Underwriting is an Algorithm – John Fowle, CEO, Chaucer

This week’s guest on The Voice of Insurance is John Fowle, CEO, Chaucer. With Chaucer’s ownership by China Re, John Fowle speaks about his vision, views on algorithmic underwriting, the state of the market, rate adequacy and ESG.

Mark Geoghegan kicks off the conversation by asking John how parent company China Re has changed Chaucer’s global outlook and strategy. John discusses where Chaucer’s plans to be China Re’s international P&C insurance and reinsurance growth engine will take them and how China Re will support Chaucer. Commenting on the purchase, John says, “They bought us for the reasons we wanted to be bought. We wanted to be bought because we wanted someone who could support our growth; we felt Chaucer could do a lot more.” Elaborating on this further, John mentions that Chaucer moving to a new parent has been great, specifically for international growth.

Speaking about business growth, John comments, “Our growth is all really channelled still at that stuff where we feel we are good. I think, by nature, we’re not an opportunistic business. We do like to be in things for the long run, we like to have a view, and frankly, the volume of business we end up with tends to be how much of what we’ve been trying to target hits those price adequacy requirements and that’s the market cycle bit that has been advantageous.” John discusses the lines of business that are seeing growth, such as political lines despite being impacted by the pandemic and reinsurance lines, but urges caution around cyber.

Algorithmic Underwriting with the nuances

Digitisation of the insurance market is universal, and it’s not just about transforming the entire value chain to gain efficiencies but about helping carriers propel growth and capture new opportunities. Answering Mark’s question on his level of satisfaction with the pace of market reform, John replies, “The digitisation is the really important bit. I really am a huge believer that if we can actually make being a Lloyd’s business a competitive advantage because you’re linked into a digitised way of doing business, that’s got enormous potential….We can’t afford to not make this progress because this is life now.”

Due to ever-increasing quantitative data available, algorithmic underwriting is increasingly playing an essential role in the underwriting process. Mark asks John for his views on its use, “Underwriting is an algorithm,” states John, “When we talk about algorithmic underwriting, what we’re thinking is, how much of that decision tree, how much of that quantification of risk can we do quickly and efficiently in a digitised manner versus that bit that is that as specialty underwriters we need still just take away and think about the nuances on. And the more that we can do in the digitised format, the more efficient we are, and frankly, the more accurate.”

As the conversation moves from technology to insurtechs, Mark asks what John has learned from interacting with the insurtech world; commenting on this, John says, “I think the really exciting bit is the intersection between the two, and the people we found the easiest to work with are the people where we understand what they bring to the party, but they do actually understand that you do need this thing called a carrier balance sheet somewhere, and if you can get that intersection between what they’re trying to do and what we’re trying to do right, then those are some great partnerships.” John speaks about Chaucer’s participation in the Lloyd’s labs, how the organisation is currently mentoring three start-ups there, and the benefits of discovering different and more modern ways of doing things and looking at things.

Enjoy the podcast.