The Actuary magazine - April 2022

APRIL 2022 theactuary.com

HEALTH

The magazine of thee IInstitute nstitute and Faculty of Act Actuaries tuaries

Are we starting to understand long COVID?

RISK What the pandemic has taught us about the interdependency of risks

MODELLING How IFoA modellers supported SAGE’s pandemic response

INTERVIEW Matthew Edwards and Stuart McDonald reflect on the crucial work of the COVID-19 Actuaries Response Group

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Lessons for the future from two years of COVID-19

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Contents April 2022

Web Exclusives Driving at the bigger picture COVID-19’s effect on the behaviour of motor insurance consumers bit.ly/DrivingBigPic

17 Health: A tale of two countries Sharad Bajla and Rajeshwarie VS examine the different pandemic experiences of India and Singapore 18 Risk: Better than cure The study of existential risks has a lot to offer humanity, says Sanjay Joshi

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Up Front 4 Editorial Ruolin Wang introduces a special issue dedicated to COVID-19 5 President’s comment Success will come about through community, says Louise Pryor 5 CEO’s comment Stephen Mann reflects on the results of the latest IFoA member survey 6 IFoA news The latest IFoA news and events

Features 14 Interview: Matthew Edwards and Stuart McDonald The impact of the COVID-19 Actuaries Response Group

20 Modelling: An integrated 2 approach Maryam Abdullah on COVID-19 modelling, and the lessons it could hold for climate modelling 22 General insurance: New world, new threats The pandemic has altered motor and cyber risks, says Socrates Olympios 23 Health: In for the long haul Achim Regenauer delves deeper into the long COVID phenomenon

COVER: NEIL WEBB

38 Health: Positive progress Ian Rowe and Jack Halligan on AIdriven advances in cancer diagnosis 41 Environment: Could do better Insurers must stop covering fossil fuel extraction, says Peter Bosshard 42 World view: Thailand Simon Brimblecombe shares his experience working in south-east Asia

At The Back

29 Risk: Chain reaction Kim Burgess and Richard Waterer look at elevated supply chain risk

43 Student Adeetya Tantia discusses the insurance and societal implications of widespread home working

32 Risk: The tangled web Our interdependent economies demand careful risk management, say David Maneval and John Lian

44 Puzzles

34 Modelling: Model citizens Chris Martin and Steve Bale on their COVID-19 work for the public sector

47 Inside story Kate Dron on volunteering during COVID-19, and ‘growing’ actuaries

Did you know you can now read The Actuary magazine on any tablet or A Android phone? Click through to read more online, download resources, or sshare on social media via our links in the app. It’s an exclusive free benefit for o our members. Download on the App Store at: www.theactuary.com/ipad V Visit: www.play.google.com

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36 Risk: Forewarned and forearmed What can we learn from the pandemic ordeals of different states? Kate Dron, Alvin Fu and Randall Wright discuss

26 Health: End game Adam Strange and Prachi Patkee investigate what it means to go from pandemic to endemic

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Open season How insurers can use open data sources to their benefit bit.ly/OpenSeason_data

46 People/society news The latest news, updates and events

Additional content including daily news can be found at www.theactuary.com Weekly newsletter: for all the latest actuarial news, features and opinion direct to your inbox, sign up at bit.ly/1MN3bXK APRIL 2022 | THE ACTUARY | 3

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PUBLISHER Redactive Publishing Ltd Level 5, 78 Chamber Street, London, E1 8BL +44 (0)20 7880 6200 PUBLISHING DIRECTOR Anthony Moran MANAGING EDITOR Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk SUB-EDITOR Kate Bennett NEWS REPORTER Christopher Seekings +44 (0)20 7324 2743 christopher.seekings @redactive.co.uk

EDITOR Ruolin Wang editor@theactuary.com F E AT U R E S E D I T O R S Travis Elsum: Environment and sustainability Blessing Mbukude: Life Fiona Neylon: General insurance Yiannis Parizas: General insurance and data science Rajeshwarie VS: General insurance PEOPLE/SOCIETY NEWS EDITOR social@theactuary.com Sharon Maguire sharon.maguire@redactive.co.uk STUDENT EDITOR Adeetya Tantia student@theactuary.com

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E: membership@actuaries.org.uk Delivery queries: contact Rachel Young E: rachel.young@redactive.co.uk Published by the Institute and Faculty of Actuaries (IFoA) The editor and the IFoA are not responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, stored or transmitted in any form, or by any means, without prior written permission of the copyright owners.

