Actuaries in Data Science

 “Data science is very empowering for actuaries: it gives them a platform to move into wider fields.” 

John Taylor, Immediate Past President, The Institute and Faculty of Actuaries 


What is Data Science?

Data Science is no longer a buzzword in the industry, and is being implemented as a part of day to day operations of organizations across the board. It combines programming skills, mathematical and statistical knowledge, and domain expertise to gain valuable insights from data.

Data scientists apply machine learning algorithms to data in all forms- number, text, images, audio, video, and more, to design artificial intelligence (AI) systems which can perform tasks which would normally require human intelligence. These systems also generate insights into the data which are used by business analysts for making crucial decisions.


Actuarial Science and Data Science: What are the similarities and differences?

Data is a crucial tool for both actuaries and data scientists – the more data they get, the better results they can achieve. While data science focuses more on the programming aspect, actuarial science focuses more on the business and financial implications of data.

It is believed that actuaries are the original data scientists. Since the inception of the actuarial profession, actuaries have pioneered the use of statistics, Math, data and economics (and now automation and machine learning) to predict and manage future risk.



Career opportunities in data science for actuaries

There is a high demand in the industry for professionals with data science skill sets. Online recruiters indeed predict a 30% increase in demand for these professionals year-on-year. However, searches for jobs relating to data science grew at just 14% - suggesting a demand-supply gap.

These skill sets open new domains for actuaries other than insurance and boost their professional value. Actuaries can either work as full-time data scientists, or work closely with data scientists combining data insights with their knowledge of business, finance and risk management.


One of the industries where actuaries can add value with data science skill sets is healthcare. Like the BFSI sector, the healthcare industry is being disrupted by technologies driven by massive datasets being generated by diagnostic and treatment tech.

o   Wearable technology monitors and collects patients’ data 24x7 based on certain health indicators. Approximately 2 TB of such data is collected per-patient per-day.

o   Machine Learning and Deep Learning algorithms are used to read imaging data such as x-rays and scans and analyze them to detect common ailments and reduce rates of diagnostic failure.

o   Data science algorithms are also used to estimate the number of patients entering a hospital on a given day.

These applications fuel a need for professionals well-versed in data science skill sets. Actuaries are well-placed to work closely with data scientists by combining healthcare analytics with their strong understanding of finance and risk management. In the insurance domain, data generated by wearable technology can also be used to better understand consumers’ needs. This could facilitate actuaries to develop new insurance products which are more dynamic in responding to the individual’s health and lifestyle requirements.

The upcoming flood of data which will have to be analyzed provides unprecedented opportunities to actuaries to move into wider fields. Apart from healthcare and insurance, organizations across all industries will look forward to reaping the benefits of Data Science and Machine Learning.

The effective application of data science and AI requires efficient collection and analysis of data, problem solving, doing a cost-benefit analysis, and deciding whether a consequence is indeed genuine or merely random or accidental. Actuaries are specially trained for solving these specialized problems, and thus have a significant advantage in this field.

Data science is a fast-growing area of expertise which has applications in almost all fields. More and more businesses and industries are adopting and implementing it in their day-to-day business operations.

Actuaries, being data professionals, are well-placed to be involved in this field and make use of it to widen their professional horizons. This will also lead to increasing collaborations between actuaries and other professionals like data scientists and engineers.  


References -

https://www.datarobot.com/wiki/data-science

https://www.innoarchitech.com/blog/what-is-data-science-does-data-scientist-do

https://analyticsindiamag.com/can-an-actuary-become-a-data-scientist/

https://www.theactuary.com/opinion/2017/12/2017/12/05/are-actuaries-competitive-data-science

https://medium.com/infonation-monthly/actuary-2050-data-science-and-actuarial-science-as-one-77b89185bae9

https://www.actuaries.org.uk/learn-and-develop/lifelong-learning/data-science-actuarial-viewpoint/data-science-qa-ifoa-president-john-taylor

https://www.actuaries.org.uk/learn-and-develop/lifelong-learning/data-science-actuarial-viewpoint/what-are-career-opportunities-data-science-actuaries

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