It’s great to hear from you again. I’m sorry to hear that banking is no fun anymore. But I suppose that shouldn’t be a surprise to anyone after everything that happened.
I’m getting in touch because I think you should be having a look at insurance with fresh eyes.
You left 20 years ago and at the time you were right to do so. It was obvious to all of us at the firm that someone of your talents and ambitions had to go off and seek fame and fortune in a more dynamic financial services sector. We had no way of keeping you.
You bankers had cracked it and were light years ahead, securitising everything that moved and deploying the white heat of technology to bring major efficiencies and improved returns on investment.
In comparison we in insuranceland were the laggards. We were clinging to our long lunches like shipwrecked mariners and our slipcases were the life buoys. Expenses had hardly budged and margins were anaemic at best.
But seriously, since you left so much has changed, I wouldn’t know where to start. And the best part is that the real changes are only just beginning to kick in.
Now the digital foundations are laid they’re going to transform everything.
Take my job. I can now see my global property portfolio on a big digital map and drill down into it whenever I like.
A quick click and I can take a look at the physical stuff that my underwriters have insured, or have quoted or are targeting. I can then run these physical assets against all the tools I have got – risk scoring for wind, fire, flood, political violence, terrorism – you name it.
But then I can zoom back out when I need to show the big picture in the aggregate. I can lay it all out on a dashboard which I can configure however I want.
If the CEO or CFO would like a look I can just show them the big picture stuff that matters to them – remember ‘X’ never really was one for getting lost in the weeds when it came to detail? Well, that hasn’t changed!
Or if compliance and risk want a report I can just run that off for them – or even better, when they get trained up on the system they can run the report off for themselves!
But it doesn’t even begin to stop there. All this stuff can go into what they are now calling a financial engine.
This even looks at the individual policy wordings and conditions and takes my reinsurance into account. I know! James Bond stuff!
So when I’m looking at flood I’m looking at the real net impact of flood on me, including all the flood sub-limits I have and adding in the effects all the fac and treaty protections I have in place, policy by policy.
Some of the stuff I can do now just blows my mind – it would have taken us a whole year to do some of this back in the dark old days of paper. To be honest, we wouldn’t even have attempted it.
These days I can see exactly what side of the street we are on – and as you know that can make all the difference.
And remember what a faff renewals used to be? Pulling out dusty files and loss records, trying to see if what was being presented stacked up with the material info that had been used the year before.
Half the time it was hard to recognise the new proposed deal, or large chunks of information were inconsistent or even missing entirely. Today these are being visualised for me on screen and artificial intelligence (AI) is sniffing out any anomalies and flagging them up.
Live loss data is now available to me – once again I can map this onto my portfolio and see it as it happens.
I imagine by now you have got the picture on the portfolio and risk management side of things? But it’s what it has done for my day-to-day role that has been the most interesting.
These days I spend zero time cajoling everyone to do their chores and generate reports for me – it’s already there for me to see with my own eyes.
Now my job is much more about thinking up new hypotheses for the analysis teams to test. (Yeah, we have analysts too now!)
Whereas in the old days you and I would have spent most of our time trying to work out what we had got, these days we know exactly what we’ve got and we’re constantly thinking about how we could be optimising and improving the mix.
We’ve gone from ‘what?’ to ‘what if?’ in the flick of a switch.
I am constantly looking at the ways I can get an edge or squeeze the best possible returns out of my portfolio within aggregates and PMLs.
And wait until I show you the stuff that’s going on to improve the art of underwriting.
Now I can really drill down into my producers’ books and spot problems before they get out of hand.
But more far more useful and pleasant than spotting problems, I now pick up on the good things much quicker. These days I can tell who I should be doing more business with in an instant - and that insight is worth its weight in gold.
All the workflow from a risk coming in to quoting, binding and peer review is properly tracked and controlled. I can make sure our brokers are properly served and can spot any bottlenecks way before they become a problem. Everyone knows what they are supposed to be doing and by when – and it’s all documented.
But it’s not just workflow management. The AI sucks in and racks through submissions and ranks them for us – we don’t have to enter the data, it just gets ingested. There is nothing artificial about that kind of intelligence! We can make it do whatever we want before we spend valuable time touching it.
We can and will fully automate the commoditised stuff – I don’t see why not. We are still in control at all times.
This is going to improve productivity no end.
My best underwriters already get it and they love it. After all there’s only so much time in the day. If instead of writing $10m each of good business a year, my top talent could write $20m of even better risks, they would jump at the chance.
All I can say is that the expense ratio is going to get a proper old squeezing and margins are going to go the right way for the first time in a long time!
As you can see, everything is so much more interesting than it used to be.
That’s why I’m getting in touch – I seriously think you would love it round here these days. You wouldn’t be frustrated or bored anymore – and we’d be able to get the full benefit of your considerable brain!
In fact I’m deadly serious – you must come back. We’re hiring people like you every day.
And don’t worry, with all of these productivity gains, we will soon be a match for any investment bank on the money front.
Let me know – this industry has really got tooled up in the last few years and we’ve only just got started. You’ll be doing something really useful, you’ll be part of a great team and a fantastic wider community, and what’s more you’ll have more fun!
Looking forward to hearing from you,
Your old friend, Hannah
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