While every effort is made to ensure the accuracy of the content, the publisher and its contributors accept no responsibility for any material contained herein. © Institute and Faculty of Actuaries, April 2022 All rights reserved ISSN 0960-457X

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Two years on Welcome to this special pandemic issue of The Actuary. It seems fitting, though unfortunate, that I write this editorial having tested positive for COVID-19 myself…

The pandemic was declared in early March 2020, and the UK went into its first lockdown at the end of that month. We originally thought that the April 2022 issue would feature a few ‘two years on’ articles, but thanks to the overwhelming amount of interest we received, we bring you an almost entire issue of COVID-19-related articles, looking back – and ahead – at different aspects of the pandemic. Thank you so much for your contributions.

For this issue, I spoke to Matthew Edwards and Stuart McDonald about their work as part of the COVID-19 Actuaries Response Group and the CMI (p14). We also read about pandemic scenario modelling as part of the IFoA COVID-19 Action Taskforce (p20), and actuaries’ contributions to the UK’s public sector response (p34). Further afield, we consider factors that have contributed to different national responses and outcomes (p36), zooming in on Singapore and India (p17). Looking beyond healthcare and first-order impacts of the pandemic, we also consider motor, cyber (p22) and supply chain risks (p29).

And finally, what next? What does it mean to go from pandemic to endemic (p26)? What do we know about long COVID (p23)? And can we prepare for the next extreme event (p18)?

I hope you enjoy this issue.

RUOLIN WANG EDITOR editor@theactuary.com Ruolin Wang is a Solutions Manager at Schroders. Any views are her own and not those of Schroders.

www.theactuary.com

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LOUISE PRYOR

STEPHEN MANN

Global community

Making headway

F

A

ostering a vibrant global community is one of the three main themes of the IFoA’s 2020-24 strategy.

Wherever we are and whatever our circumstances, we should be able to count on the IFoA’s support in our careers and professional development.

There are several aspects to this. First, it’s about how the IFoA interacts with its members, and how members interact with each other and the world at large. Many of you will have noticed that the change to online working has meant the IFoA is making greater use of digital tools, enabling more of us to participate in working groups and attend online events. Members are encountering a growing range of career and employment patterns, and the IFoA is considering how digital communities could support us, starting with pilot online communities for banking and data science.

The IFoA is also learning how to work with groups of actuaries that are not part of its formal structure. One example is the COVID-19 Actuaries’ Response Group, which has made excellent use of social media and online resources, and built a reputation for timely and informed comment.

Building a vibrant global community isn’t just about technology; it is also about increasing diversity so we can tap into the potential available to us. The launch of our Diversity, Equity and Inclusion strategy (bit.ly/IFoA_DEI) was an important step, and we’re committed to putting it into immediate effect, measuring impact and making a real difference. Not only do we need to collaborate with employers and universities to ensure actuarial careers are open to everyone, we also need to make sure that we’re supporting people from all backgrounds throughout their careers.

This will build on the IFoA’s reputation, helping us to create and LOUISE PRYOR sustain meaningful relationships and is the president of partnerships around the world, and to use the Institute and our influence to promote the profession’s Faculty of Actuaries purposeful growth. www.theactuary.com

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s we cross the halfway mark in our existing strategy, our thoughts are somewhat inevitably beginning to turn to what comes next – particularly as much of our focus so far has been to get the IFoA ‘fit’ for what follows, whether that is our culture, systems, finances and so on. Our constant aim is to create and sustain a meaningful and valuable member experience for all of you as individuals and in the profession more broadly, and in a way that enables the IFoA to grow and flourish. The best starting point for this is the feedback you have given us.

