Frequency
How could this change how often claims occur?
JOHAN STRYDOM’S SIGNATURE FRAMEWORK
The Pricing Actuary’s Lens
Eight tests for how technology changes risk, markets, capital and customer outcomes.
Technology announcements are not insurance conclusions. The Lens forces each development through the questions a pricing and product-development actuary needs answered before changing price, appetite, cover or capital.
Risk mechanics
Severity
How could this change average claim cost—and the shape of the severity distribution?
Exposure basis
Is the exposure unit we currently use still valid, measurable and causally connected to the risk?
Tail and accumulation risk
Could this limit or amplify large individual losses, correlated events, accumulation and catastrophe exposure?
Market and capital
Price response and selection
How price-sensitive is the market—and how might customers entering, remaining or leaving change the risk mix?
Capital vulnerability
Could naive or under-informed insurance capital be burned before credible experience emerges?
Customer outcomes
Customer expectation
Do customers want or expect change—and will they recognise and pay for the resulting value?
Duty to act
Where Consumer Duty applies, could doing nothing permit foreseeable harm, poor value or another poor customer outcome?
THE REQUIRED CONCLUSION
The analysis must finish with a decision.
Each application of the Lens should state what is changing, how confident we are and what an insurer should do next.
DirectionImproving, worsening or mixed
MagnitudeMarginal, material or structural
TimingCurrent, emerging or longer-term
EvidenceObserved, inferred or speculative
ResponseMonitor, test or act
Use the Lens when
- A technology announcement is being treated as an inevitable insurance outcome.
- A frequency benefit is claimed without considering severity or accumulation.
- An existing exposure denominator may no longer describe the risk.
- New capital is pricing before credible experience has emerged.
- Inaction may create poor value or foreseeable customer harm.
Discipline behind the answer
- Separate observed evidence from inference and speculation.
- Consider selection as well as headline price elasticity.
- Test the average loss and the tail of the distribution.
- State what evidence would prove the conclusion wrong.
- Choose a response: monitor, test or act.
Consumer Duty: The duty-to-act test is a decision prompt, not a conclusion that inaction is automatically a breach. The relevant standard is whether a firm acts to deliver good outcomes and avoids, or where necessary mitigates, foreseeable harm. FCA Handbook PRIN 2A.3
LIVING APPLICATION OF THE LENS
Autonomous Mobility
Autonomy may reduce some human-error frequency while increasing repair severity, technology dependency and correlated system risk. The exposure basis may move from driver-years towards mileage, operating domain, system version and mode. The live tracker separates each new development from material changes in this actuarial interpretation.
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