Shaking up the actuarial industry: Backstory of Adi Kaimowitz’s ‘Virtual Actuary’

JOHANNESBURG — With a background in sales and marketing, and after having made connections with several actuaries over the years, Cape Town-based Adi Kaimowitz had an idea to improve the industry. He saw a gap in the market to offer companies more competitive pricing regarding actuarial services while also enabling actuaries to go on their own and earn more as independent consultants. Subsequently, Virtual Actuary as a business was born, becoming an ‘Uber’ for actuaries but, as Kaimowitz explains, even better in terms of its operating model. Kaimowitz lives his philosophy by running his business from home. Here then is a fascinating interview with Kaimowitz on why he started Virtual Actuary. – Gareth van Zyl

(This transcript has been edited for brevity.)

It’s a pleasure to welcome on the line Adi Kaimowitz, who is the co-founder of a business called Virtual Actuary. So, Adi, basically, just very briefly, what is Virtual Actuary and what makes your business ‘virtual’, so to speak?

Hi Gareth, thanks so much for having me on. I think with Virtual Actuary, the simplest way to explain it is that we are an actuarial consulting services business. We traditionally service insurers, reinsurers, and financial services businesses. I think that there’s two different types of actuaries: you’ve got the actuaries that work in a normal insurer so, they are the insurer or a pension fund administrator and so on. They are the business and then you get consulting actuaries – there are four consultancies and other smaller, boutique type consultancies out there. So, both of them are still actuaries. One side is consulting and the other side is more the actual business itself, and we sit more on the consulting side.

Okay, being an actuary puts you in a very elite professional club, if I can put it that way. How does Virtual Actuary target, disrupting that industry?

So, firstly, I’m not an actuary, okay, I think being an actuary is a very difficult thing to just become. I think you are born an actuary. As your years progress, you excelled, and then one went into actuarial science. So, I’m not an actuary. I’ve been very fortunate enough to work with actuaries over the years How we’re trying to enter the market is that instead of the normal remuneration type structure – what we’re trying to do is to say, ‘hold on a second, a lot of the actuaries are actually the ones that are doing the work.’ They are the ones that are running a lot of the businesses and they should be the ones that benefit the most.

Adi Kaimowitz.

We’re a traditional consulting business in servicing the market locally and overseas. The main difference for us is that we’ve tried to switch the earnings table upside down to say that it’s actually the actuaries that are making most of the money. The company just takes a very small percentage, which I think is (the way that we see it) the correct way to go about it. Unfortunately, this particular mindset has an element where it’s not traditionally the way that things have been done. We haven’t specifically set out to be different. I also try not to use the word ‘disruptive’ – I think it’s overused. I think what we’re trying to do is just do things the best way we know how.

I think the business model is actually more what we call an organised collaborative in that the actuaries that form part of Virtual Actuary are very experienced actuaries in their own rights, across different sectors, whether it’s life insurance, or general insurance, or banking, or pensions, reinsurance, healthcare, investments and so on. They, in their own right, are very experienced actuaries and so if we go forward together, then they are not employees. We are a team and everybody does their bit. So, what is my bit? Well, my bit is more on the admin. I form part of the support and the operational side of the business so that the actuaries can rather just focus on what they do the best.

As an organised collaborative, everybody does their bit, and together our goal is to build the business for the sake of everybody that is involved. I think that particular model is slightly different to how some of the other companies approach their market, which is possibly more exco-focused, with a top-down type approach: salaries, bonuses etc. Ours is not that way and so, it can tend to come across as being disruptive.

Adi, what is your background, and what inspired you to launch this business, because you are the co-founder?

It’s not glamorous, unfortunately. I think the hard-hitting truth is sales and marketing. People who have sales and marketing backgrounds are individuals who are out there trying to make a living, and they’re out there trying their best. Generally, they will latch onto a company that has a good product and they’ll try their best to interact with clients who find the need for that particular product very useful. So, that was my background. My background was sales and marketing and so, as the years progressed, I got involved with actuaries, from a recruitment perspective, and one phone call at a time over the last 10 years or so I built up a very nice network of actuaries.

