomous vehicles are gradually rolled out.

As I have mentioned road deaths are expected to hugely decrease therefore actuaries should experience a decrease in mortality across all ages. Life policies could expect a slight decrease in premium due to a decrease in the likelihood of death while pension policies may experience a slight increase in premium due to a longer expected pay out period as a result of longer survival. Actuaries can also expect the ‘accident hump’ in the mortality curve to become less prominent. This is the part of the mortality curve that doesn’t follow the general increasing across ages mortality trend and in which mortality increases slightly before decreasing again across the age range of approximately 15-30. A big part of this is due to younger and newer drivers being more reckless when driving and having less experience on the road resulting in more accidents.

Health insurance companies should also experience a decrease in claims that health actuaries will need to take into account when pricing due to the reduction in injuries and necessary healthcare associated with road accidents.

autonomous vehicles on the highway
So although roll out of autonomous vehicles is still a while off yet it is clear that there are many factors that need to be considered before they can be offered to the public. General insurance companies and in particular the actuaries that work for them will need to begin planning for how insurance for these vehicles will be approached so that when the manufacturing and technical side of the vehicles has been perfected a lack of planning and consideration by actuaries doesn’t hold back the process of getting them on the road and making a beneficial impact within society!
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Productivity, Technology

Technology Addiction: 5 Ways to Fight Back

"It has become appallingly obvious that our technology has exceeded our humanity." Albert Einstein

I remember it well. It must have been 7 months ago. Maybe more. Pre-Covid anyway. Back when life was more normal and I had an office to commute to. Funny how we take things for granted.

He was about 4 years old. Waiting for my morning train, I watched with intrigue, as he desperately tried to get his father's attention. The boy's face was lit up in excitement as he attempted to relay his joyful enthusiasm about something important. Important to him, anyway.

But father was oblivious. Absorbed in a different world. A world where his son was but a distant noise. An annoying distraction.

The boy continued to fight for attention. The most important thing in the world, to the little boy at that very moment, was receiving some level of attention or acknowledgement from his parent. Yet 'father' could not fulfil that need.

I watched as the boy grew tired and despondent. Until eventually, he gave up. Giving in to the fact that the battle was lost.

Who did he lose the battle to?

"Everything is designed. Few things are designed well." Brian Reed

His adversary was too sophisticated and expertly engineered. It knew exactly how to hack his father's attention. How to hijack his brain and stop him from cherishing the limited time he'd have to be everything to his boy. How to keep him coming back for that one extra hit of dopamine.

I am, of course, talking about our 21st century newly evolved appendage - the ubiquitous smartphone. And the vast, complex and merciless AI algorithms that lie beyond the smartphone screen.

I took a moment to glance across at my fellow commuters. Most were preoccupied in their own digital world, unaware of their surroundings. It reminded me of Steve Cutts' "Lost World" animation. If you haven't seen it, it's worth a watch.

But why did watching this father/son scene bother me so much?

Well, if I'm being honest, I seen some of my own self being reflected back at me. We often dislike in others what we don't like in ourselves. And I know there are times I've had my head buried in a screen when I should have been giving my full attention to those around me. Friends, family and...yes...regrettably and embarrassingly even my own kids.

Contemplating this set off a trail of thought in my mind. Digital technology is becoming increasingly pervasive into our everyday lives. But its also increasingly clear that it comes at a cost.

Why I Love My Digital World

Don't get me wrong. I'm no Luddite. In fact, I love technology. Heck, I even recently organised a digital conference for actuaries, encouraging them to embrace the digital world of technology. And I believe in that message - as business professionals, we can't get left behind in the digital era of opportunity.

From a personal perspective, there are many things I value and love about technology.

"Any sufficiently advanced technology is indistinguishable from magic." - Arthur C. Clarke

I love that I can access information on anything in the world, at the flick of a finger, on a device I can fit in my pocket.

I love that I can connect with people at the far end of the world, almost as if they are in the same room.    

As an independent person who values freedom, flexibility, and autonomy, I also value that I can feasibly carry out much of my current work from anywhere in the world.

I value that Netflix, Amazon, and Google will make accurate predictions about things I want to buy, and things I never even realised I ever wanted. These ubiquitous black box algorithms know who we are, where we are, what we want and why we want it. Our every need is, quite often, only a smartphone finger swipe away.

Finally, I'm old enough to still be amazed at the fact that I've written the draft of this article on a 6-inch device whilst sitting in my back garden with my feet up enjoying a cup of coffee.

I couldn't have imagined this flexible world of work we live in when I was at school many years ago. Yet here we are living in the matrix of digital pixels.

You get the picture. Technology makes our lives efficient, fun, convenient and connected. It makes opportunity and possibilities seem endless. It provides immense leverage, allowing us to do things we never thought possible. It adds to our lives in many ways and I for one would find it difficult to live without my many beloved devices and apps.

The Darker Side of Digital Technology

But I also have deep concerns about where some forms of digital technology are taking us. I feel it has a dark side that is becoming ever more prevalent.

For example, I'm often frustrated that "truth" seems to be increasingly difficult to uncover. Increasingly obscured by false news and emotion driven narratives that can spread like wildfire. It seems that, in some sense, misinformation, manipulation and deceit through data has become the norm and quite often the epicentre of communication. 

