The Marketing Actuary Role
Talk about being caught in the middle! The Marketing Actuary is in the middle dealing with the Valuation Actuary (if we make a promise, we must put up more reserve), the Financial Actuary (we need to sell more and increase our profit margin and reduce our risk exposure), the Sales Department (if we don’t come in lower than XYZ we won’t sell anything), and the President (we’re just trying to make a buck here). The only way I know that a Marketing Actuary can survive is to pursue and disciplined, systematic process.
- Market Definition – Who is our client? What need of theirs do we want to serve?
- Market Research – What does our client want? How much are they willing to pay? What are their risk characteristics?
- Competitor Research – What other companies are serving the market we want to serve? Who manages those companies and what is their background? What is the financial structure of those companies and how much capital do they have available to invest in our
market? What are their soft spots and how can we take advantage of those weaknesses?
- Distribution System Analysis – How do the customers in our market want to buy our product? How much will it cost to distribute through that preferred system?
- Product Development – Take all of the information gathered above and choose product provisions and expense allowances. Includes sales projections and pro-forma financial statements.
- Monitor Emerging Experience – What did we get right? What did we get wrong? How can we fix the problems?
Actuaries in insurance organizations have been working on product development for many years. However, if the first four steps of the process are not completed and documented, the fifth step is not likely to be successful. That’s what the Marketing Actuary Process is all about.
The ultimate goal is to create value. That’s why the Marketing Actuary role is my favorite.