About 2 or 3 years ago we decided that we needed to do something better with the network of actuaries as compared to rather just driving towards a brick wall, which is really what LinkedIn has done for the recruitment industry. And chatting with a lot of the actuaries who were independent actuaries. So, they weren’t working in a normal consultancy or an insurer, but rather they were independents, and we pulled together and said if we can work as an organised collective or collaborative then we can move forward together and do well. I’ll try my best to interact with the clients and bring them to a point where you can engage with them, and you can do the work, and we’ll all benefit, and you’ll make most of the money. So, that’s how we came to this point. It was a group of very nice actuaries, and I just want to say, I don’t speak in any way on behalf of the actuarial industry.

I mean, it’s a very organised, sophisticated industry with the most wonderful people, very bright, and it’s a very regulated governed industry. Those that form part of Virtual Actuary are a very nice group of actuaries, very experienced, who were managers, and higher in some of their previous companies. We’ve decided to open our own business and do things our own way….

In a lot of our roles that we’re currently on at the moment, the actuaries are inside the client’s offices. Working as normal consulting actuaries, inside the client’s office. The main difference is we try to optimise technology to be able to service a market that is more stuck in the old ways of a chief risk officer, or the chief actuary, who wants to see the consulting actuary. They call you, you get in your car, you drive there – you have a 30 to 40-minute meeting and you leave. Now, you could have easily have done all of that digitally, which is what we do. We’re able to transfer the data across in a secure way. The need to specifically be running around non-stop physically, is completely, in my opinion, a waste of time. There’s work to be done. We want to be able to save on costs to the clients.

Why should we have to run around and also, what do we need massive offices in central locations burning money – what for? I don’t understand it. We’ve got work that needs to be done, we can do the work and we can do it at a more affordable pace. In fact, that specific situation allows us to engage with insurers in Asia, in the UAE, in Europe. The fact that they have a consultancy across the road from them in Singapore – well that doesn’t change anything. We can do the work just as well, if not better. South Africans are very bright. So, not only are we moving into a situation where we can all work very efficiently and very correctly without any mistakes whatsoever, digitally, but this is also happening anyway, whether the consultancy is across the road from you or not. So, we’re already there. We’ve been there for a long time.

Yes so, Adi, have you then got quite a complex technology platform in the background because you mentioned how you’re doing everything remotely so, I presume that your actuaries are based all over SA, and maybe even the world? Do they then plug in through you, as the mediator, and then get through to the clients in that way?

I think that the technology is being used by all the businesses. The servers that we use are similar to all the servers that the other consultancies are using, and it’s all secure. There’s no difference whatsoever. I think that our approach is that the actuaries are not fragmented. We’re a very organised company and we operate like any other consultancy. To be quite honest, there’s no huge difference between the way that the other consultancies operate in a digital way and us. I think what also happens is that we’ve just tried to realistically look at the wastage and what is completely unnecessary and we’ve trimmed that away.

The rest of the platforms, from a governance perspective, from a data protection perspective, all that stuff is identical, and secure. The only difference really is that more recently it’s become available financially in a more affordable way, for an up and coming startup like us…

So, what we’ve also done is we do have actuaries around the world. We’ve got actuaries in Singapore and in Cyprus, and Switzerland, and Hungary, and in the UK, and in America, and in other parts as well, and Africa, and South Africa as well. So, we have a mix between actuaries that are on the ground (inside the client’s office), and those that are their team members that plug-in, in a remote way, virtually. So, what happens is the main actuary that would be working in the client, will go into the client. They would get the work, they will get the data, and that would be put onto the servers and then the rest of the team, that is not there, is able to work in a virtual, remote way…

We went to market in January. We are very cognisant of the fact that we don’t want to come across as brash. The actuaries that form part of the business are extremely experienced, very nice people, we understand the client’s needs – that is very important, and we just try to do it in a bit more of an efficient way, and quite quickly we’ve started taking on work…

Okay, Adi, it definitely sounds like it’s a win-win for the companies that use your service and for the actuaries that are part of your service, insofar as the company would probably, I’d imagine, spend a little bit less than they would on a normal actuarial kind of consultancy business, and then your actuaries also earn a bit more. How do you then make money out of this?