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It concerns me that my 3 children are growing up in a world where attention spans are decreasing, selfies and comparison rule the day, and technology-induced narcissism seems to be increasingly the norm. 

It worries me that I can foresee kids becoming increasingly susceptible to the algorithmic perversions of the tech giants. Increasingly drunk on Silicon Valley dopamine as the incursion of manipulative technology, with their slot machine random rewards, moves further into our lives with Machiavellian precision.

The research seems to concur. It tells us that our children are taking over a world of: 

  • Increased anxiety and depression (technology, especially smartphone addiction, has been shown to increase rates of both anxiety and depression) (see reference 1).
  • Poor sleep habits (see reference 2).
  • Warped senses of reality (see reference 3).
  • Constant distraction (see reference 4).

With technology as an enabler, we increasingly seem to go from one place to another in an efficient fashion avoiding the randomness of life. Jason Hrera of Bigthink describes this as a series of ‘living life in straight lines'. I can see his point. More and more, I feel that, in some ways, stochastic randomness of daily life is becoming a thing of the past as (at least in in some regards) we move towards living ever more deterministic lives based on algorithms and prediction. 

Maintaining Balance and Staying in Control

So what should we do to negate some of the negative effects that digital technology can have on our lives, whilst still maintaining the upsides? How can we help to ensure that digital technology is working for us and not against us?

Here are a few things, I've personally found helpful:

1. Have a digital detox day

“There are only two industries that refer to their customers as 'users': illegal drugs and software." - Edward Tufte

Once a week (typically a Sunday) I will do my best to not use my phone at all. It gets locked away. Out of sight, out of mind.

“Device dependence is highly reinforcing, so it becomes like a drug. And in fact it co-opts the same brain systems that are indicated in addiction.” - Michael Gelb

This is a day for stepping outside into the non-pixelated world, some refer to as the real world. Screens are generally forbidden (except for the occasional photo!). Instead, hiking, cycling, and sunshine (or rain where I live), are the day's chosen indulgences.

2. Delete, delete, delete (or at least turn off notifications)

“Almost everything will work again if you unplug it for a few minutes, including you.” — Anne Lamott

I suggest going through every smartphone app, especially social networking sites that require giving up your attention and asking yourself, how much richer your life really is with it. Yes, there are clear benefits. But there are also (often hidden) costs. Really think about and consider if the benefits do outweigh the costs?

I used to think I was being efficient having instantaneous access to my emails open on my computer (or on my phone whilst away from it), able to answer them as soon as the messages came through. It eventually became obvious (I'm a slow learner!) that all I was doing was valuing other people's agenda above my own. More often than not I was seeking a distraction from the more difficult (but more meaningful) work I was meant to be engaged in.

I no longer have email notifications on my phone and try to work much of the time offline in outlook. I now (try to!) strategically check my email three times per day (okay maybe occasionally more). As a result, my working days are largely focused on what Cal Newport calls "Deep Work," rather than fire fighting whac-a-moles as they make their way into my inbox.

Same goes for social media and other notifications. Life is just more peaceful with them turned off and strategically managed at predetermined times of the day.

Like a slot machine on steroids, the random reward nature of notifications is the means by which the engineers of smartphone apps and devices have exploited our psychological weaknesses. I've found that turning the tap off at the source is the most efficient way to fight back.

Life without the constant phone beep notification is good. Sure, I miss the constant micro drip of adrenaline being fed by my random reward generator. But I don't miss the wasted time and accompanying feelings of guilt.

3. Set minimum and maximum time limits

“What gets measured gets managed” - Peter Drucker

Have you ever checked LinkedIn, Facebook or YouTube for a quick 5 minute break, only to find you have gone down multiple rabbit holes and wasted an hour or more of your time?

I know I have.

Or at least I used to. 

Nowadays, I set very strict limits on my social media and internet browsing usage. I actually physically set an online timer with a predetermined time when I engage in social media. Sad? Maybe. But I don't really care. If it means I finish work on time, without stress and with the feeling of having accomplished what I set out to do that day, then I'll happily make the trade. Downtime after 5pm is just more fun and rewarding.

4. Get into nature as much as possible

I like to walk, hike, mountain bike through forests and go to the beach with my kids. 

When I don’t engage in these things, and have time away from technology, I very quickly find my energy beginning to dip, my mind starting to fog and my mood can veer towards irritability.

Hence I view these things, not as nice things to do if I have time, but as personal necessities and priorities, allowing me to function optimally and recover from hours spent looking at a screen.

I recently created my own secret hideaway in the countryside where weekends are about the outdoors. I help my kids build huts in the forest, climb trees, make random stuff, light fires and just potter about.

No alt text provided for this image

The upside? My brain gets a well-needed break from living life through a screen. My nervous system resets. My soul gets grounded. And I feel like I'm giving my kids part of the privileged relatively non-tech outdoor-based life I was lucky enough to grow up in.

5. Shut down complete.

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Mark Twain

A running actuarial joke is that an actuary is a computer with a heart.

There's probably some truth to it.

My own current "computer trait" is that of having a mental "shut down complete" switch at the end of the day (idea borrowed from Cal Newport).

I've heard it referred to as a digital sunset. I like that phrase. 5pm. Computer shut down. Smart phone off. Work over. Mental shut down. Family time.