Our latest member survey indicates that the improvements you said would make a difference are starting to be recognised – particularly the work we have been doing to improve and modernise in the digital sphere. Free-to-access online events, our new continuing professional development scheme, our move to online examinations, being able to access exam marks online, online Personal and Professional Development (PPD) submission and better PPD account management are improvements that many of you have told us you value.

You also indicated that we are building a strong foundational layer, as there is good alignment between our core strategic priorities and what you value. These include, but are by no means limited to, delivering actuarial education and lifelong learning, regulating members and setting and upholding standards, and promoting the actuarial profession and the value it brings to business and society.

There is always more to do, but this suggests we are doing many of the right things, as they are the things you are telling us you value the most. In a rapidly changing world, getting the basics right is a good foundation to build on.

It gives us some choices for the future, which is a great position to be in – but STEPHEN MANN the way we work through these during is the chief executive the next few years will still need to be of the Institute and based on meeting our members’ needs, Faculty of Actuaries however they evolve.

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Upfront News M O RTA L I T Y

CMI Model shows small drop in cohort life expectancy The Continuous Mortality Investigation (CMI) has released the latest annual update to the CMI Mortality Projections Model, CMI_2021.

Standardised mortality rates in England and Wales in 2021 were, on average, 5% lower than in 2020. However, both years had significantly higher mortality than before the COVID-19 pandemic. Mortality in 2021 was 8% higher than in 2019, and mortality in 2020 was 14% higher than in 2019.

CMI_2021 produces cohort life expectancies at age 65 that are about two weeks lower, for both males and females, than in the previous version of the CMI model, CMI_2020.

“While mortality can be volatile from year to year, we tend to see falls over time, so it is unusual to see such a sustained increase in mortality,” said Cobus Daneel, chair of the CMI Mortality Projections Committee.

“We have to go back to 1940-41 to find a period as unusual as 2020-21 relative to the preceding five-year average.

“The impact of the coronavirus pandemic has meant that we have placed no weight on 2021 mortality experience. We did the same with the 2020 core model after a consultation process, and users from the pensions and insurance industry expressed strong support for this temporary change. We encourage users to consider adjusting the model’s parameters to reflect their own portfolios and their views of the impact of the pandemic.”

IFOA

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Council election nominations As the IFoA strives to fulfil its purpose ‘to be the voice of actuaries, and to support, develop and be the voice of our members’, we’re meeting the challenges of this extraordinary period in our history with energy and drive.

As we continue to make meaningful progress against our 2020–24 strategy, we are also looking ahead to what comes next. To make our ambitions a reality, we need a diverse range of leaders who can provide strong stewardship, share their high-quality thinking and time, and uphold a commitment to excellence.

If you are a Fellow or Associate of the IFoA and want to make your mark on the global actuarial profession, you can put yourself forward to join our Council. Visit our nominations website (www.cesvotes.com/ifoa) to find out more about the application process and submit your nomination.

Your application needs to be received by 12:00 BST on Tuesday 25 April 2022. The results will be announced at the Annual General Meeting on Wednesday 15 June.

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For more information, please see the FAQs at bit.ly/CMI_FAQs

RESEARCH

IFoA partners with the David Hume Institute Through the Scottish Board, the IFoA is supporting an exciting research project by the Edinburgh-based David Hume Institute (DHI). The research explores public attitudes to risk, and is closely aligned with recommendations in our Great Risk Transfer campaign to place the responsibility for certain complex risks in pensions and insurance with financial institutions rather than individuals (bit.ly/GRT_Recs).

The DHI announced the project in February and expects to report its findings later in 2022. Reflecting on the partnership, David Hume

Institute director Susan Murray said: “The Great Risk Transfer reflected much of what we heard from individuals during our previous research on The Action Project. We heard from households that the ability to plan for the future is severely compromised by the pressures of everyday financial challenges.”

