By Joe Spicer, Associate and Senior Insurance Consulting Actuary and Wan Hsien Heah, Partner and Consultant, Barnett Waddingham
The system itself is specific to what we need to do at Barnett Waddingham (BW), but the lessons themselves are universal. Here are some of the key lessons, especially if you are thinking of overhauling your reserving system.
Data is key
Robust data flows and controls throughout the process are essential to ensure confidence and accuracy of the results. Our new end-to-end process has standardised data flows, checks and output summaries across all insurers that we work across, and this has significantly improved the overall efficiency of the reviews since deployment.
By automating routine tasks and calculations, our software enables us to focus more on the main areas of actuarial judgment, such as analysing trends, assessing risks, and making informed decisions. As a result, our clients have received more insight into the reserving results for the reviews since deployment.
Ensure the process matches the scale and complexity of the job
The new reserving process has been designed to meet the needs of a wide range of reserving projects, from larger Lloyd's syndicates to smaller captive insurers, and can be easily scaled to the requirements of the project in hand.
The set-up functionality has in-built code so that the user can scale the models to the requirements of the project they are working on. This has the benefits of a one-size-fits-all approach whilst ensuring that the models used are proportionate to the work in question.
Don’t forget about reporting
The new process has significantly improved our reporting capabilities. With the integration of Power BI and structured query language (SQL), we can now generate more detailed and customisable reports, providing more insight into the reserving results for both us and our clients, including the ability to benchmark results.
The process is also flexible enough to produce standard outputs for reports, presentations and other ad hoc extracts that may be needed from time to time.
Build flexibility into reserving
Whilst most tools in the market offer a good solution to the main triangulation and curve fitting modules, they can be less flexible when splitting out existing classes and performing more bespoke calculations outside of the typical methods used.
We have designed our process to be flexible so that users can easily investigate the impact of alternative assumptions/judgements on the fly and make any changes to the structure of a project with minimal effort. Additionally, it has been designed to easily deal with situations like the recent market challenges around Covid-19 and excess economic inflation where bespoke calculations in addition to the core methodology were required.
Training and getting the team up to speed is vital
We conducted a series of training sessions for the wider team so that everyone had a good overview of each stage of the process, ahead of using it. The training stage was great in terms of gathering initial feedback and developing the tool further ahead of going live.
We found that the best approach to training was to get people working with the process as soon as possible. Once the team started both testing and using the software, their understanding of the functionality and benefits became much clearer.
We have already seen the benefits of this process since its implementation in 2024. All our reserving client work has now migrated to the new system which has improved efficiency, enhanced controls, and improved the insights gained from our reviews.
The more standardised approach has enabled the team to approach reserving more consistently and we have already seen the additional benefits in terms of handover, realigning of resources to improve capacity and capability, as well as reduction in key person risk.
More importantly for our clients, the lessons that we have learned means we can help them avoid some of the pitfalls that come with an end-to-end, ‘big bang’ style change that we have implemented.
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