How Low-Code Can You Go?

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While not necessarily true, the insurance industry has been seen as slow to adapt to new technology. But perhaps “selective” and “strategic” are better words to describe the industry. There has been a strong appetite to invest more heavily in technology due to increasing complexity (in products, models, data requirements, processes) and the strategic imperative to improve efficiency and reduce costs.¹

With the advent of low-code (LC) and no-code (NC) solutions, actuaries and business analysts can more easily harness the power of technology without needing deep technical expertise or excessively rely on the IT organization. In our opinion, achieving synergy between actuaries and IT professionals is a critical success factor in today’s data-driven insurance landscape.

There are many different LC/NC platform offerings available, and they feature a multitude of benefits that enhance the actuarial workflow and drive efficiency. This article explores the benefits of incorporating LC/NC platforms in an actuarial setting and how actuaries with different skill sets can benefit from enhanced efficiency, collaboration and analytical capabilities.

Based on our observations and experience, one of the LC/NC platforms actuaries frequently use is Alteryx, which allows users to extract, blend, cleanse and analyze data from various sources. It has a user-friendly interface that enables data preparation, transformation and modeling without requiring extensive coding skills. While we crafted our case studies in this article using Alteryx, the underlying principles we highlight are not confined to this single tool and can extend universally to any LC/NC solution in the realm of actuarial work. This universality underscores the adaptability and broad applicability of LC/NC technologies in transforming and optimizing actuarial processes.

Key Benefits of LC/NC Technologies in the Actuarial Setting

Incorporating LC/NC platforms can make the actuarial workflow more efficient. Some of the key benefits include the following:

• Seamless data integration
• Cost-efficient automation
• Scalability and governance
• Modernizing actuarial specialty toolkits
• Improved process transparency
• Optimizing teamwork and communication
• Software as a service (SaaS) empowerment
• Agility realized

Seamless Data Integration

Actuarial work heavily relies on data, and LC/NC platforms come with prebuilt connectors that facilitate seamless integration with various data sources such as SQL and other database formats. Because actuaries can easily import, clean and analyze data without extensive programming knowledge, data processing time is reduced, helping ensure the use of up-to-date information.

Alteryx’s built-in input tool can read commonly used data sources such as Excel files, Microsoft Access databases, SQL and other database formats. Based on the type of input, the tool automatically asks for the appropriate parameters to connect. Using the LC/NC platform’s prebuilt functionalities allows actuaries to spend less time troubleshooting data issues and more time performing analysis. This ultimately provides opportunities for actuaries and data professionals to collaborate more effectively, whereby they can all focus on their own domain expertise.

Cost-efficient Automation

Insurance companies have recurring processes, such as month-end reporting, that require significant resources. These processes often involve an actuary or business analyst performing many inputs and data manipulations. LC/NC platforms facilitate the automation of repetitive tasks in actuarial work and streamline complicated processes so different inputs can be sourced and transformed in one workflow. By setting up input parameters, the workflow can be configured to work with dynamic inputs and run automatically. If there needs to be a change to certain records, actuaries can add manual adjustment functionality so the workflow can automatically adjust the output without user action.

By creating custom workflows and automating data processing, actuaries can save valuable time, reduce overall operational costs and increase business insights. The impact of LC/NC platforms also cascades into reporting and visualization. With robust reporting capabilities, users can generate reports that distill complex data into actionable insights. Additionally, these platforms can easily interface with visualization platforms, presenting an integrated solution for transforming data into visually engaging dashboards and reports. This creates an integration solution that automates the end-to-end process—from data aggregation and transformation to visualization and reporting.

Scalability and Governance

With datasets becoming larger in response to accounting regulations and more granular models, scalability has become a concern. LC/NC platforms address scalability issues with solutions that allow actuaries to handle large datasets without significant changes to existing workflows.

Solutions such as Alteryx allow for workflows to be processed on cloud-computing platforms such as Microsoft Azure by using grid computing. Cloud computing capabilities enable users to access resources as needed to handle substantial amounts of data. Alteryx empowers users to manage substantial datasets efficiently and provides an avenue for transitioning workflows from desktop to production environments.

Beyond the scalability, server- or cloud-based execution offers a strategic advantage for model governance by facilitating centralized control and management. Workflow execution in a controlled environment is essential for compliance with data governance, security and regulatory standards.²

Modernizing Actuarial Specialty Toolkits

Actuaries often rely on specialized software for complex modeling and analysis. While well-established actuarial modeling software remains indispensable, integrating LC/NC solutions can augment these existing processes significantly. For example, model development often includes unit testing through replicator workbooks in traditional tools such as Excel, which can become intricate and slow, particularly when replicating complex calculations like stochastic models. LC/NC analytical platforms such as Alteryx can address these problems by offering a solution that enables step-by-step replication of actuarial model logic and efficient scaling for large datasets. Unlike traditional programming languages such as Python, Alteryx’s user-friendly interface reduces the risk of errors caused by syntax or complex logic, allowing actuaries to focus on their core tasks.³

Another specialized use case we have seen is with experience studies. Traditionally, actuaries have done this highly recursive exercise in SQL and Excel, a process riddled with challenges that include handling large datasets efficiently, managing numerous copies of intricate workbooks for each iteration and the potential for human error. Alteryx offers a better approach, in our opinion, and uses workflows to source inputs directly from assumption repository databases, perform data manipulations, automate recursive actual-to-expected (A/E) calculations and generate optimized rate tables for a target A/E ratio—and it couples all of this with data visualization tools to present comprehensive reports. This automation enhances accuracy and efficiency and accelerates the entire experience study process.