The DHI will engage and listen to a diverse range of people, looking at which aspects of financial risk they see as the most important, how they address these, and what barriers they face. www.theactuary.com

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Upfront News

IN BRIEF...

Save the date: Annual General Meeting This year’s Annual General Meeting (AGM) will take place on Wednesday 15 June at 9.30am BST. Book your place at bit.ly/IFoA_AGM2022 Our AGM will again be held virtually this year, as this enables members to attend wherever they are based, allowing their voices to be heard.

The formal notice of the AGM will be communicated in due course.

Members who join the meeting will be able to submit questions to presenters. You can also submit questions in advance by emailing IFoA corporate secretary James Harrigan.

Matt Saker’s inaugural address as IFoA president will take place virtually the following day, Thursday 16 June. You can book your place at bit.ly/PresAd_2022

Spotlight on volunteering Continuing professional development (CPD) co-ordinators play a key role in effective engagement between the IFoA and organisations that employ our members. Organisations with multiple offices often appoint one CPD co-ordinator per office, while some of the larger organisations appoint one per practice area – for example a different co-ordinator for life and general insurance in the same organisation.

If you’re interested in being a CPD co-ordinator, please look at the volunteer vacancy (bit.ly/3vOOqyl).

Our recommendation is that organisations which employ at least three qualified actuaries appoint a CPD co-ordinator.

We are holding our annual CPD co-ordinators’ briefing on 19 May. Full details are still to be confirmed but, in the meantime, please save the date. www.theactuary.com

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P U B L I C AT I O N

Funeral Plan Trusts thematic review report The IFoA Review Team has published its fourth report Funeral Plan Trusts: A thematic review report on the advice of actuaries (www. actuaries.org.uk/funeral plantrustsreview2022).

This is the first report from a series of reviews looking at actuaries as experts in narrower fields.

Funeral plan trust advice was chosen as the first in this series because regulations are changing and there is significant interest in the operation of the pre-paid funeral sector.

Neil Buckley, chair of the IFoA Regulatory Board, said: “Around 1.5 million UK consumers have purchased a pre-paid funeral plan and are therefore relying on funeral plan trusts to meet the cost of their funerals.

Although only a very small number of actuaries are

involved in providing advice in this area, the size of the market demonstrates there is a significant public interest in actuarial advice being appropriate and of a consistently high standard.”

The review looked at examples of actuarial advice to pre-paid funeral plan trusts and burial societies. The report sets out key findings and recommendations, and contains a high-level summary of the advice reviewed, as well as case studies showcasing examples of good practice.

“I would like to thank the actuaries from nine organisations of all sizes who agreed to take part in this review, which included scrutiny of advice and in-depth conversations with the actuaries involved,” said the report’s author, IFoA

senior review actuary David Gordon. “This has provided a detailed snapshot of the actuarial work being carried out in the run-up to regulation by the FCA.” The IFoA Thematic Review Programme is part of the Actuarial Monitoring Scheme, and is designed to improve the effectiveness of actuarial regulation in the public interest, provide meaningful, credible, independent feedback to members and their employers, and promote ongoing reinforcement and continuous improvement.

AWARDS

IFoA Prizes 2021 In 2021, the IFoA continued the tradition of awarding prizes for outstanding performance in examinations. The Board of Examiners confirmed the following prizes for the 2021 examinations diet (April and September): Actuarial Risk Management Prize for the best student in CP1: Daniel Preston and Thomas Clarke International Underwriting Prize for the best performing student in General Insurance (SA3): Luca Farrer and Jack Blanc Worshipful Company of Actuaries prize awarded to the best performance in a Fellowship subject on an SA series paper:

SA1, Ren Chi P’ng and Jemma Colvin; SA2, En Hao John Yeow and Keir Harvey; SA4, Jack Bailey and Christopher Pinkney; and SA7, Ting Hui Khor and Yuen Ng Sir Joseph Burn Prize for the UK student showing special merit in completing all exams and becoming eligible for the class of Fellow: Niall Mc Groarty and Patrick Hughes Charles M Stern Award to a student from a non-UK centre who completes the exams and is deemed to have performed outstandingly in the ST/SA series: Anshul Garg and Chew Hou Ng All winners of IFoA prizes received a certificate and a cash award.