You’re right. I think that any other company that has their way of doing things, I think that the reality is that the other companies will mention their benefit of working with them and why they come in at a better price point, and at a service that comes with credibility. I can’t speak on their behalf. All I can say is that from our perspective the actuaries are a one-for-one value swap from any of the other consulting companies in SA because that’s exactly where they’ve worked for years, and all the other companies. So, from a quality perspective it’s an absolute one-for-one match. Definitely, we don’t have wastage so we can come in at a better price point, and the actuaries make more money. They make way more money. The company just takes a small percentage.

The company take a very small percentage of the overall role that we are involved in. The price model is that we just take a percentage and the actuaries earn most of the money. So, that means that the actuaries earn more…

We’ve got probably well over 30 actuaries that form part of the business, at the moment. We’ve had to really hold back on bringing the rest on board. There’s a lot of actuaries I’ve been in contact with that we’ve chatted. I started about talking about the business in May last year, and in November we went to market. There’s a whole bunch of actuaries that are currently employed but ready to literally resign and move across to us, as soon as we’ve got enough work in.

It sounds like you’re an Uber for actuaries?

Okay, so there was a publication that had mentioned that, and it’s an awesome statement. It thinks more so from the New Age approach. It really allows people to go, ‘wow, this is different – this is new.’ To add to that statement, that would also imply as well that the actuaries are dealing with the clients completely by themselves with no support from the company. That’s not the case, we operate in a way, not from an earnings perspective, but from a management and assignment perspective….

An Uber car is seen parked with the driver’s lunch left on the dashboard in Venice, California, United States.

In a way, it’s almost like an Uber of actuaries where you would phone head office Uber and you would actually deal with Uber itself. So, it’s not an automated quick-fix system. We operate as a full-blown consultancy. A turn-key type of operation. The main difference is that the earnings is different and our technology platforms are slightly more in tuned with the way that we’re thinking. So, just to almost not correct but to improve on your statement of an Uber of actuaries.

Just as a final question, how has the business gone so far, you said that you launched it recently, and where do you see it going in the next 3 to 5 years?

Thanks, one would always hope that it takes off, and it has. We officially went to market in January, and in February we started working and we’ve already got about 10 projects on the go, and more that we’re discussing. Some are massive contracts, some are medium-sized and some are small. My email inbox went from maybe 50 or 100 a day to working until 22h00 or 23h00 at night just trying to catch up. So that’s going as well as one would hope. You almost hope that you’re going to be super-super busy and this is playing itself out and obviously, everybody is happy. We’re just trying to make sure that the clients understand that we need to be responsible by doing quality work, and not in a rushed way. We would rather be honest and say, ‘maybe we can’t handle that or we can handle that. We’re not going to be taking on everything but we most certainly have the actuaries who would like to engage in. So, it’ going very nicely, as anyone would hope. The market has taken very nicely and very well to our concept, as you can imagine, it does make sense to them, and because we’v earned nice credibility over the years, having established those relationship with those actuaries, who are ultimately the clients. They’ve taken quite well to this and, fortunately, we are being paid, and the actuaries are working, and it’s going very nicely, thank you.

Where do we go from here, for the next 3 to 5 years? So, our first point is to just carry on going as we are, not to grow too fast unnecessarily. Our eye is firmly on overseas markets, Asia, as I’ve mentioned before, your UAEs, and the UK, and Europe. We have a 10-year plan. Our 10-year plan is to just sort of fit in, fit in the global Actuarial Consulting services market, to be able to build those many franchisees because ultimately, the actuaries in most countries are franchised owners of Virtual Actuary in that they have the support of the other virtual actuaries to build up those up those clients. So, we would hope to establish ourselves in maybe 5 or 10 different… We don’t want to speak too boldly about what we’re hoping to achieve. I think we definitely do not see the world as a big place and we would hope to just participate.

Adi, thank you so much for taking the time to chat to me – a very interesting discussion.

Thank you, Gareth.