The ability for data and analytics to bring about instrumental changes within the insurance industry is one which has come under increased scrutiny in recent years. As the role played by analytical and machine-learning models in enabling insurance companies to make “better, faster decisions” becomes more evident, the capacity for these solutions to accelerate innovation in the insurance sector has also been highlighted.
At a recent webinar held by global software publisher Guidewire Software (Guidewire) on the subject of ‘Leading through Change with Analytics’, the chief innovation officer for Guidewire, Paul Mang (pictured), noted that it is hardly controversial to state that analytics has been a key focus for the insurance industry in recent years. In the London market, he said, Lloyd’s is focusing on leveraging analytics services in its specialised marketplace while, in the US, the digital insurance platform Lemonade has recently gone public, with its value proposition partly built on the analytics platform it has just built.
“One important element of analytics is its role in driving innovation,” Mang said. “At Guidewire, we’re responding to the trends we’re seeing in the marketplace. First, the demand for insights with minimal amounts of identifying information. Second, the ability to operationalise those insights into workflows. And third, the aspiration of our clients to proactively use those insights to help their customers. We’re focused on insights into repeatable processes.”
The panel of this webinar was made up of peers working and operating in the insurance sector who have been on the journey of analytics, he said, and who are able to identify where the sector stands and how far the industry has moved, and also to outline what needs to be done to drive further innovation. Each business will have a different area of emphasis when it comes to deciding where to invest its time and energy into these processes.
For Michael Poulos, president of Marsh Risk Consulting, the focus has been on modelling and analytics around the COVID-19 pandemic, through different geographies where individual clients have properties and large employee bases. Analytics has been able to offer assistance to these clients when it comes to helping them evaluate the likely impact of the crisis as it develops.
This is applicable not only in terms of the pandemic’s progress in the locations where these businesses operate, he said, but can also be mapped out to their wider operations. This helps to potentially deal with the health and safety issues that may arise for these business’s clients, as well as aiding their overall operational resilience.
“[At Beazley], we’ve been taking a view of trying to build capabilities in general, in order to be able to better process information, but understanding that each of our data lines is quite separate,” said Mike Donovan, head of cyber and executive risk at Beazley. “And so, if you look at marine, for instance, it’s ships moving around. Now that’s a distinctly different kind of risk to EPL, where you’re looking at behaviours in the work environment.
“Each has its own approach that you can take in order to try to develop better tools to be able to price exposure and understand the risks. And so that’s the area where we’re investing, really, in all of our product areas.”
The internet of things (IOT) has been a large focus for Tokio Marine, according to Daljitt Barn, the head of the Tokio Marine Innovation Lab. If sensors are deployed to clients, whether they are operating in factories or in the home, the question is, how can analytics be used to truly understand what the customer is facing? And, in turn, it must also be asked how insurers can use this information for their own needs; to better price the risk and, ideally, to predict potential claims in the future?
“The contribution [of analytics] to the industry has really been part of that shift from an industry which, 25-30 years ago, wasn’t using its data and wasn’t using science to solve the problems of risk and risk management to an industry which now, today, truly is,” said Ian Branagan, the chief risk officer at RenaissanceRe. “So, having been a part of that shift has been an exciting time.”