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Upfront News

EVENT

Exploring ‘tomorrow’s actuary’ The inaugural IFoA Conference is taking place on 22–23 June. We’re delighted to be back and look forward to welcoming you to our first in-person, cross-practice conference.

By attending in-person, you will have an opportunity to choose from two days of technical, thought-provoking sessions, as well as being able to interact with the speakers and network with peers within the exhibition area. If you can’t join us in-person, a virtual conference ticket is also available.

The theme of the conference is ‘Tomorrow’s actuary’ and through panel discussions, technical workshop sessions and plenary presentations, we will be exploring how actuarial science will

contribute to some of the biggest issues of the future, and the skills needed to meet these opportunities.

Sustainability, data science and diversity, equity and inclusion all feature strongly in the programme, as do finance and investment, health and care, pensions and risk. Keynote speakers confirmed so far include: Sir Geoff Mulgan CBE, professor of collective intelligence, public policy and social innovation at University College London; Paul Johnson, director of the Institute for Fiscal Studies; and Professor Colin Mayer CBE. Focusing on the conference theme, a panel of prominent actuaries will deliver a session

entitled ‘Tomorrow’s Actuary – moving beyond traditional actuarial roles’. During this presentation you will hear how panel members have used their actuarial knowledge and expertise to diversify their careers. They will share the experiences that led them to their current roles and explain how their actuarial knowledge provided the skills their employers were looking for.

We end both days with a networking drinks reception, giving you the chance to reconnect with old friends and colleagues.

The IFoA Conference is taking place in central London. Earlybird tickets are available until 22 April.

Book at bit.ly/IFoA2022

Book now!

The IFoA Conference 2022 22–23 June – etc.venues, 133 Houndsditch, London

The theme of the conference is ‘Focusing on tomorrow’s actuary’ and will explore the contribution actuarial science is making to some of tomorrow’s biggest issues. The conference will feature:

đƫ Over 50 cross-practice sessions with headline speakers including Sir Geoff Mulgan, Paul Johnson and Professor Colin Meyer

đƫ A range of career and professional development

đƫ Two in-person networking events, including a drinks reception on the evening of 22 June

đƫ Hybrid event, attend either in-person or virtually or a combination of both.

workshops and panel discussions Earlybird tickets until Friday 22 April. Visit:

www.bit.ly/IFoAConf2022 Sponsored by

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www.theactuary.com

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© 22 Conning Asset Management Limited. All Rights Reserved. ©20 d

GEMS® Economic Scenario Generator Driving risk models in 17 countries across Europe, North America and Asia LEARN MORE ABOUT OUR SOFTWARE AT CONNING.COM/SOFTWARE-AND-SERVICES

Europe | North America | Asia

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Upfront News

2021 member WHAT YOU TOLD US

At the end of last year, we asked you to complete a survey telling us about your experience of IFoA membership and how we can help you meet the challenges that the next year holds. Here’s a snapshot of what you told us.

THERE WAS STRONG RECOGNITION OF THE IMPROVEMENTS THAT HAVE BEEN MADE TO THE MEMBERSHIP EXPERIENCE:

79%

54%

of Student members valued the move to online exams

said the increase in online access to IFoA services improved their membership

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4,289

51%

of Fellows and Associates said that they value the new Continuing Professional Development scheme.

PEOPLE RESPONDED TO THE SURVEY Since the first full IFoA member survey in 2018, we’ve made many improvements to membership in response to your feedback. This was the first full-length survey since then, and the results are already being used to inform decisions for the future of your professional body.

We are very grateful to those of you who took the time to respond to our survey.

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