"Technology... is a queer thing. It brings you great gifts with one hand, and it stabs you in the back with the other." C.P. Snow

I think digital technology is a classic example of there being no such thing as a free lunch.

It's amazing, it really is. There are so many beneficial aspects to digital technology. So many opportunities and ways in which our lives are enhanced. Overall, I can see how my life is better with digital technology.

But there will always be trade-offs in life.

"Technological progress has merely provided us with more efficient means for going backwards." - Aldous Huxley

In many ways, I feel like we are living in a grandiose experiment where no-one knows exactly where the path will lead us.

However, I believe we can still optimise our approach and the above actions have helped me.

With all that said, I'm still to figure this stuff out. And the tech guys in Silicon Valley are often staying one step ahead of me. If you any further thoughts on keeping digital technology under control, working for us and not against us, please do let me know! 


  1. Demirci, K., Akgönül, M., & Akpinar, A. (2015). Relationship of smartphone use severity with sleep quality, depression, and anxiety in university students. Journal of Behavioral Addictions, 4(2), 85–92. doi:10.1556/2006.4.2015.010
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Wearable Technology in Insurance - ProActuary
Insurtech, Technology

Wearables in Insurance: Where Do We Go From Here?

This essay was awarded first place in the Society of Actuaries' Actuarial Innovation and Technology Essay Competition in 2020. It has been republished here with kind permission from the Society of Actuaries. The original essay and other entries can be read in full here.


Actuaries, working in the pre-digital era, writing out calculations by hand, would have found it difficult to imagine today’s actuary having such immense data, technology and computing power at their disposal. 

Ubiquitous smartphones, advanced artificial intelligence, autonomous vehicles, the internet of things, drones and blockchain are just some of the new technologies today’s actuary is exposed to. The future holds even more exciting prospects with emerging fields such as quantum computing, 5G, brain-computer interfaces, smart pills and smart dust all coming to the fore.

Naturally, these changes provide immense possibilities, but also challenges and potential repercussions for the data-focused actuarial profession. As a forward-looking profession, it seems imperative that actuaries must change with the times and learn to embrace the challenges and opportunities the new technology-focused digital world is creating.

This essay summarizes the current use of technology within insurance (InsurTech) with a focus on wearable technology. Thoughts are provided on new wearable-derived data sources insurance companies may use in the future and the potential advantages of using data from wearables. A summary of opinions are presented on important questions that must be addressed as the use of wearables in insurance becomes more advanced and widespread.

In the era of tightening data regulations and consumer concerns, a blockchain solution is proposed. The essay concludes with thoughts on the important ethical considerations actuaries and other insurance stakeholders should consider, to ensure we are using wearable data in an ethical and responsible way.

The Emergence of InsurTech

In recent years many high profile insurance thought-leaders have argued that the industry has been lagging behind other industries (e.g., banking) which have increasingly embedded technology throughout their business models. However, this is now beginning to change as we witness the emergence of InsurTech – the use of technology innovations within insurance.1

InsurTech has seen many technologies coming to the fore. For example:

  • Telematics (e.g., Metromile use telematics to offer affordable car insurance for low mileage drivers)
  • Artificial Intelligence (e.g., Lemonade offers ‘zero paperwork and instant everything’ home insurance powered by AI)
  • Blockchain (e.g., Insurwave is a blockchain-enabled insurance platform for marine insurance)
  • Robotics (e.g., Digital Workforce uses robotics to enable insurance companies to automate processes)
  • The Internet of Things (IoT) (e.g., Neos Ventures combines connected home devices and home insurance)
  • Wearable Technology (Wearables) (e.g., John Hancock sells interactive life insurance policies that track fitness and health data through wearable devices and smartphones)


One of the key technologies to emerge over the last decade has been the Internet of Things (IoT). Our World is now saturated with a vast array of sensors that capture information across many areas including transport, agriculture, healthcare and property.

IoT sensors have also made their way into wearable technologies that collect data across many aspects of an individual's lifestyle, particularly those relating to health and health-related behaviors. We have also moved beyond wrist-borne devices to now seeing wearable devices in shoes, clothing, accessories and jewelry. Consider, for example, the Oura Ring - a seemingly normal looking ring that incorporates a plethora of sensors measuring various sleep, activity, and recovery metrics with a high degree of accuracy.3

This availability of more bespoke and timely data on biometrics and the ability to understand this data, via machine learning, is having a profound impact, both on the medical profession and on patient care. The ability to detect deterioration in a biometric(s) of choice can lead to a preventative intervention, which can be delivered at lower cost and higher efficiency than a curative response in the absence of the biometric warning.4 Furthermore, research from behavioral psychology and economics confirms that more immediate feedback results in a higher probability of a behavioral adjustment of an individual.5 The early evidence on the use of wearable technology is that it is an effective tool in changing individual attitudes, behavior and ownership of health problems to the net benefit of the subject’s health.6

Wearable data, therefore, provides information that can be conceivably exploited to both improve our understanding of health and mortality related risk factors, and also used as an indirect channel to incentivize and help improve health behavior for society.

Hence, wearables also hold much promise for the health and life insurance industries to incorporate health and behavioral data to aid insurance underwriting, pricing, product innovation and customer engagement. This is evidenced by some pioneering insurance companies such as John Hancock, Vitality, United Healthcare and Oscar that have already incorporated wearables into their product design.

