What are some of the key trends in today’s reinsurance industry, and what does the future hold for the industry in a world after the pandemic?
These were some of the questions discussed during a virtual panel session hosted by Intelligent Insurer and moderated by Tom Anderson, Director of Sales US, AdvantageGo. In this wide-ranging discussion, panelists David Govrin, Global Chief Underwriting Officer and President, Americas Reinsurance, SiriusPoint, and James Few, CEO UK and International, TigerRisk, gave their views on the market during the last twelve months. They also discussed the impact of capital entering the market, climate change, and if the pandemic has restricted the ability to engage with clients.
When speaking about achieving underwriting excellence, the common belief is that you´re only as good as the data you have. Tom asks both panelists for their views on data and if the industry can ´fix´ the data quality problem that many perceive to be an issue. He also asks for their opinion on data sharing.
Kicking off the discussion, David Govrin says, “I think a lot of progress is being made on data quality…there is so much entrepreneurialism around technology I think the data quality issue is being fixed… one of the big issues is who owns the data. Reinsurers have the worst data; it´s portfolio data, and you have to figure out ways to get to the data from the beginning, not the end if you´re going to make good decisions on risk.”
James Few brings up the question about who owns the data, and questions if the industry has done enough in benefiting from the plethora of public sources of data.
Elaborating on what seems to be ever grown data sources, David comments, “More and more data will be available…. I think a lot of the value is what you do with the data. Data for the sake of data is worth nothing. This gets back to the human capital; you can give ten companies the same data, but what you do with it will be radically different. The value is going to be in what you do with it.”
The panel discussed that as the industry evolves in its use of data, Insurers will most likely need to hire more and more data scientists as a way to differentiate themselves from each other. However, everyone agreed that the industry is not at the point yet where machines and AI will be doing everything; the insurance world is still run by humans and is an industry based on trust and relationships. As David succinctly puts it, “you need the humans.”
Taking the data conversation further, James comments that a few years ago, one of the big consultancies published the jobs that machines would replace, and Underwriters was right at the top of the list. The panel discusses that insurance is fundamentally based on trust, especially as insurance is a product you cannot touch and see. Commenting on this, James says, “I think, for commercial risk, we have not yet reached the point where models can accurately replace the judgment of experienced Underwriters who can understand how business interruption works, supply chains work, risk standards management work, so I don´t see the human interaction being changed anytime soon for commercial risk.” However, both speakers did say that on the simplistic end, machine learning and technology have their place in the insurance value chain, citing the example that today, many people haven´t had a human-to-human interaction when taking out car insurance.
Talking about the future of data and exposure, James speaks about the value of the insurance industry in helping people and societies recover, but that there are still enormous parts of the world where insurance is non-existent. He touches on untapped markets where insurance is currently unavailable and how these areas will only be covered when people make it a priority - a decision a machine can´t make.
Closing on this point, James says, “There are loads of exposures around the world where the data doesn’t exist because there hasn´t been enough money involved for people to bother to build the models or collect the data, and I think it´s a little shocking that so many parts of the world have very foreseeable disasters where there is no insurance market.”
This blog only touches on one aspect of an engaging and insightful discussion. You can listen to the whole discussion on The Re/insurance Lounge run by Intelligent Insurer.
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