Innovation and Regulators
Background and Purpose
Actuarial innovation helps actuaries design successful products, manage data with greater speed and security, and improve models’ ability to drive company decisions. Innovators face difficulties when attempting to find acceptance of their ideas; gaining regulatory approval is an especially challenging goal.
While technology continues to provide opportunities for innovation, actuaries need to stay within the guard rails of our regulatory frameworks. Demonstrating the soundness of a new idea seems to require so much effort that it negates any expected benefits. Without sufficient demonstration, though, regulators cannot move ahead with confidence that they are acting in the best interests of their constituents.
Even with these difficulties, we see approval of new ideas like innovative product designs or modeling techniques. Carriers successfully propose and defend novel approaches, while regulators evaluate and approve them while guarding the best interests of the public. Stories of these successes are worth study.
The Actuarial Innovation & Technology Program Steering Committee (AITPSC) is seeking researchers to produce a report that discusses successful approaches to gaining regulator acceptance for actuarial innovation. Research format should include interviews with representatives of both carriers and regulators involved in these success stories.
The report should include examples of company innovations that gained acceptance with regulators. It should highlight areas not limited to:
- Successfully presenting and defending novel ideas to regulators
- Proving the soundness of a new idea without becoming so onerous that it outweighs hoped-for gains
- Evaluating proposed innovations to ensure that it meet the requirements of the current regulatory framework
- Evaluating proposed innovations that aren’t even addressed in the current regulatory framework
- Timelines from proposal to approval
- Lessons learned from the approval process
- Communication and collaboration between carriers and regulators in reviewing new ideas
Proposal
To facilitate the evaluation of proposals, the following information should be submitted:
- Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
- An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
- A description of the expected deliverables and any supporting data, tools or other resources.
- Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix) - A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The PSC is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
- Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.
Selection Process
The PSC will oversee the selection of projects. The PSC will review each proposal and is responsible for recommending proposals to be funded. Input from other knowledgeable individuals also may be sought, but the PSC will make all final decisions, subject to SOA Research Institute leadership approval. The SOA Research Institute will provide staff actuarial support to develop and publish the final material.
Questions
Any questions regarding this RFP should be directed to David Schraub, SOA Senior Practice Research Actuary, (email: dschraub@soa.org)
Notification of Intent to Submit Proposal
If you intend to submit a proposal, please e-mail written notification by April 7, 2023 to Korrel Crawford (kcrawford@soa.org).
Submission of Proposal
Final proposals for the project should be sent via e-mail by April 21, 2023 to Korrel Crawford at kcrawford@soa.org.
Note: Proposals are considered confidential and proprietary.
Conditions
The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries and the researcher.
The SOA Research Institute and AITPSC reserve the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The SOA Research Institute and AITPSC also reserve the right to redirect the project as is deemed advisable.
The SOA Research Institute and AITPSC plan to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).
The SOA Research Institute and AITPSC may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the SOA Research Institute and AITPSC in publicizing or promoting the research and responding to media requests.
The SOA Research Institute and AITPSC may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the SOA Research Institute and AITPSC, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.
Appendix
The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.
All Contracted Projects
This category includes all contracted projects that the Institute has undertaken within the last several years.
The 33rd-66th percentile project cost range is $25,000 - $50,000.
Literature Reviews
This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.
The 33rd-66th percentile project cost range is $15,000 - $20,000.
Surveys
This category includes all projects that had a survey as their primary component.
The 33rd-66th percentile project cost range is $28,000 - $55,000.