Wearable Data

The insurance companies currently embracing wearables are typically monitoring activity levels (e.g., via step counts) and rewarding policyholders in the form of discounts and other perks. However, as the technology advances and matures it seems conceivable that other health metrics may be used by insurers to underwrite policies with greater accuracy (see Farrell & McCrea, 2018).7 Health metrics that hold particular promise include:

  • Continuous Blood Glucose Monitoring (CGM): CGM is now feasibly monitored by individuals (from both an economic and a practical sense) because of the advancement of sensors such as that offered by The Freestyle Libre System and the Dexcom G6 system. Insurance for diabetics has historically been challenging as insurers’ class these individuals as high risk. CGM may act as a means by which cheaper insurance can be purchased by diabetics that are managing to control their blood sugar levels through means such as exercise and diet.
  • Heart Rate Variability (HRV): HRV measures the variation in the time interval between heartbeats. It has been studied extensively in the medical research field and has been shown to be a predictor of morbidity and mortality. As HRV provides a non-invasive and easy way (e.g., measuring via the previously discussed Oura Ring) to measure autonomic nervous system imbalances, it could be potentially used by insurance companies in the future. Insurers could potentially use HRV as a rating factor and also a means to help inform policyholders of insights into their health and to even facilitate healthy behavior change.

Advantages of Using Wearable Data in Insurance

Incorporation of self-quantified wearable health data into insurance product design provides insurance companies with many potential advantages. I discuss some of these below:

1. Product Innovation

The availability of these new technology-driven data metrics opens potential new avenues for health and life insurers to provide cover for previously difficult to insure or uninsurable risks.8 This is aided by the potential to now provide ongoing feedback data to the insurer in a real-time basis, overcoming the historical underwriting of coverage whereby the insurer typically only captures mortality and morbidity related metrics at a single point in time.

2. Reduced Adverse Selection and Improved Underwriting and Product Pricing

By recording data on an individual’s health behavior, the information asymmetry between the policyholder and the insurer is reduced, thus enabling an enhanced granular risk differentiation based on the true risk levels of the drivers to be achieved. This potentially reduces the problems of adverse selection. Wearable technology may, therefore, lead to the identification of newly available and potentially relevant information and rating factors which are important determinants of health and life related insurance products. This is particularly prevalent in today’s insurance market as insurers engage in a ‘race to simplification’ so that they can offer adequately priced products whilst avoiding having to obtain invasive and time consuming policyholder information.

3. Enhanced Customer Engagement

Insurance company products do not lend themselves well to customer engagement, with most insurance buying viewed as a ‘grudge purchase’. In addition, the industry has suffered from a lack of consumer trust. The traditional insurance model, which typically involves contact at a single (annual) point in time, has arguably held the industry back in today’s customer-centric world. Incorporating wearables into product design may now help to overcome this as customers are engaged with on a more frequent basis with the potential to reward policy-holders for desirable (i.e., risk lowering) activities. In addition, wearables data might give the insurance company an opportunity to provide policyholders with valuable health information and analysis and motivation (through discounts and rewards) to engage in healthier behaviors.

The Challenges Ahead

Although some insurance companies are already embedding wearables into product offerings, the application of wearables within insurance is still nascent and many opportunities remain to be uncovered and challenges remain to be solved. Actuaries, as insurance problem-solvers and historic gatekeepers to policyholder premium calculations and insurance product development, are likely to play a significant role, along with other stakeholders, in addressing the many future issues around utilizing wearable data and embedding the technology into insurance. Some issues and questions actuaries may contribute to answering include:

  • How can the insurance industry use more timely and rich biometric data to refine their underwriting and pricing practices and provide a more personalized product?
  • Can wearable data be used to predict the risk of adverse health outcomes and help incentivize healthy behavior, thus altering the policyholder/insurer relationship?
  • What are the socio-economic implications from potentially reducing adverse selection in insurance markets via pricing using wearable technology data? Does more accurate pricing of health insurance open the possibility of extending coverage to those deemed uninsurable or difficult to insure (e.g., diabetics)? Will certain high-risk individuals be penalized as a result? Will they still be able to get insurance? Should regulatory bodies, therefore, provide greater oversight?
  • How will customers react to insurers introducing new technology into their products? Will they enter a trusting relationship that encourages data disclosure?
  • How can we ensure that we use new novel data sources and artificial intelligence in an ethical manner within insurance?

Furthermore, as the future is likely to move towards more detailed data being captured, on a more frequent and possibly real-time basis, there are various implementation impediments to overcome. Actuaries may also help solve problems in the following areas:

  • Data privacy, security and ethical debates have been a central part of the “big data” landscape since its rise to prominence. What are the demographic, cultural, legal and institutional barriers to the sharing of private information? How have users of private data in other technological spheres overcome these barriers?
  • What are the technological challenges in the collation, storage, processing and communication of this very detailed and real-time data? Can insurers provide guarantees for the validity and source of the data using technical means?

Blockchain: Part of the Solution?

