Exposure management operational performance issues

Covid-19 has been a game-changer, altering the context in which the market now operates, irrevocably affecting our work lives and dislocating market processes and practices, as well as accelerating market hardening.

As a technology partner to the insurance industry, we speak to customers and prospects daily about their business challenges, visions, and what keeps them awake at night. When it comes to exposure management, the pre-Covid19 operational performance challenges faced by some carriers have been further exacerbated by the double whammy of the move to remote working and imperative to improve the technical underwriting result. For any insurer and reinsurer reading this and nodding their head in agreement, you’re not alone.

In a late 2020 survey we commissioned of 200 (re)insurers, 67% of respondents said the pandemic has made underwriting decision-making even more difficult, with 43% suggesting the speed at which they now needed to make underwriting decisions was making things harder. Half of these respondents said the primary reason for underwriting decision becoming more difficult was an inability to access all of the information needed to make the best decisions. Another question revealed that only 16% of respondents thought they have access to all of the latest-up-to date data to make decisions.

In many classes, this is largely down to exposure impact analysis turnaround issues, with underwriting decisions having to be made without all the desired exposure analysis having been completed. Our experience suggests that this is as a consequence of the increased operational workload caused by underwriting portfolio rebalancing, and exposure management tool performance issues.

As insurers grapple to improve underwriting profitability, the need to rebalance and diversify their portfolios is an important dimension of many of our client’s ERM strategies. Reducing line sizes and underwriting new business to improve portfolio spread comes with the operational cost of additional work from more risks needing to be analysed whilst at the same time the overall portfolio premium remaining static.

Exposure management tool performance issues adds to the turnaround challenge. I’ve personally come across examples of simple exposure impact reports taking many hours, sometimes days, to run, often on antiquated infrastructures and homegrown tools that are not designed for today’s volume of data and therefore do not enable speedy analysis turnaround. In this situation exposure reports have become the “longest pole in the tent” in the underwriting process. The more time spent waiting for reports to complete, the less time that can be spent creating the optimal compelling underwriting response. The ideal situation is when analysis turnaround is rapid enough so that there is sufficient time to explore alternative scenarios with what-if analysis, to meet and exceed broker and client expectations. The now common practice of broker “send all” marketing and the mass adoption of placing platform submissions has meant that Underwriters are now effectively “open all hours” with broker expectations of underwriter service raised.

Our Exact Suite has been designed to solve this challenge; ExactMax enables Underwriters analysis of billions of locations, enabling analysis across multiple entire portfolios.