Business agility by ‘do it yourself’ changes to your exposure management Systems

Giving carriers the ability to make software changes in-house without needing to go through a vendor provides critical business agility and the freedom to react nimbly and quickly to changing market forces.

The ability to rapidly identify new risk and manage the impact through changing underwriting and pricing is minimum “table stakes” in mass market personal and SME commercial lines. Insurers in these segments have operating models that identify change quickly through analysis of in-house risk and claims data, frequently cross-referencing with third-party data to understand trends. Some Insurers will be changing rates hundreds of times during a trading day; much of this will be through pre-determined algorithms responding to very subtle shifts in market dynamics. However, a significant proportion of this change will be deploying discrete underwriting and pricing adjustments into live. This kind of agility requires industrialised processes that rapidly identify and deploy change.

Today’s commercial market dynamic and environment are very different from the mass markets. The fact is that risk has never been less static, be it from economic, technology, political or climate change perspectives. However, as more and more business is auto rated and underwritten, and potentially auto-followed, the greater the need for low-cost and high-speed in-house change capability, and therefore consideration to this type of capability should be given.

Risk Modelling & Exposure Management Capability

Carriers do not want to find themselves relying on deep “internal IT” or vendor resources when making and deploying modifications, often when these changes need to be swiftly deployed against shifting market forces. The in-house change capability needs to extend to risk modelling and exposure management software to achieve alignment end-to-end.

Better still if the changes can be made, tested and deployed by business, thus minimising the use of scarce internal IT resources, but always with a “route to live” with robust IT disciplines, controls and visibility to managed services. There will be a speed benefit as well as a cost benefit as there will be less hand-offs in the process. Lower cost and faster change mean carriers can afford to test and learn more.

Consideration needs to be given to the operating model to identify the change and execute and deploy it. The greater the capability and appetite to make changes in-house, the more structured and defined this needs to be. The carriers who have been most successful in embracing this capability have considered achieving the outcome from day one. They have planned and acquired the skills as part of the implementation. This has had the additional benefit of lowering initial implementation, with in-house business staff taking roles that vendor staff might typically have done.

Fundamentally changing software as the market changes protects a carrier’s investment and provides greater value and for longer than when the software is not kept up to date – in this scenario, usage and “buy in” fall quickly. Low-cost in-house change capability is a key enabler of this highly desirable outcome.