A major hurdle for insurers’ ability to use wearable data relates to effectively managing policyholder concerns regarding privacy and control of data.

actuaries and blockchain

Blockchain, as a distributed ledger technology, holds much potential for the actuarial profession (see Farrell (2018)9). The incorporation of wearable data into insurance may also benefit from blockchain as it potentially allows policyholders to control access to personal records and to know who has accessed them.10 If insurance pricing is to be based on more extensive levels of health and behavioral data, then this data needs to be shared with the insurance company whilst allowing privacy to be maintained as well as adequate policyholder controls (e.g., releasing a certain aggregated level of the data and only for specific purposes) and suitable security mechanisms to be put in place.

Blockchain has already shown promise, within healthcare, in the facilitation of sharing medical data without the need to turn the data over to another party.11 It also, therefore, seems to have potential to be used to help manage wearable data for insurance companies of the future.

Ethical Considerations

With great power (to ‘nudge’) comes great responsibility

Wearable technology has the potential to change the insurer and insured relationship to a more continuous risk-management support role where the insurer helps to prevent adverse conditions taking place by alerting policyholders and also nudging them in the right direction. However, this shift towards ‘predicting and preventing’ and influencing behavior has many potential repercussions that should be considered. To highlight this, consider the following examples:

  • An insurance company rewards policyholders for activity via recording steps. As a result, the policyholder goes for a run rather than doing yoga (which they would enjoy more and would have a better marginal impact on their overall health).
  • A health insurer offers a policyholder a free watch with heart health monitoring capability. The policyholder willingly accepts it as they expect the data, from their rigorous fitness lifestyle, to reduce their premium. The data reveals a heart issue. The insurance company withdraws cover.

An Ethical Example: Adverse Selection - Friend or Foe?

As ‘big data’ continues to increase, the insurance world appears to be moving towards more individualized, granular pricing. With both increasing and more accurate data availability (e.g., via wearables) it is likely that the asymmetry of information between the insurer and the policyholder will decrease, in the absence of regulation. This situation will inevitably lead to a decrease in adverse selection as the pooling of risk involves pooling lives of a more similar nature and hence fewer lives leave the risk pool because of a pricing mismatch between risk and premium.

There are many socio-economic implications from potentially reducing adverse selection in insurance markets. The traditional view is that reduced adverse selection is advantageous and desirable since policyholders are paying a premium closer to a statistically ‘actuarially fair’ price, that truly represents their level of risk. However, this traditional belief provides a good example of a situation where insurance companies and regulators may now need to reconsider traditional views considering the new data rich world we inhabit. For example, British actuary, Guy Thomas (2018), argues that some adverse selection may actually be good for society if we consider the social value created from insurance coverage as a probabilistic ‘loss coverage’.12 I show this situation below (diagram reprinted with kind permission from the author):13

The Potential Impact of Adverse Selection on Insurance Loss Coverage

The Potential Impact of Adverse Selection on Insurance Loss Coverage

This example helps to highlight how some groups of consumers (in this case, the low risk insurance policy holders) may benefit from enhanced personalized pricing and other individuals may be potentially disadvantaged (in this case, the high-risk individuals - who are arguably most in need of insurance - who were previously being subsidized by the lower risk policyholders).

This serves as just one example of how insurance companies, regulators and actuaries must carefully consider the implications of incorporating new data into pricing models to help ensure that we are using data responsibly in an ethical manner.

Concluding Thoughts

In an era where data is growing at an exponential rate and machines are progressively more capable of out-performing humans at many tasks, the actuarial profession (like many professions) is facing unprecedented change. Novel data sources, such as from wearable devices, combined with more sophisticated and powerful analysis, is one example of how technology is altering some areas of traditional actuarial work. As we continue to move into this new digital data-rich paradigm, new opportunities and challenges will emerge. Technology is creating a new world before our very eyes, providing actuaries with an opportunity to capitalize on our strengths of technical expertise, problem-solving ability and professionalism to ensure we remain relevant and trusted business professionals in the future.

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Autonomous Vehicles: Mortality & Insurance Implications
Data Science, Future of The Profession, Technology

Autonomous Vehicles: Mortality & Insurance Implications

In 1908, Henry Ford profoundly changed the automotive industry by developing and manufacturing automobiles at scale. The Ford Model T is generally considered to have been the first affordable car, subsequently ushering in the era of mass-market transportation and leading to widespread societal changes around the world.

111 years later, in 2019, the recent advances in computing power and artificial intelligence have made the previously science-fiction idea of living among unmanned vehicles, capable of navigating their landscapes without human input, a reality. A number of companies are already testing their vehicles in various locations and, since 2009, Google-owned Waymo has already driven more than five million (real road) miles, using self-driving technology (Waymo, 2018).

In a similar fashion to Ford’s global impact, autonomous vehicles will also change society, by significantly altering how we travel.

The areas of potential impact are wide and far-reaching and could include:

  • reduced car ownership
  • radically different car design geared more towards comfort and luxury
  • more older drivers, fewer taxi/bus/truck/delivery drivers
  • lighter burden on hospital and emergency services from fewer road accident injuries
  • significant improvements to rush-hour traffic

However, perhaps the most significant and important implications, at least to the actuarial profession, is the potential for reduced mortality and morbidity from traffic-related accidents and an overhaul of personal auto-insurance risks.

