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How data partnerships can open up fresh underwriting opportunities

25.04.22 AdvantageGo

Billed as Europe’s largest Insurtech conference, Insurtech Insights, recently held in London, brought executives, entrepreneurs, insurers and investors from all over the world, in person, to discuss new perspectives and strategic issues.

The agenda was broad in its scope, and we had the opportunity to participate in the panel session: How data partnerships can open up fresh underwriting opportunities. Leon Walker, Senior Director, Business Development, AdvantageGo, was joined by Ed Gaze, Acting Head of Innovation, Lloyd’s, and Moshe Tamir, Founder and Managing Director of Axell, as moderator.

The past few years have seen monumental shifts in data-driven marketing and advertising in insurance. However, data silos continue to exist among a proliferation of channels that make it hard to cultivate a cohesive customer experience. Leon, Ed, and Moshe discussed how data is transforming how insurers interact with customers and the risks, challenges, and opportunities for insurers in partnering with third-party data providers.

Kicking off the panel, Moshe asked what attracted Leon and Ed to participate in this discussion. Leon responds, “I think from my perspective the reason why this topic is vitally important is because, if we can control the data, make the data work for us better we can create new products and services across the market.” Replying to the same question, Ed remarks, “In the Lloyd’s Lab, what we do relies on data, and people bring in new data, better data, how they integrate it with insurers, and so it’s a really important topic for us at Lloyd’s and obviously for insurance as a whole.”

Data partnerships have been around for some time, and the size of the global alternative data market is expected to reach $17.4 billion by 2027 at 40.1% CAGR (2020 – 2027), FinTech Futures reports. This growth will inevitably affect the insurance market, and Moshe’s next question asked panelists where they see the biggest opportunity for organisations to accelerate and improve underwriting by leveraging data partnerships. Leon discussed how many insurers lack the time or infrastructure to access large data stores to improve operational efficiencies, enter new markets, provide new products or augment customer experiences, but empowering underwriters to unlock the value of data can change that. “If you can harness data to drive decision making at point of sale, and it’s not just us that say that, McKinsey says that that’s where you’ll get the biggest bang for your buck in terms of operational growth and operational efficiencies. If we can drive that data to underwriters at the right time then they can open new markets, they can open new opportunities that they’ve never been able to grasp before.”

Ed commented on the value data can bring not just in underwriting but also along the entire insurance value chain. “I see so many insurtechs coming with great ideas because they’ve got this special sauce of data and some way of understanding it that we currently don’t, and so working and partnering with those insurtechs and bringing something new to the market can help create new insurance products, or can help with claims solutions, can help with modeling risk. All this kind of stuff is super valuable, and we’ve got loads of examples in the Lloyd’s Lab where we’ve done that kind of thing.”

Can data partnerships not only be leveraged for underwriting, but also in supporting an ongoing dynamic pricing capability, asks Moshe. Leon highlights the work that Adiona, an innovative motor start-up is currently doing in harnessing data to improve the insurance options for underrepresented communities in the UK based on their real-time driving experience as individuals, and not on historic rates and rules. Citing a comment recently made by Lambros Lambrou, CEO of Commercial Risk at Aon, saying that history is no longer a determinate in predicting the future, Leon discusses that harnessing and sharing data is now the differentiator in how the industry can support clients.

What about real-life examples of successful data partnerships? Ed speaks about Gaia, a new insurance product that is making fertility treatments more accessible by alleviating the financial burden of IVF. Developed by Gaia and Lloyd’s Lab, Ed explains how data was captured, analysed, understood, and modelled to deliver a product, the first of its kind.

Moving on to “the elephant” in the room – Moshe asks if insurers see data partnership as an opportunity or a threat? Are they considering the opportunity to build capabilities internally or a threat that they will enable other players in the value chain to develop underwriting capabilities?

Responding to the question, Leon discusses how the whole point of data partnership is to broaden the entire value chain. Describing an example about a car manufacturer, Leon explains how you’re not just a car manufacturer, but one that is partnered with a car supermarket that enables you to see well in advance that estate cars will be replaced by 4x4s for long journeys – who is buying what, when and how are they paying. Citing another example, Leon discusses the work done by 14 health insurers in the US that created a company between them that pools their data to help each of them broaden their perspective.

Leon emphasized that we need evolve the conversation away from just having the data as that should be freely available, like the access we all have to YouTube and Instagram. It’s increasingly about how you use the data as in the same way that everyone has access to these platforms, only the people that know how to use them properly are making millions of pounds from them. Commenting on this further, Leon adds, “The data partnership piece isn´t necessarily just your view, you want to get as many views as possible, and I think culturally insurers are very much and some of the insurtechs in this room, can be very proprietary with their data, my data is my USP and I think we can and need to evolve that view.”

Ed replies that he’s never heard anyone worry that someone who has good data poses a threat, “We’re getting new insurtechs coming to us with new sources of data, and it’s fantastic; we make partnerships with them, we serve customers in ways we couldn’t before, we bring value to them, they bring value to us.”

We at AdvantageGo are now uniquely positioned to become the enablers of data partnerships for Insurers throughout Europe, Bermuda and the United States. We believe that interest in this area will only increase particularly when it comes to the number of data sources we offer as “out of the box” integrations into our products, including Dunn & Bradstreet, IHS Markit and Clarksons. Based on our broad experience across Lloyd’s, Composite and International Markets, once Insurers select the right partners for their portfolios, we can bring the data sources together to support their underwriting decisions at point of sale.

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