Title Slide
• AI for Actuaries: Understanding the Basics and
Enhancements
• [Your Name] | [Date]
Introduction
• AI is transforming industries, including
actuarial science.
• This presentation will cover:
• - AI fundamentals: neural networks, machine
learning, deep learning
• - Types of AI (e.g., generative AI)
• - Enhancing AI models (RAG, fine-tuning)
• - Actuarial applications
What is Artificial Intelligence?
• AI refers to machines simulating human
intelligence.
• Encompasses tasks like learning, reasoning,
and problem-solving.
• Key AI subfields: Machine Learning (ML), Deep
Learning (DL), Generative AI.
Machine Learning (ML)
• ML is a subset of AI that enables computers to
learn from data.
• Types of ML:
• - Supervised Learning: Uses labeled data for
training.
• - Unsupervised Learning: Identifies patterns in
unlabeled data.
• - Reinforcement Learning: Learns via rewards
and penalties.
Neural Networks
• Inspired by the human brain; consists of layers
of interconnected nodes.
• Components:
• - Input Layer: Receives data
• - Hidden Layers: Extracts features
• - Output Layer: Produces predictions
• Key architectures: Feedforward, Convolutional
(CNNs), Recurrent (RNNs).
Deep Learning (DL)
• Deep Learning is a subset of ML using multi-
layered neural networks.
• Advances in computational power and data
availability have driven its growth.
• Applications include image recognition,
speech processing, and risk modeling.
Generative AI Background
• Generative AI refers to models that create
new content (text, images, music, code, etc.).
• Based on patterns learned from large datasets.
• Examples: ChatGPT (text), DALL·E (images),
Codex (code generation).
• Key generative AI techniques:
• - Variational Autoencoders (VAEs)
• - Generative Adversarial Networks (GANs)
• - Transformer-based models (GPT, BERT, etc.)
How Neural Networks Power
Generative AI
• Generative AI uses deep neural networks,
specifically transformers.
• Transformer models (like GPT) process
sequences of data in parallel using self-
attention mechanisms.
• Training involves predicting the next token in a
sequence based on vast datasets.
• Fine-tuning allows customization for specific
domains (e.g., actuarial risk models).
Types of AI
• Narrow AI: Specialized in specific tasks (e.g.,
chatbots, fraud detection).
• General AI: Hypothetical AI that mimics
human intelligence across all domains.
• Generative AI: Produces new content (text,
images, code) based on patterns.
• Example: Large Language Models (LLMs) like
ChatGPT.
Enhancing AI Models
• **Fine-Tuning:**
• - Adapts a pre-trained model to specific data
or tasks by continuing training on a specialized
dataset.
• - Example: Detecting rare insurance fraud
patterns.
• **RAG (Retrieval-Augmented Generation):**
• - Enhances LLMs by incorporating external
knowledge sources.
• - Example: Regulatory chatbot pulling real-
AI Agents
• AI agents are autonomous systems that
perceive, reason, and act.
• Types:
• - Reactive: Immediate responses (e.g., rule-
based fraud detection).
• - Model-Based: Predict outcomes (e.g.,
catastrophe simulation).
• - Goal-Oriented: Plan actions to reach
outcomes (e.g., portfolio optimization).
• - Learning Agents: Improve from experience
Structured vs Unstructured Data
• **Structured Data:** Organized/tabular (e.g.,
policy records, claims DB).
• **Unstructured Data:** Text, audio, PDFs
(e.g., emails, medical notes).
• Gen AI excels at unstructured data
interpretation.
• Hybrid Example: Combine claims notes (LLMs)
+ policy data (ML models).
Actuarial Applications of AI
• - Predictive analytics for claims forecasting.
• - Fraud detection using anomaly detection
models.
• - Chatbots and virtual assistants for customer
support.
• - Enhancing risk models with AI-driven
scenario analysis.
Challenges and Considerations
• - Data quality and availability.
• - Model interpretability and regulatory
concerns.
• - Ethical implications and bias in AI models.
• - Computational and resource constraints.
Conclusion
• AI is rapidly evolving and has significant
actuarial applications.
• Understanding fundamentals helps actuaries
leverage AI.
• Techniques like RAG and fine-tuning enhance
performance.
• Continuous learning is key to success.
Q&A
• Open for questions and discussions.