Mortality & morbidity implications

Previous research has indicated that over 90% of road accidents today result from human error. For example, the National Motor Vehicle Crash Causation Survey conducted between 2005 and 2007 attributed critical crash causation as follows:

Vehicle cr​​​​ash attribution

mortality statistics

As we try to forecast and imagine the future driverless world implications, we should first note that nearly 1.3 million people die globally in road crashes each year and an additional 20 to 50 million people worldwide are injured or disabled (Association for Safe International Road Travel, 2013). Indeed, road traffic injuries are currently estimated to be the ninth leading cause of death across all age groups globally and the leading cause of death among people aged 15-29 years (World Health Organisation, 2015). Given the potential for driverless cars to reduce accidents caused by human error the mortality and morbidity implications from autonomous vehicles are profound.

It is of particular interest to consider where these mortality effects are likely to have most impact. Unsurprisingly, traffic related deaths are not uniform across geographic location, socio-economic status, gender and age groups.

The World Health Organisation (WHO) highlights some of these disparities:

  • Income: The global average number of deaths per 100,000 population is 17.4. However, the breakdown between low income, middle-income and high-income is 24.1, 18.4 and 9.2 respectively (WHO, 2015).
  • Location: The African region has the highest fatality rates (26.6 per 100,000 population) and Europe has the lowest (9.3 per 100,000 population) (WHO, 2015).
  • Age: 60% of road traffic deaths are among 15-44 year olds (WHO, 2013).
  • Gender: 77% of all road traffic deaths are men (WHO, 2013).

Proportion of road traffic deaths by age range and country income status

WHO statistics

In terms of the potential for improvements in vehicle accident related mortality and morbidity, this may depend on the degree to which drivers in society can and wish to transition from fully operating vehicles to vehicles that are completely automated. Despite recent advances, there are still many hurdles and obstacles to overcome, and like any innovation there will be a prolonged period of transitional change before autonomous vehicles become mainstream. According to the Society of Automotive Engineers’ (SAE) J3016 standard there are six different levels of automation from level 0 (no automation) to level 6 (full automation), as shown below:

Insurance implications

Inevitably, the motor insurance world will change drastically as we move through the six levels of autonomy. As previously discussed, it is estimated that over 90% of road accidents today result from human error. Hence, personal car insurance will be redefined as risk moves from vehicle users to vehicle manufacturers and software/hardware suppliers.

Attribution of liability will become a much more grey area as discussed in AIG’s 2017 report, ‘The Future of Mobility and Shifting Risk’. In a survey they carried out asking “who is liable in a fully driverless world?” respondents identified various parties that might be liable in crash scenarios involving driverless cars. The parties identified included (AIG, 2017):

  • the car manufacturer,
  • software programmer,
  • vehicle occupant,
  • vehicle owner,
  • parts manufacturer,
  • internet service provider,
  • pedestrian and road manufacturer.

As the inevitable driverless world takes over, many traditional auto-related risks will no longer be as prevalent. Risks such as those caused by reckless or distracted driving, speeding, ignoring stop signs/red lights, unsafe lane changes, tailgating and road rage will be replaced by new, emerging risks such as malfunctioning software and cyber security.

The migration and ensuing calculation of risk will be particularly challenging during what has been called the ‘chaotic middle’ transition period where vehicle owners and the AI software share responsibility for the vehicle’s operation and any resulting liability.

Clearly, we are entering a new era of transportation. Despite the many challenges ahead, it appears that significant changes will be increasingly felt across many different aspects of society, as autonomous vehicles make their way into our everyday lives.


AIG (2017). The future of mobility and shifting risk. (Innovation + Risk series; 8). December 2017.

Association for Safe International Road Travel ([2013]). ‘Annual global road crash statistics’; ‘Annual United States road
crash statistics’.

Society of Automotive Engineers (2014; 2016). Taxonomy and definitions for terms relating to driving automation systems for on-road motor vehicles. J3016_201609.

Singh, S. (2018). Critical reasons for crashes investigated in the National Motor Vehicle Crash Causation Survey. (Traffic Safety Facts: Crash; Stats. Report No. DOT HS 812 506). March 2018. Washington, DC: National Highway Traffic Safety Administration.

Waymo (2018). Waymo safety report: On the road to fully self-driving.

World Health Organization (2013). Global status report on road safety 2013: supporting a decade of action.

World Health Organization (2015). Global status report on road safety 2015.


A version of this article was originally published in the Institute and Faculty of Actuaries Longevity Bulletin (Issue 11, September 2018) and reproduced here with kind permission. The original article can be downloaded here.

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The Last Actuary - Proactuary
Data Science, Future of The Profession, Technology

The Last Actuary

This essay was awarded an "Honourable Mention" in the Society of Actuaries' Actuarial Innovation and Technology Essay Competition in 2020. It has been republished here with kind permission from the Society of Actuaries. The original essay and other entries can be read in full here.

The Last Actuary

The church was packed. Hundreds had gathered to pay their respects. As the eulogy was being read out, my thoughts began to drift. My father was loved. Eccentric and slightly odd in his ways, but very intelligent and most importantly he always acted with complete integrity. Whether it was work, family or community related, he put integrity at the core of his approach. He partially thanked his chosen profession for instilling in him the importance of integrity in how he conducted his life. These attributes had served him well, judging by the vast crowd of friends, family and former work colleagues that had gathered to say their last goodbye.

The church minister was humorously explaining to the silent crowd how my father had managed to accurately predict the exact week of his death - no doubt using the tools and expert judgement he had become so proficient in when he was working as an actuary.

