Market Analysis – 80101512 – Actuarial consulting services

Executive Summary

The global market for actuarial consulting services is valued at an est. $32.1 billion in 2024 and is projected to grow at a 6.5% CAGR over the next three years. Growth is fueled by increasing regulatory complexity (e.g., IFRS 17, LDTI) and a broader C-suite focus on enterprise risk management. The single greatest challenge facing the category is the acute scarcity of credentialed actuaries, which is driving significant wage inflation and price pressure. Our primary opportunity lies in leveraging competitive tension and mandating technology adoption to offset these rising costs and enhance analytical value.

Market Size & Growth

The Total Addressable Market (TAM) for actuarial consulting is robust, driven by non-discretionary spending in the insurance, pension, and healthcare sectors. North America remains the largest market, accounting for an est. 45% of global spend, followed by Europe (est. 30%) and Asia-Pacific (est. 15%). The APAC region is projected to exhibit the fastest growth, driven by expanding insurance markets and regulatory harmonization.

Key Drivers & Constraints

1. Regulatory Complexity: New accounting standards like IFRS 17 (insurance contracts) and LDTI (Long-Duration Targeted Improvements) in the U.S. have created multi-year, mandatory consulting projects, representing a significant demand driver.
2. Expanding Risk Landscape: Demand is growing beyond traditional insurance and pensions into enterprise risk management (ERM), including modeling for climate change, cybersecurity, and operational risk.
3. Talent Scarcity: A persistent shortage of credentialed actuaries (FSA, FCAS) creates a supplier-favored labor market. This is the primary constraint and the leading cause of price increases. [Source - Society of Actuaries, Jan 2024]
4. Technology & AI Adoption: The shift from legacy spreadsheet-based models to AI/ML platforms for predictive analytics and process automation is creating a capabilities gap between top-tier and lagging firms.
5. Economic Volatility: Fluctuations in interest rates, inflation, and market performance increase the complexity of asset-liability management (ALM) and hedging strategies, driving demand for sophisticated modeling and advisory.

Competitive Landscape

Barriers to entry are High, predicated on brand reputation, deep regulatory expertise, access to credentialed talent, and significant investment in proprietary data and analytical platforms.

⮕ Tier 1 Leaders * Aon plc: Differentiates through its integrated data analytics platforms (e.g., Radford) and deep expertise in risk, retirement, and health solutions. * Marsh McLennan (Mercer): A dominant force in retirement/pension consulting and asset management, leveraging the scale of the broader Marsh McLennan enterprise. * Willis Towers Watson (WTW): Strong in both human capital/benefits and corporate risk/broking, offering integrated technology solutions for risk and capital management. * Deloitte: Leverages its audit relationships and broad advisory practice to offer end-to-end solutions, particularly strong in regulatory-driven transformation projects.

⮕ Emerging/Niche Players * Milliman: An employee-owned firm known for its deep, independent expertise, particularly in the U.S. healthcare and life insurance sectors. * Oliver Wyman: A premium strategy consulting brand (within Marsh McLennan) that often leads high-stakes engagements in financial services risk. * FTI Consulting: Focuses on specialized areas including actuarial disputes, litigation support, and restructuring. * Regional Boutiques: Numerous smaller firms compete effectively on a regional or single-industry basis, offering specialized expertise and lower overhead.

Pricing Mechanics

Pricing is predominantly structured around blended hourly rates or fixed-fee, value-based projects. Hourly rates are tiered by consultant experience, ranging from $250-$450/hr for junior analysts to $800-$1,200+/hr for senior partners or subject matter experts. Large-scale transformation projects (e.g., IFRS 17 implementation) are often quoted as multi-million dollar fixed-fee engagements, but these are typically underpinned by resource-based cost models.

Rate cards are heavily influenced by labor costs, which account for an est. 70-80% of the price build-up. The most volatile cost elements are talent- and technology-related. Procurement should scrutinize annual rate increases and demand justification based on these specific inputs.

• Senior Actuary & Data Scientist Salaries: est. +8% to +12% (YoY)
• Specialized Modeling Software (e.g., FIS Prophet, Moody's): est. +5% to +7% (YoY)
• Third-Party Data Acquisition & Licensing: est. +4% to +6% (YoY)

Recent Trends & Innovation

• AI in Underwriting & Claims (2023-Present): Top-tier firms are actively deploying AI/ML models to help clients automate underwriting, improve pricing accuracy, and detect fraudulent claims, moving beyond traditional stochastic modeling.
• Climate Risk Quantification (2022-Present): A significant new service line has emerged focused on modeling the financial impact of physical and transition risks associated with climate change on insurer and pension plan balance sheets.
• Consolidation & Capability Tuck-ins (Ongoing): While the Aon-WTW mega-merger failed (Aug 2021), the market continues to see consolidation through smaller "tuck-in" acquisitions, where large players buy boutique firms for specific technology or domain expertise.
• LDTI Implementation Peak (2022-2023): The mandatory adoption of ASU 2018-12 (LDTI) in the U.S. created a massive, one-time demand surge for implementation support, which is now transitioning to recurring valuation support.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina presents a strong and growing market for actuarial services. Demand is anchored by the significant insurance and financial services presence in Charlotte (e.g., Brighthouse Financial, Lincoln Financial, Bank of America's global hub) and a robust healthcare and life sciences ecosystem in the Research Triangle Park (RTP) area. All Tier 1 suppliers and the Big Four maintain a significant physical presence in Charlotte and/or Raleigh. The primary local challenge is intense competition for a finite pool of actuarial talent from both consulting firms and the industry clients they serve, mirroring the national talent scarcity.

Risk Outlook

Actionable Sourcing Recommendations

1. Unbundle Engagements & Foster Competition. Shift from large, single-supplier retainers to a portfolio approach. Issue discrete RFPs for specific needs (e.g., year-end valuation, M&A due diligence, model validation). This allows for the inclusion of niche, specialist firms, creating competitive tension on both price and expertise, and can reduce blended costs by an est. 10-15% on project work.

2. Mandate a Technology & Automation Roadmap. Require all bidders in major RFPs to submit a plan detailing how they will use automation and AI to increase efficiency and reduce manual effort over the contract term. Evaluate this roadmap as a scored criterion, targeting a 5-10% reduction in recurring annual hours by Year 2 through technology-driven productivity gains.