Data: The Final Frontier
If you are from my generation, you would remember the first time Personal Access Display Device or PADDs started appearing in Star Trek. The creators of the series were true visionaries and their vision was brought forward by Apple in 2010. Every time I hold my iPad, which is now a device that's more essential than ever, as it holds the connection to the world "out there", it's a throwback to those episodes of the crew on the Enterprise.
This digital technology has fueled accelerating shifts in consumer demand and competition from InsurTech players. In the face of so many disruptive forces, it's important to be aware of the huge opportunities available for insurers.
Walking a mile in someone else's shoes
Countless articles were written about the ability of firms to put the customer in the centre of what the business does, but not many firms are remembered for doing exactly that. Apple lies on the opposite end of the spectrum, being quoted in marketing textbooks as the gurus of customer centricity. Their brand comes to mind instantly when one thinks about unique value proposition, developing products to suit the clients or even manufacturing something that people can't imagine living without. Efficiency, speed and ease of doing business is paramount in the modern marketplace.
For almost 20 years, Swiss Re's online placement channel, SwiftRe®, has provided an automated, easy-to-use platform, available worldwide for our facultative reinsurance clients 24x7. It was "digital" before "digital" became a buzzword and in two decades helped over
Gone are the days when you could spend the same effort evaluating all facultative risks in the same fashion. Demands of time and competitive pressures make applying digital processes more vital than ever before. It is imperative to be able to adjust your operational map to suit portfolios based on their transactional characteristics rather than a one-size-fits-all approach.
SwiftRe® reduces the cost of writing smaller to medium sized risk portfolios (where the economics may be slimmer) by decreasing the underwriting effort substantially. Targeting new market segments is also less risky. For instance, if you were looking for a way to enter a new domestic mid-market
Having efficiency gains also means increasing the transparency of your performance. As SwiftRe® captures all the data into a single platform, it provides a full picture of your portfolio to help you more easily steer the business. Ultimately, driven by the intrinsic desire for insightful and superior data, we constantly keep upgrading our quantitative capabilities from highly regarded sources, in order to have better data. As we look into 2021, the journey doesn't stop and there are many more enhancements to come on SwiftRe®.
External data brings new perspective on markets and risks
The growing amount of internal data of any re/insurer makes data analytics a key topic. Combined with abundant external data, it opens new opportunities to better assess risks and hence to price them accurately. Ultimately it fosters effective portfolio steering.
While an insurer's internal performance data will still be a corner stone for risk pricing, it is also always biased towards the specific focus on client segments written so far, therefore not telling the full story. The comprehensive view is extremely important when your goal is to expand into new markets and segments. For example, leveraging highly granular data on geographical factors that drive the motor accident risk allows us to obtain a view on the risk landscape in a region – even before writing a single policy in that region.
External data can also help understand the digitisation of vehicles. Sensors in various car components – from those inside the mirrors able to spot other cars to airflow meters in motor grills – are an example on how technology is affecting the price of cars. While such advancements in Advanced Driver-Assistance Systems (or ADAS) positively impact the insurance risk, they also increase repair costs. Detailed external data on prices of latest spare parts allows to understand those dynamics that often do not occur gradually, but rather more erratically . Such insights enable us to foresee corresponding claims inflation and put us in the position to proactively include it into pricing and portfolio steering.
Making the most of digital claims management platforms using Machine Learning (ML)
The real benefits from digitalising processes in the insurance industry are harvested, when the treasure chest is open using the right key - analytics. Embedding analytics from inception into digital processes truly optimises the value chain. We assisted in moving one of our clients to a digital platform for claims management. Such automation worked with a ML decision engine, built on existing rules, previously manually applied by the claims experts.
The probabilistic model used a similar information base as the existing rule-based model. Relevant data included estimated and historic repair cost information and vehicle specific data, but also ratings for car service/repair shops. However, the dynamic model captured the relationship among the different variables much better and the claims department was able to significantly reduce the number of manually reviewed cases.
Thanks to the new solution, now fully automated, the client benefits from an increased data quality, reduced cost of manual intervention and increased customer satisfaction. In addition to digitising the processes along the insurance value chain and harnessing new data, analytics capabilities are key to harvest all benefits and win the market in the next decade.
Data enables us to explore new worlds. Space - the final frontier.