Born in 1968, he had certainly had a good life, dying just 3 months shy of his 119th birthday. As the eulogy progressed, I became more and more intrigued about the profession that my father had made such an impact upon and that he had clearly loved.

When he finally retired, in 2038, the actuarial profession had also literally died a death. I vividly recalled father speaking, with passion, at his retirement dinner. A poignant moment of his retirement speech, that remained with me, was when he was shaking his head, showing tangible regret and disappointment, as he talked nostalgically about his actuarial career. He had discussed how times, and in particular the business world, had changed drastically eventually making his skills and profession obsolete. Technology and data had been the driving forces of change and in many ways, as father used to say, these same drivers should have been what propelled his profession to greater heights and not towards oblivion. But it wasn’t just the actuarial profession that had vanished. Paralegals had disappeared, doctors were pretty much gone. All victims of technology advancements and the merciless artificial intelligence (AI) algorithm. Even household maids were a thing of the past as robots took care of cooking, laundry and other household chores. The fuel behind AI was data, algorithms, and smart individuals. Father had, therefore, felt that actuaries were well placed to play a key role in the emerging paradigm. Particularly given the pressing need to consider the ethical and regulatory implications.

The New World

On my way home from the funeral I again began to think about the world we now lived in and the prophetic words father had uttered towards the end of his career.

My car was traveling at speed as I lay back in my seat and closed my eyes, safe in the knowledge that my autonomous vehicle would have me safely home at exactly 17.05. Technologists had finally overcome the moral and legal issues with self-driving cars and they were now of course ubiquitous bar the occasional hobbyist manual driver, that was confined to the 'leisure only' roads. It seemed strange to think of a time when the majority of people actually drove themselves from place to place and thus took on the potential liability of damaging someone else or their property.

Father, of course, had tried to warn his fellow actuaries that this new reality would have drastic repercussions for the many P&C actuaries. Risks and liabilities still remained, but they had shifted from the driver towards the manufacturers of the cars and their parts (e.g., sensors). As human input had all but disappeared from the driving experience, cutting out the 90% of risk previously caused by human error, risk and liability had also transferred to the producers of the software used to make the AI driven decisions as well as those responsible for building the transport routes and networks on which the driverless cars operated.

My father had been one of the more outspoken actuaries of his time, calling for widespread changes and a need to grasp the opportunities that were arising in the new digital and technology-focused world. If only they had listened to his advice, instead of laughing at his claims of the potential end of the profession, perhaps the actuarial profession would still be alive.

personal investment chatbot - Proactuary

As I arrived home and walked through my apartment door, my retina mail immediately downloaded via my permanent e-contact lenses. The e-letter was from my employer pension fund provider showing that my equity investments had passed the $2,000,000 mark and according to my personal investment chat-bot it was now time to start moving towards bonds to lower the fund volatility, given my planned retirement age of 86.

Scrolling further through the letter, using 2 successive blinks from my right eye, the sophisticated AI powered algorithms informed me that my expected death was still 112 with a 90% level of confidence.

I recalled father telling me how his first actuarial job involved calculating the liability for an employer's pension scheme where the employer made a promise to pay out a pension which was a fixed percentage of each individual's final salary. I wasn't sure if he was joking or not when he told me about this strange type of pension scheme, but a quick retina search revealed that these so-called "defined benefit" pension schemes had indeed existed and had kept many actuaries in work for a number of years. How times had changed!

My trail of thought was interrupted by my fiancé announcing that dinner was now ready. As I sat down to eat, the digital counter on the kitchen table automatically showed the exact amount of calories and breakdown of protein, fats and carbohydrates I was about to consume. Of course, this information would be automatically relayed to my insurer, Baidu, and a quick glance at the figures told me that my health premium score wouldn’t be adversely affected.

It had been a bad few days, since father’s death, as far as my real time health insurance premium was concerned. My usually well-organized diet had suffered and my implanted glucose sensor's historic data showed that I had been eating a lot of sugar heavy meals. As a result, my automatically calculated fasting glucose had crept over 100 mg/dL this morning, which had implications for my health insurance premium. But worst of all, my jewellery sensors had picked up the emotional stress response from having to drop everything and help with funeral arrangements whilst also dealing with the emotional shock that father was no longer with us. Despite his accurate predictions about his death and recent humorous quip that the trustees of his employer’s pension scheme would be “jumping with joy"  with the fact that another one of their scheme's liabilities was now extinguished, the news of his death still came as a blow, as if out of nowhere, and I could see the toll it was taking in cold hard stress figures.

A New Insurance Paradigm


All this health-related data was feeding directly into the autonomous blockchain enabled insurance company where the machine learning algorithms predicted my health risk with near 100% accuracy.

Ubiquitous blockchain proliferation had occurred. Not by 2025 as the hype had suggested, but by 2035 the exchange of value across the world was facilitated by the irrefutable and distributed technology.

actuaries and blockchain

Smart contracts were set up and utilized with ease which had led to a gain in trust in both the banking and insurance industries. Middle-men were a thing of the past. Unnecessary friction across nearly all services and transactions had now disappeared.

