Life Conference 2025

Introduction

A famous philosopher once said, “there are two seasons in Scotland: June and Winter”. This year has seen a third added to the list. Conference Season. Hot on the heels of September’s Scottish Conference, actuaries flocked back to Edinburgh for the 2025 Life Conference.

Now that we have all settled down from the buzz of the conference, it seems appropriate to reflect on the ongoing developments in our industry and, by extension, learn what is going to keep actuaries busy over the next few years. As always, climate change and AI featured heavily and served as a backdrop to what we will focus on today: the future of actuarial modelling, changes in the With-Profits market, and shifts in the regulatory landscape.

The Future of Actuarial Modelling

Are we entering a new age of actuarial models?

Very possibly – there were multiple presentations during the conference where presenters showcased their work in this area, improving models and associated processes while harnessing new technology along the way.

But it’s not one-size-fits-all and there are a wide range of approaches being taken.

• Smaller insurers seem to be at the forefront of the re-platforming charge, and some have opted to go the open source route (mandatory plug for our own case study here) and others are moving to new modelling eco-systems using proprietary software with a strong focus on optimisation and integration with wider processes.
• Larger insurers are engaging in pockets of activity using open source platforms to improve certain models and processes, but seem to be taking a more observatory role with regards to valuation models so far, with the big prize being the ability to run their heavy models so efficiently that they no longer require proxy models, improving accuracy while removing the time-intensive calibration and validation processes.

However, one common theme that did come across was the importance of taking the time to plan and future-proof models and the overall eco-system as much as possible.  This could include how models are structured and how they interact with other software and processes within the business e.g. accounting ledgers or policy admin systems.  Doing this now will put insurers in the best position to take advantage of current technology while simplifying the approach for adopting new technology once it is ready (quantum computing, anyone?).

What does this mean for actuaries?

So, if the future is (eventually) super-fast and automated models that can be coded and documented using AI and give us accurate results in the necessary format in a fraction of the current time, then what are actuaries going to do?  As you will probably have heard many times in presentations we will all be spending our time on higher “value-add” areas instead.  But what does that actually mean?

Some of the conference sessions gave their perspective on this topic, looking at what actuaries might do and the skills they will need into the future.  This included considering the ethical side of modelling and the potential impact of the choices made when developing and using models, using our domain knowledge to validate models, interrogate and communicate the results, and translating complex business and regulatory needs into clear model requirements.  Which, actually, all sounds quite interesting; maybe we’re not doomed just yet!

Changes in the With-Profits Market

Will the With-Profits sector see substantial growth?

As shown in the below graph, the size of mutual premiums in the UK has remained stagnant since 2017.

[1]

However, in June 2024, the Labour Party committed to “double the size of the UK’s co-operative and mutuals sector”. The services of With-Profits providers most suited to expansion are:

[2]

To facilitate growth, we may also see regulatory changes that could, for example, allow mutuals to collaborate through product bundling. [2]

In the short term, we may also see investment, laying the groundwork for growth. Examples include innovative new products, technology development, and joint ventures between mutuals. [2]

But what are mutuals internally investing in just now?

For actuaries working in With-Profits, you will no doubt be keen to know what work you may be involved with in the near term. The PwC 2025 With-Profits survey (a survey of 13 mutual insurers across 59 funds) revealed that three of the top areas of focus for mutuals are:

1. Reviewing investment strategy
2. Process improvements
3. Reducing With-Profits management costs [3]

Another top area of focus is product simplification; the survey found that over half of the funds are expected to be restructured over the next 5 years. [3]

Over time, legacy providers have accumulated books of With-Profits business, with many different product features and funds. Funds can be invested in different countries, and some may be backed by shareholders (often called 90:10 due to the split between policyholders and shareholders). Customer outcomes could be improved by simplifying products and funds so that they can be consolidated into fewer, larger funds. The FCA are keen to support such projects.

For example, Phoenix recently took a step towards fund simplification by mutualising one of their With-Profits funds (moving from 90:10 to 100:0 so that it is fully owned by policyholders). [4]

What other markets are growing?

Another hot topic from the conference was the booming BPA market, as DB pension schemes look to de-risk. This has led to innovations such as the first With-Profits bulk annuity, set to be released by M&G in 2026. [5]

Collective Defined Contribution schemes (CDCs), appear to be an emerging market in the UK. CDCs provide an option for retirees with DC pots to pool risks with others. Their benefit is expressed as an income, and the rate of increase in that income is dependent on the experience of the scheme. Globally, a spectrum of models for this product exist, with varying levels of risk pooling. [6]

While not strictly With-Profits, CDCs share similarities to traditional With-Profits annuities, such as the sharing of investment and longevity risk, with smoothed benefit increases dependent on experience. The main difference for policyholders is the lack of guarantees, and under the current UK regulations, there is less discretion for providers to set increases. However, the coming years will see consultations and the implementation of new regulations governing CDCs. [6]

Shifts in the Regulatory Landscape

Speaking of ‘new regulations’, what is the FCA focusing on?

For the first time, the FCA lead a session outlining their 5-year strategy which included 4 key priorities:

They expressed a willingness to work with the life industry and highlighted the below three upcoming areas of focus. Examples of what these areas may involve are also given below:

[7]

What are some of the PRA’s recent changes?

[8]

What else are the PRA considering?

Proposed changes to climate change disclosures include:

• Reflecting climate risks in SCR components
• Setting specific expectations on ORSA
• Enhanced scenario analysis

[8]

Circling back to the BPA market, let’s talk about funded reinsurance. This is where an insurer transfers a significant portion of the investment and longevity risk to a reinsurer, who sets up portfolio of assets as collateral. This has been under consideration by the PRA for some time, and a speech from the Bank of England in September indicated likely policy changes.

The concern is that counterparty default risk is being underestimated in these transactions and that a systemic risk may be emerging as a result. A contributing factor to this concern is that there is often a lack of transparency in the assets used as collateral. In addition, there is also unease that these funded reinsurance arrangements can be used to transfer risk to different jurisdictions to exploit regulatory arbitrage. [8]

Closing thoughts

While we have merely scratched the surface of what was discussed at Life Conference 2025, I hope for those lucky enough to attend this article has served as a helpful recap of the current developments of our dynamic industry. We’ve only covered a few here, but the industry is moving, in some places very quickly.

For those not lucky enough to attend, I hope this article has got you one step closer to catching up to the hours of CPD that those who attended the conference are sitting on.

Sources

[1] ICMIF UK Market InSights 2023.

[2] Ewen Tweedie, Broadstone; Stephanie Blenko, Association of Financial Mutuals; Andrew Collins, LV=.

[3] https://www.pwc.co.uk/industries/insurance/insights/pwc-with-profits-survey.html#:~:text=Our%202025%20with-profits%20survey,expenses%20and%20charges%20across%20funds

[4] Brian Murray, Phoenix; John Jenkins, Milliman.

[5] Andrew Kenyon, NatWest; Owen Griffiths, Deloitte.

[6] Alan Newton, Grant Thornton; Brian Murray, Standard Life; Keith McInally, WTW.

[7] David Berenbaum, FCA; Stefan Ielapi, FCA.

[8] James Isden, KMPG; Bob Warren, ABI; Himesh Sheth, Aviva.

Michael Scanlon, Craig Lynch, Sammy Ford & Ross Gordon

November 2025