The role of actuaries at Vitality

By Matthew Daniel

In the late 1700s, Austrian inventor Wolfgang von Kempelen built an automaton capable of playing a strong game of chess against a human opponent. For 84 years, it was exhibited as a marvel of modern science, baffling everyone from Empress Maria Theresa of Austria to Napolean Bonaparte and Benjamin Franklin. After its destruction in a fire in 1854, it was revealed that the machine was an elaborate hoax. The machine was a mechanical illusion that allowed a human chess master to hide inside and operate the machine.

Today, ‘Mechanical Turk’ describes a person who manually does tasks that people think a machine does. For example, Mechanical Turks tag objects in images, help companies select the best picture to represent a product, audit user-uploaded images to moderate content and classify objects found in satellite imagery. They also help data scientists create data sets to train image recognition AI, like the AI that analyses the photos you upload to your car insurer’s app.

Actuaries are kind of like the Mechanical Turks of insurance and risk. They apply mathematical and statistical methods to assess risk in the insurance and finance industries. Put simply, we predict and manage financial aspects of uncertainty and help craft strategies that underpin the stability and success of insurance plans. Like Mechanical Turks, we pull the financial levers under the hood of the insurer to help the machine make the right decisions.

In healthcare, actuaries are usually the ones responsible for ensuring the financial stability of a health plan. Their calculations and models help design benefits, set prices for coverage, and help companies decide how much money to put aside to fund future claims. Actuaries can look at large data sets and build models to identify and predict risk. In healthcare, this is very useful in identifying and predicting the risk of disease, condition progression, and risk for complications, for example. It’s also useful for unwinding the complex interactions between various factors that influence the probability of developing a disease.

Vitality was founded by a group of actuaries who had done exactly this: they looked at the data and clearly saw that foundational lifestyle and health behaviors drive the root causes of most disease risk. The hypothesis was simple but profound: if we could change those foundational behaviors, we could impact downstream health risks and costs. This hypothesis, now accepted as fact, was formed back in 1997. Beginning with a simple gym membership discount, today Vitality has created a comprehensive set of health management tools and behavioral science-infused incentives to drive health behavior change, impacting over 30 million lives worldwide.

Vitality and its affiliates now employ hundreds of actuaries to fulfill several roles.

  • Firstly, where we run insurance businesses, actuaries are critical cogs in the inner workings of the machine, building models and setting assumptions to guide financial and product decision-making.
  • Secondly, our data science team has actuaries dedicated to understanding the relationship between behavior, risks, health outcomes, healthcare costs and utilization. These teams operate at the cutting edge of predictive analytics and disease progression modeling.
  • We also have actuaries in our R&D and product strategy teams, who brainstorm new ways to leverage these causal links and design benefit constructs that change health behavior while unlocking improved business outcomes.
  • Finally, we have actuaries like me: marketing actuaries. We take all the great work the other actuaries do and translate it into something that everyone can understand: interesting stories and compelling narratives about why it matters and the impact it creates.

Something I’ve learned along the way is that a unique part of our DNA is the integral role of actuaries in the business. Within Vitality, we are obsessed with advancing our understanding of the nature of risk and how we can influence it. Our Core Purpose of ‘Making People Healthier’ is infused in everything we do and really says it all: we are looking for ways to leverage behavioral science (to make people change their behavior) and an actuarial understanding of risk (to understand what actions make an individual healthier), to create a positive impact on individuals, businesses, and society (people!).

Over the last 20 years, Vitality has collected over 60 million life years of rich and diverse data spanning biometrics, medical records, device data, claims, demographics, digital engagement and more. Having actuaries across the globe allows us to unpack and analyze this multidimensional dataset, fitting causal inference and actuarial risk models to find the root behavioral causes of risk and the impact of changing different health behaviors on risk and healthcare costs. Furthermore, rich longitudinal behavioral data has enabled us to build powerful predictive models, like our recently introduced Habit Index.

When put together, these models create the chassis of our AI personalization and engagement targeting engine. Members, like me, receive tailored next-best actions and weekly health and lifestyle goals that balance the actuarial value of behavior with the person’s propensity to change the given behavior. The result is a member experience that cuts through the complexity of navigating our day-to-day health and wellbeing to create an elegantly simple interface that helps us know what we can do today to make the biggest impact on our health – and get rewarded for it.

When people talk about The Mechanical Turk from the 1700s, most focus on the machine and little is mentioned about the person inside it. That person was the one who beat Napolean Bonaparte and Benjamin Franklin in chess. Organizations are like Mechanical Turks. While our algorithms and AI are automated, it’s the quality of the inputs, models, and calibrations that determine the quality of the outputs. At Vitality, actuaries, data scientists, behavioral economics, and clinicians are pulling the levers of our Mechanical Turk.  I am proud to be part of such a team – working to help people live healthier lives.

Matthew Daniel (FASSA) is an actuary in the Vitality Strategy and R&D team overseeing Technical Marketing. Matthew has been at Vitality for close to 8 years, leading teams of marketing actuaries, thinking of innovative product constructs, and building out product and go-to-market strategies. In his spare time, if he’s not outdoors with his wife and kids, he’s playing strategic board games, plucking his guitar, or exercising.

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