A CogX in the Machine

It is the start of a new CPD year, and I know that some of us may be reflecting on the struggle to fill a life-conference-sized hole in last year’s CPD log.  I am thankful that part of my job at APR is to look for opportunities outside of the insurance industry, which gives me the chance to look beyond the IFoA events.  This year I attended the CogX conference… virtually, of course.

CogX covers a wide range of topics bound together by the idea that technology can be used to make a better future.  Despite being a technology conference, it was certainly accessible to a non-technical audience: this goes some way to explaining how Matt Hancock and Matthew McConaughey somehow appear on the same agenda.  This article describes some of the topics discussed at the conference as well my own thoughts on the potential opportunities for actuaries.

Healthcare

In the past year, the whole country has been given free statistics lessons with the daily briefings about risk factors and R numbers, so it wasn’t a great surprise that there was a strong focus on healthcare at this year’s conference. The NHS showcased some great data visualisations and analytics tools they used to help predict demand for NHS services.  Other presenters explained how the delivery of medical care has changed through remote consultations and the ability to detect mental health issues caused by our year of disrupted living.

A theme that ran through all the healthcare sessions was the problem of data privacy. Medical records are perhaps the most personal of personal data sets, but the aggregation of health data also offers one of the greatest prizes.  Matt Hancock, the then Health Secretary, described how these two competing aims could be balanced, although it was clear from the discussion that there was still a lot of thinking to do.

Healthcare and health insurance is certainly not a new area for actuaries, but the CogX presentations did highlight a few things that we could do differently to make sure the profession stays relevant:

• There is a growing volume of data (and models) relating to cause of death and sickness that should be used to augment the application of standard mortality and morbidity tables.
• There is a potential social benefit from sharing data and insight rather than guarding a company’s intellectual property.  The actuarial profession has a good reputation for sharing information in this way, but could we do more?  And how do we address all the data protection concerns?
• New entrants are not swayed by decades of past practice and so are tackling healthcare (and insurance) problems in very different ways.  Should we be thinking a little further outside the box before Google does that thinking for us?
• One of the presenters described how death is just a technical problem explaining how each of the biological processes that lead to ageing may be treated like any other ailment. While immortality might sound like science fiction, it would be foolish to disregard all this research.

Climate

The other big topic of our time is climate change.  There were several sessions on climate including: biodiversity, the future of food, the role of cities, and what to expect from COP 26. Overall, I would split these discussions into two categories: big picture discussions that establish we need to do something (without offering practical solutions or insight) and, very specific solutions that could help in some way. The first category is becoming all too familiar, and I worry about the risk of boring people into inaction. The second category is certainly more interesting, but as I thought of ways in which actuaries could add value, it became apparent that this will require research into not just climate change but a plethora of disparate topics.  However, although the challenges in each of these distinct problem domains may differ, there is usually a need to evaluate and compare uncertain future outcomes – which feels a lot like traditional actuarial work.  In conclusion, this looks like a promising area for actuarial skills, albeit with no obvious place to start.

DeFi (Decentralised Finance) and the Economy

One area that always promises to intrigue and confuse is blockchain and how it might be used in the future.  While crypto assets like Bitcoin make some sense to me, the DeFi movement is much bigger than just virtual coins, but I struggle to imagine what a blockchain insurance contract might look like. I’d also like to know how the cost of processing transactions (and the associated carbon emissions) compares to the benefits of using a blockchain to solve new problems.

I would be the first to admit that there are gaps in my understanding, but unfortunately the CogX sessions did not help fill these. I heard a lot of discussions about the potential benefits, but it was all vague, sounding more like a marketing pitch than a technical explanation. If the world financial system is indeed going to be overhauled by this technology, I would like to know more. If blockchain is just a marketing gimmick used to secure Venture Capital investments, then I’d like to know that too. Until I gain more clarity on those fundamental questions, I will not be focussing my efforts to find DeFi opportunities for actuaries.

Future of Work

A topic that many of us have discussed in the last year is the future of work.  The Covid-19 lockdown has certainly offered a glimpse into an alternative model for working.  It has empowered some parts of the workforce to demand/expect the right/option to work from home/anywhere.  It has also encouraged many to move home, change industries or rethink their own work life balance.  Some of this impact may be temporary, which is why so many of the discussions on this topic end up being a mix of conjecture and wishful thinking. Whether temporary or permanent, the CogX discussions certainly highlighted one thing to me: it is inappropriate to extrapolate from the experience of knowledge workers (like those attending and presenting at an online tech conference) to the experiences of workers in other industries and parts of the world.

For some, technology has facilitated the last year of working from home and there are many areas where technology could be further developed to cope with the changing workforce:

• Tools can be used to facilitate the gigification of work, but to what extent does this affect the power imbalance between employer and employee?
• Technology can be used as surveillance for untrusting bosses, but should it?
• Intelligent automation tools can be used to replace some tasks, but which ones?
• The Ed-tech industry is growing, but to what extent does this replace or complement the lessons we learn by being in the office?

These ideas could affect actuaries in a few ways.  First, as employees the change in work patterns affects us directly. Second, the change in lifestyle could have an impact on mortality and morbidity rates as well as the market value of some financial assets (e.g. city real estate rents and values may fall).  Both impacts have implications for the Solvency II balance sheet. Third, at their core, many of the technological advances are just tools that wrangle data in new ways (e.g. allocating work to people using a real time dashboard instead of phone calls, some scribbled notes and a holiday spreadsheet saved on a network drive), and this feels like an area where a tech-minded actuary may have something to offer.

Insurance

Although this article is about the non-traditional opportunities for actuaries, it would be remiss of me not to mention the session about insurance technology trends. The discussion was quite high level, but the main takeaways were:

• Customers expect personalisation at every stage of the customer journey, from customer greeting to the design of the products.
• There are ways to make back-office processes more efficient, but most of the technology disruption is happening in the customer facing processes.
• Insurance is being bundled with other services, potentially creating new distribution channels and business models.
• New product offerings typically involve much more customer engagement, which works well for some products like motor insurance but less so for things like life insurance and long-term savings.

In conclusion

Of all the CogX sessions, the one I found most insightful was an interview with the CEO of NVIDIA, Jensen Huang, on how AI is changing the world now and how it will shape the future.  The session covered the purchase of UK chip designer Arm, the creation of a supercomputer in Cambridge, and the most promising developments in AI.  For anyone considering attending next year, I would recommend watching this to get a flavour of the conference.  One moment that tied everything together for me, was when Jensen Haung was asked how, as a facilitator of much of the world’s AI, he balances the benefits of AI against the vast energy resources being used to fuel the computations.  His argument relied on the fact that the energy use of the AI was less than that of the millions of engineers over many years that would be required to do the same computations. This is an interesting way to look at it, but not very comforting: progress sounds good, but using 100 years’ worth of energy in one year does not.

There were many other sessions covering: quantum sensors and computers; the desires of generation X; precision manufacturing; cyber threats; deep fakes; bio-metric technology.  I lump all these things into one category as they are all interesting, but I have yet to identify good opportunities for actuaries. Overall, I found the conference thought provoking, whether it was Mark Carney talking about the important role cities play in tackling climate change or Iron Man (Robert Downey Jr) offering a different view.  As with all conferences, the quality of sessions was mixed, but there were certainly some useful ideas sprinkled over the three days.  And whether it was a good question, an incomplete answer, my inability to attend all the sessions I wanted to, or the irony of so many technology presenters struggling to use the online conference technology, my frequent takeaway was simply that there is so much still to do.

Phil Creswell

November 2021