The future for actuaries and data scientists
A current challenge facing the industry is the burgeoning development of data science and the question on the lips of many is perhaps ‘will the data scientist eventually replace the actuary?’ It appears that whilst there are many overlaps, the two industries in fact remain very distinct, with the plan for the future most likely representing the two roles working side by side to facilitate a more effective business model, as opposed to one overtaking the other.
The work of a data scientist spans across a number of industries, not just the insurance field, and may involve all types of different data including pictures, diagrams, graphs, surveys, the written word, numerical data), with a mixture of statistics, computer programming, machine learning and advanced analysis. Many data scientists will be graduates of related subjects including mathematics (statistics and probability are essential to analysing and interpreting data, hypothesising, making prediction etc), engineering or computer science with excellent knowledge of programming. (computerworld.uk). It is not uncommon for a data scientist to have a PhD or masters degree. Salary wise, graduates may start around £19k, with the more experienced earners being around the £60k mark, occasionally up to £100k.
The actuary works primarily with statistics and mathematical theories, analysing the same to advise on risk and probability of certain events and this information is usually produced in the form of graphs, tables, and reports. According to iFoA
(https://www.actuaries.org.uk/become-actuary/how-become-actuary) actuarial employers generally will favour candidates with degrees in a numerate subject such as mathematics, statistics, economics, engineering, chemistry, physics or actuarial science. The actuary will then study on for up to 6 years after graduating from their bachelors or masters degree, taking a total of around 15 professional examinations to become fully qualified (although some degrees offer exemptions from certain exams). An entry level annual salary is around the £25k-£30k mark, with the highest fully qualified earners reaching £100-200k.
In short, it may be said that there are the following key differences:
It may also be argued that whilst data science skills are great to have in an actuarial role, an actuary doesn’t necessarily need them.
However as data science has developed, speculation is rife that the actuarial profession in the future may end up playing host to a hostile takeover bid from data scientists.
Data science: the end of the actuary as we know it?
An interesting article from Colin Priest, actuary turned data scientist
states that ‘it has been said that actuaries were the first ‘data scientists’ – but presently actuarial employers are increasingly expecting applicants and existing employees to offer the same tri-part skillset (coding/programming; mathematics and statistics; and domain knowledge) as data scientists, with the Singapore Actuarial Society reporting that almost 50% expected new actuaries to write code, manipulate data and use statistical software. A further theme in the employer feedback was that actuaries need to “improve on programming skills”. In the US, data scientists have increasingly been hired for roles that were traditionally actuarial. In Colin Priest’s view, actuaries will now need to learn:
However, as Colin Priest points out, technology perhaps saves the day here with automated machinelearning, expert software that automatically finds the best algorithms for data.
An article published by Smith Hanley
postulated that actuaries are in fact completely safe from any potential data scientist takeover because the following key factors will simply switch the data scientist off from any initial actuarial ambitions:
Teamwork makes the dream work...?
So what does the future hold for actuaries and data scientists? Some say the evolution of data science could make the actuary extinct, but it would appear that the recent consensus amongst industry influencers is that the future will see two similar but very separate industries remaining independent yet working together in perfect professional partnership. At the 2018 London discussion,
(https://www.cambridge.org/core/journals/british-actuarial-journal/article/what-data-science-means-for-the-future-of-the-actuarial-profession/B42EF98A53ED8D6E42606FAE664021D2/core-reader) some of the main conclusions drawn were:
In conclusion, it would seem that whilst the future of the profession will undoubtedly see a fusion between the two industries, the fundamental differences between the very nature and purpose of the two still very separate industries means that both will more likely work side by side rather than one counterpart replacing the other. This will undoubtedly mark an interesting move towards an all-encompassing business model in which both actuaries and data scientists will enhance one another by individually playing to their strengths.
Have your say:
Do you think the actuary will become a dinosaur thanks to the development of data science, or will the two remain separate and complement each others skill sets?