Dear Editor:
The article “Social Inflation and the Bornhuetter-Ferguson Method” (Actuarial Review March-April 2023) basically focuses on how traditional actuarial reserving and pricing methods come up short when social inflation is present in a book of business. My immediate reaction to the article was that, once again, people would like to replace the actuaries with programmed formulas, and, once again, with no success. However, I have also been reading a little about AI and became intrigued with how AI could work to replace us, even in the issue described above. My first thought was what would the AI actuarial avatar look like? If I were building this avatar, I would make it a combination of actuary, claims specialist, underwriter, legal person and programmer. So now we begin to build an AI avatar that has all the knowledge and skills derived from actuarial, claims, legal and underwriting, and since there is a programming background built in, the avatar can learn and reprogram on the fly. This avatar can run a tremendous number of different scenarios using factors blended together from all that expertise. Thus, by incorporating different skill sets as described above, I believe these AI avatars can better predict future costs than the actuarial department. Can these AI avatars replace me? Not yet, I think, but I fear the gap is narrowing!
—L. Nicholas Weltmann Jr., FCAS
