In August, AAIS Views detailed the results of our hugely successful Proof of Concept (POC) for openIDL (Open Insurance Data Link) that proved the blockchain technology can dramatically improve the insurance regulatory reporting proves for insurers and regulators. We also saw that insurer information could be correlated with data from other sources to reveal deeper insights, and that data could be leveraged by regulators, while remaining private, secure and in full control of participating carriers
This is the next installment in a series of conversations with AAIS leadership to get to know them, their background, and the unique work they’re doing within AAIS to further the insurance industry. In this edition, AAIS Views spoke with Michael Payne, Chief Pricing Actuary, about his career, being creative as an actuary, the role data is playing to create better pricing models, and how AAIS is leveraging those models to deliver value to our Members.
Tell us about your background.
Michael Payne: When I was in college, I liked math, but really didn’t know what I wanted to do. Then I heard about Actuarial Science from an alum who came back to campus and gave a presentation about the career path. That’s what sparked my interest. I got an internship at Zurich and that turned into my first job out of school. I started out doing pricing at Zurich, went to SCOR Re to do reinsurance pricing, and went back to Zurich to eventually lead a pricing tools team.
One not-so-traditional role in my career was a stint I did at Sears in their Home Services unit where I was the Director of Underwriting Analysis. Basically, if you bought a refrigerator at Sears, they were going to offer you a protection plan. It was my role to figure out the prices for those protection agreements based on how likely the appliance was going to need to be repaired or even replaced.
Overall, I really like pricing. It’s prospective in nature as you try to determine what might happen in the future.
In the winter of 2018, I joined AAIS where I’ve been able to leverage my pricing experience. My role includes product development and delivering loss costs that are appropriate for the coverage being offered. Not all carriers have a large team of actuaries or loads of data, so our rating plans offer them a faster speed to market for a new line of business, or even insurtechs to get their first policies written.
The AAIS Pulse newsmagazine recently featured AAIS Chief Pricing Actuary Mike Payne and Somil Jain, VP & Consulting Actuary at Lewis & Ellis Actuaries and Consultants, spotlighting forces reshaping the role of pricing actuaries.
In August 2020, AAIS introduced its new Risk Awareness Service (RAS), a digital resource center tracking catastrophic risk and providing risk information in real time. At the inaugural AAIS Pulse Newsmagazine, AAIS VP Data and Actuarial Services Phil LeGrone described the Risk Awareness Service, its goals, and the value it can provide insurance carriers and the customers they serve. He also welcomed Jeff Waters, a Senior Product Manager at Risk Management Solutions (RMS), the leading modeling firms, to add his perspective on emerging modeling approaches and tools.
With more than $22 billion in losses recorded annually, fire insurance is burning a hole in the insurance industry’s proverbial pocket. Having used the same approach to assessing public fire protection (PFP) risk for the past 30 years, insurers have failed to evaluate the impact it has on overall loss cost.