COVID-19 accelerates innovation within insurers, encouraged by Swiss Re

It has often been said by industry executives navigating the COVID-19 crisis that one of the few positive things to come out of it is that a re/insurance industry that has often been slow to embrace change, has been forced into something of a technology revolution.

Companies have made more progress in embracing technology and digitisation in the last few months than in the decade before, in some cases.

A natural side-effect has been that this rapid period of change has propelled companies to consider innovation in other ways. This is something that Kassie Bryan, head of solutions, P&C Americas, Swiss Re, has encountered in her role with the reinsurer. Her solutions unit is focused on working with the reinsurer’s clients to innovate, develop new products and generate new risk pools and spend that did not exist before.

“The environment created by COVID-19 has accelerated many dynamics including the increased use of technology and digitisation,” Bryan told APCIA Today.

“As clients have been driven more towards the digital world, they are also considering how they might use innovation to access new revenue pools using analytics. We can help clients achieve those things by providing the tools and the capacity.”

Bryan explained that her unit is dedicated to help Swiss Re’s clients develop new revenue streams or boost profits by giving them access to cutting-edge analytics and other tools along with the expertise and capacity to make it happen.

“We are tasked with generating new spend for our clients,” she said. “There are many underserved areas of the market and we help clients open these up.”

“There are many underserved areas of the market and we help clients open these up.”

Kassie Bryan, Swiss Re

Methodology in action

Bryan said one good example of this methodology working in practice is the way that Swiss Re has helped a number of clients to start writing flood insurance in the US. It has done this by making its own flood model available to clients—as well as offering expertise and capacity where required.

“It is a great example of what we do,” she said. “It was not so long ago that US flood was viewed as uninsurable. But there have been many improvements in the modelling and insurers can now write it with confidence in many areas.

“With five out of six homes in some parts of the US lacking flood insurance, this is a massive untapped market and a big opportunity to close the protection gap.”

Bryan said Swiss Re is now working with around 18 insurers that offer flood insurance because of the work of the solutions unit.

“And we put reinsurance behind them, so we have skin in the game too,” she added.

“The big problem is that a lot more education is needed around the importance of buying it. We have a team looking at this from a behavioural economics perspective.

“We are seeing some good traction and a lot of client interest, and we will continue on the path of educating clients and end customers, chopping away at the protection gap.”

Better auto cover

Another interesting initiative that Bryan has been involved in is in the US motor market. Swiss Re has developed a tool called the Motor Market Analyser (MMA), a state-of-the-art predictive tool that uses data on the landscape and locality of where a motorist drives to help insurers offer a more appropriate premium.

Specifically, the tool has been used by one US client to develop a digital motor insurance product specifically targeting millennials that requires only minimal data, delivered digitally, to offer a customer a quote.

“The MMA is a proprietary car accident model that uses the geographic location of a driver to predict losses as opposed to information around historical insurance losses,” she explained.

“We worked with a large client to launch a new product specifically targeting millennials. It offers much easier customer interaction through an online portal and has removed some of the rating factors, such as credit score, which regulators are starting to pick up on as troubling.”

Bryan explained that the platform, initially trialled in Texas and now being rolled out to other states, takes into account factors such as traffic density and other geographical factors to determine a quote.

Some of the outcomes are surprising.

“While you might think driving in rural areas means a lower likelihood of accidents, there is a strong correlation between the density of deer population and accidents,” she said.

“There might be fewer cars but there are other risks,” she added.

The solutions unit is keen to work with corporations that might consider expanding their services to include insurance. In Switzerland, for example, Swiss Re has partnered with IKEA to launch a home insurance policy.

In such examples, it will act as a facilitator helping an insurer to partner with the corporate on the new offering—with Swiss Re sitting in the background on the reinsurance end of the risk chain, Bryan explained.

“It is about looking for strategic partnerships to help our clients expand their reach into new distribution models. We can make the connections and help set things up.

“The same is true when it comes to some of the opportunities insurtechs offer—we look to partner where we can to leverage the best tools available for our clients,” she concluded.

Main image: / Sergey Nivens