LC/NC platforms can produce customized roll-forward tables to support financial reporting. The process for customized roll-forward analysis, traditionally completed in Excel, can be cumbersome and requires transformations of large post-model datasets. In addition, a spider web of mappings and business rules leads to low interpretability, limited flexibility for format changes and increased risk of user error. LC/NC platforms simplify this by allowing users to visually lay out transformation and mapping logic, providing a more user-friendly experience than navigating complex Excel formulas across multiple sheets. In addition, the generation of various roll-forward reports would have been completed with a significant leap in the processing time.

Lastly, Alteryx offers built-in advanced analytics packages beyond traditional actuarial software. Actuaries can leverage these capabilities to create tools for advanced and predictive modeling, leveraging and integrating with generative AI capabilities such as optical character recognition (OCR), customized large language models (LLMs) and natural language generation (NLG). This empowers actuaries to explore new horizons in their field and harness cutting-edge technology to drive insights and innovation. Thanks to preassembled components and templates, actuaries can swiftly craft specialized toolkits within a matter of weeks—a significant departure from the months previously required.

Improved Process Transparency

Transparency in actuarial models is crucial for regulatory compliance and stakeholder confidence. LC/NC platforms offer a visual representation of a model’s components, making it easier for users to understand and interpret the logic behind calculations. In Alteryx, the tools form a canvas flow chart that depicts how inputs are extracted and transformed into the final product. Rather than needing to review complicated programming language, reviewers can examine the model quickly by looking at the LC/NC workflow and setting up test cases.

LC/NC workflows allow compliance members and nontechnical stakeholders to accelerate their understanding of the model. This transparency enhances model governance and aids in explaining results to nontechnical stakeholders.

Optimizing Teamwork and Communication

Effective collaboration is paramount within accounting, finance, underwriting, IT and actuarial teams. Although actuaries are generally well-trained in technical skills, it can be a challenge to share their knowledge of highly complex models and code. LC/NC solutions streamline communication by providing an intuitive visual interface that’s accessible to nontechnical team members. Alteryx uses icons to visually represent the built-in tools that create the workflow, connected to each other through lines, so the user can easily see how the data flows from beginning to end. In this setting, nontechnical team members can visualize and understand the process, which improves collaboration with business professionals and helps them understand actuarial results and facilitate strategic decision-making.

SaaS Empowerment

LC/NC solutions come with an assortment of prebuilt tools to enable users to construct workflows and models quickly. The SaaS model offers a wealth of benefits. Through regular version upgrades and enhancements, these tools seamlessly can incorporate the latest technological advancements, such as statistical learning techniques. This allows users to effortlessly align their work processes with cutting-edge tools and techniques without extensive research and complex coding implementation.

Developers of these solutions have been quick to add new tools to the built-in libraries so that actuarial capabilities are up to date with the latest technologies. One recent example is the generative AI boom’s “coding assistants” that help with the development and debugging of models. Comparatively, constructing and maintaining homegrown models often requires the involvement of subject-matter experts who need to navigate the intricacies of integrating new technology or features, potentially slowing business innovation.

Agility Realized

Recently, we used Alteryx to assist a large life and annuity insurer with streamlining and automating a complex data preparation process for the monthly valuation process. The result was that a manual and time-consuming procedure that spanned several days is now an automated workflow that takes only a few hours to run. Incorporating automatic error handling and user alerts for data quality control further enhances the efficiency and reliability of the process.

In another use case, Alteryx helped address a significant challenge where actuaries from six different product lines were required to independently format their cash flows into a standardized reporting format every quarter. This was a resource-intensive burden prone to multiple rounds of errors requiring rework. Utilizing Alteryx allowed the extraction of data from various sources, data transformations and standardization to be consolidated into a single automated process that one user running the workflow can perform automatically.

These examples showcase the power of modern data analytics and automation tools in revolutionizing traditional processes and optimizing resource utilization. They also underscore the importance of embracing technology-driven solutions to stay competitive and efficient in today’s rapidly evolving business landscape.

Limitations of LC/NC Platforms

In light of these pivotal advantages, it becomes evident that LC/NC platforms are potent assets within the actuarial toolkit and furnish many capabilities. Nevertheless, it is imperative to underscore that they are not intended to serve as the universal solution for all circumstances. Practitioners should be conscious of the limitations. For instance, it may be more prudent for specialized IT teams that employ optimized processing languages to oversee and manage extensive data pipelines.

Conclusion

In a rapidly evolving landscape, many insurance companies are adopting LC/NC solutions into their processes, adding them into toolkits to address specific and unique business problems. This growing trend is placing these powerful tools in the hands of actuaries. LC/NC solutions empower actuaries by allowing them to fully unleash their analytical potential and navigate the increasingly data-centric landscape of modern actuarial science. While a major benefit of LC/NC platforms is that they help actuaries reduce the barrier of entry for analytics through ease of use and rapid development of solutions, it’s crucial to recognize the importance of adhering to best practices, stringent model governance and coding standards, particularly with production processes.⁴

Looking ahead, we expect that generative AI will further usher in an era of amplified empowerment for LC/NC platforms. These solutions are poised to revolutionize how actuaries approach their work by augmenting predictive capabilities, expediting tasks through automation, enabling seamless communication and facilitating adaptive learning. As this technology continues to advance, we believe its integration is likely to become the standard in actuarial practice, driving the industry forward into more innovative and data-driven excellence.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Copyright © 2024 by the Society of Actuaries, Schaumburg, Illinois.