The UK recently hosted the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow. on the 31st October to 12th November 2021.
Climate science is perhaps the greatest example of how powerful using the past to predict the future can be. In fact, we wouldn’t be aware of the devastating impact of climate change if it wasn’t for the tireless work of scientists around the world, who looked at global temperatures from far beyond the time when formal measurements were introduced.
In November 2020, climate scientists released a paper that urged others in the field to; “include simulations of past climates in their evaluation and statement of their model performance.” In other words, they should; “pay attention to the past and actively involve it in predicting the future.”
At Capita, our expert actuarial team takes this approach when supporting our clients with a wide range of challenges. By using actuarial modelling we can help any business area where complex
calculations need to be handled or meticulous data analysis is required.
This means that businesses have the insight they need to make informed decisions, whether this is how they’re going to change their practices and take action against climate change, or how they’re going to improve their customer experience.
Data modelling informs decision making
The role of data modelling was thrown into the spotlight during the coronavirus pandemic. We all took more notice of the data models being talked through at the Downing Street press briefings because they impacted our daily lives. In 2020, the former president of the Institute and Faculty of Actuaries (IFoA), Tan Suee Chieh, recognised the role that actuaries can have in tackling the pandemic when he addressed graduating students. He said; “The Covid-19 crisis will define this generation of actuaries… apply the skills embedded in our DNA to solve practical problems which benefit society.”
While the government has used data modelling to inform its decision making, companies around the world have had to do the same. When there’s uncertainty and a number of outcomes to consider, such as during the pandemic, modelling can help to inform decision-making, and this is where the expertise of actuarial teams come in.
Our team recently demonstrated how actuarial data modelling could be used to help insurance companies to predict customer demand and plan their resourcing more effectively. This insight could ultimately ensure that the companies were able to better support their customers during a stressful and worrying time.
Although a sobering exercise, this kind of modelling is vital, as the pandemic significantly increased demands on insurance claims teams. To respond appropriately, they needed to be able to predict the increase in contacts they were likely to receive, so they could bolster their teams.
To provide this insight, we took the publicly available Covid-19 data and used a number of models, including linear regression and random forest, to predict the likely demand for claims in the following week.
The actuarial profession is evolving, and more businesses are realising the value that actuaries can add when tackling challenges that reach beyond the traditional finance world. At Capita, we always work to adapt to the new challenges our clients face so, as well as providing traditional actuarial support, we’re able to help our clients to solve problems that require a high degree of data analysis.