“There’s no such thing as taking a bad risk. Just bad choices of how to approach the risk and the bad result of that risk,” according to Sapiens Director of Product and Strategy, P&C, Graham Gordon.
In an interview with Reinsurance News, Gordon discussed some of the ways in which data and the use of advanced analytics can help insurers unlock emerging risks.
He explained that in cyber or climate related claims, brokers collect huge volumes of data, hand it over to underwriting, who evaluate the risk, add their gut feeling experience into it and churn it through multiple manual compliance steps, just to produce a pure premium they can share across the syndicates.
However, according to Gordon, a problem with this complex process is that it’s simply not scalable.
“In summary, looking across both Lloyd’s and the marketplace, the closer integration with reinsurance, the greater the scale and potential for change,” he said.
“But this feels like a once-in-a-generation event where multiple factors such as market demand, learning from the pandemic, reducing cost of technology, the availability of new analytics, and macro-economic conditions are coalescing to present the market ecosystem with strategic choices. It’s truly an exciting time to be involved.”
When asked how Sapiens feels about the efforts of the Lloyd’s Blueprint Two initiative, Gordon expressed how the core data record is the foundation of everything.
“The ease of data exchange through APIs and the seamless transfer of information from one system to another, together with the consultative way Lloyd’s manages this data flow, is remarkable.
“It provides those in the ecosystem the flexibility to operate in their individual way within the guardrails that the Blueprint Two output provides.”
It also combines what individual market players want and what Lloyd’s actually needs, with the technicalities across the rating agencies and regulators both at home and internationally, continued Gordon.
He further explained: “It’s an evolution that will need to constantly reinvent and rebuild itself to improve over time. Today, data is siloed in computer systems, or in a few people’s heads.
“Sapiens’ role is to simplify this challenge of analysing this data and sharing it with the various players in the marketplace. Sharing insights and transparency is the go-forward theme so underwriters can say to the brokers, ‘bring us more of XYZ or ABC.’”
He expressed the need for more transparency and confidence in the capital provision and also the need to have access to the claims data in near real-time so that we understand cash flow and profitability.
“With all these factors working in tandem, we can take a giant step closer to real-time risk management,” said Gordon.
Additionally, Gordon noted that technology is able to make business cheaper at Lloyd’s by automating multiple manual tasks which can be as simple as the elimination of double-keying through data pre-fill techniques; and by integrating with key ecosystem partners compliance, audit, and data collection processes to manage by exception rather than today’s labour-intensive manual processes.
The role of companies like Sapiens is to facilitate the transparency and sharing of information across the ecosystem, through providing the market aggregated risk views and external data integrated into the workflow as well as the traditional policy case management.
“It’s all about embracing data analytics and uncovering areas of hidden value. This focuses not only on cost reduction, but profitability and prediction of risk and exposure,” he concluded.