Adverse selection was also a thing of the past, as individual insurance risk predictions were now completely specific and accurate to each individual, ensuring that the insurers were not impacted by potential asymmetry of information. Hence the bad risks were no longer being subsidized by the “good risks”. The traditional insurance pooling of risk no longer existed as every insured individual was accurately assessed on a completely personalized granular level. However, lack of pooling had created wider societal problems as the poor risks in society were now finding it very difficult to get the necessary cover.

Insurance companies had also changed in many other ways. Baidu now had 90% of the insurance provision market share, as they had leveraged off their advanced analytics and strong customer loyalty and engagement. Everything had moved from static to dynamic and real-time. From purchase and annual renewal to continuous offerings and interactions. Data availability was ubiquitous with sensors everywhere feeding in voluminous data cheaply and easily for the sophisticated and automated algorithms to perform complex and extremely accurate calculations, which had moved beyond the realm of human understanding. Wearables, social media, geolocation, weather and news were just some of the real-time data continuously feeding into insurer’s dynamic blockchain enabled data systems, where AI was doing the work previously done by actuaries.

A Shift to Prevention

My own insurance company acts not only as a financial security blanket but also a valued trusted advisor. The insights and health information it provides me on a daily basis has truly helped to overhaul my health behaviors and constantly nudge me in the right direction with alerts and monetary motivations.

The fact that all my coverage comes from a single provider, where I also get nearly all my other digital services, has meant that my customer experience is drastically efficient and simplified. They even provide me with new unique bespoke personalized and dynamically priced products based on my changing needs.

Manual underwriting no longer exists. Claims processing is fast, accurate, cheap and efficient. Fraud is almost non-existent as the data and algorithms, delving into online social data can spot them with ease.

Everything is frictionless. The industry has shifted largely to one of prevention, risk monitoring and mitigation. I enjoy interacting with my insurer as they provide such valuable information that is provided in a clear simplified format. I truly trust that they will provide the necessary claims and/or advice should I need to call upon them at any point.

A World of Actuarial Opportunities

My father had foreseen these changes and viewed them as being catalysts and opportunities for actuaries to “move up the value chain” adding value in innovative creative ways, completely outside traditional actuarial work. His view had been that creativity, flexibility and the ability to innovate and reinvent oneself were going to be key skills for the future. He spoke about the need for actuaries to embrace technological changes. His message to actuaries of the future also included:

  • The need for actuaries to become more creative as new data sources and complex risks continued to appear and evolve.
  • The need for actuaries to evolve their mindsets so that perpetual ongoing learning was viewed as being very important for actuaries to not only thrive, but survive.
  • Barriers to entry will reduce in the future. Actuaries would no longer be protected, to the same extent, by credentials from exams and by regulatory work. Actuaries must ensure they are always adding value and remain focused on the needs of employers and their customers.
  • As part of being flexible and continuous innovators, actuaries must learn to work in diverse teams that often take an agile experimental approach to new problems which would involve failing fast and iterating as necessary.
  • As key members of these diverse agile problem-solving teams, actuaries would, at times, be expected to apply their specialist knowledge but they would also need to be able to act as generalists with an ability to see the bigger picture and to connect people and ideas.

Many of his fellow actuaries, unfortunately, thought he was being dramatic with such views. Actuaries don’t need creativity they claimed. Technology and AI is over-hyped they retorted. We are protected by impermeable barriers to entry they countered. However, risk and corporates had evolved and changed so quickly that father’s warning about creativity and flexibility being some of the most important attributes an actuary of the future could possess, did indeed seem prophetic. As he had forewarned, AI and technology had indeed penetrated every nook and cranny of business. Anything that could be easily automated had fallen prey to the majestic combination of AI and technology. Those that failed to embrace fourth industrial revolution had indeed been left behind. Hindsight, of course, is a wonderful thing.

The Merciless AI Onslaught

As I turned on the news I was greeted by some uplifting positive news. The new president of China and free leader of the world was speaking at an address and the support from the crowd was palpable.

Politics had moved on in leaps and bounds over the last decade and of course had changed immeasurably since the spectacular collapse of America, in 2032. President Wò sēn was everything a nation could hope for in a leader - completely altruistic, non-biased, 100% committed to the good of the people and more intelligent and rational than any president that had gone before him.

This was, of course, no surprise. President Wò sēn was after all an artificial intelligent robot. What began as a joke (“Watson For President”) in 2016 had set in motion the wheels towards the current reality. Surprisingly, the vast majority were embracing the new efficient world order where national decisions were based on terabytes of historic data, aided by quantum computers that had all but replaced traditional binary computers.

The results were difficult to argue against. World crime was now down 15%, healthcare costs were down significantly as chronic conditions were recognized at an early stage and patients had the means to understand their conditions and treat themselves much of the time.

Concluding Thoughts

I should finish by saying that I actually don't think that the actuarial profession will die a death. I believe there are too many talented and intelligent people in this profession for us to lose our relevance and for actuarial obsoletion to become a reality.

However, despite our many strengths, I do have the view that we are entering an era where the world of work will continue to change at a rapid rate. Increasing connections, technology, digital information and ideas are leading to exponential change throughout the world in many ways, whether we like it or not. To use a metaphorical quote from Malcolm X:

The future belongs to those who prepare for it today.

As a profession, whose very existence is based on the premise of being skilled at predicting the future and dealing with risk, let’s not fail in these regards, at this very important juncture.

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