INTERVIEW: BEN ZEHNWIRTH & DAVID MUNROE, INSUREWARE
Analogue actuarial practices are on borrowed time
The explosion of interest in AI and its possibilities is making it increasingly difficult to justify pre-digital methods.
The rise of artificial intelligence (AI) has made it very difficult for companies to justify the continuation of actuarial practices that date back to the early 20th century—the pre-computer age.
This is the view of Insureware founder and managing director Ben Zehnwirth and chief analytics officer David Munroe.
In the run up to Monte Carlo last year, the Insureware executives enjoyed substantial interest in their long-tail liability risk management software ICRFS. It capitalised on the re/insurance industry’s need for tools that not only quantify the trends in the business, but also accurately describe the volatility characteristics of the business.
In the 12 months since then, the Insureware team has been very pleased with the increase not only in interest but also in commitment from re/insurers to use its software.
“As we predicted, the need for modelling tools that accurately assess risk is pressing. Interest from firms more typically associated with the investment side have also been forthcoming,” says Zehnwirth.
“There has been a slight uptick in interest in our product among our potential clients. This may well be because the rise of AI has made it very difficult for companies to justify the continuation of actuarial practices that date back to the pre-computer era.
“We are positioned as an advanced technology that has a proven track record of many years and is transparent and portable enough to be regulated.”
“We are positioned as an advanced technology that has a proven track record.”
Ben Zehnwirth, Insureware
Market conditions
The main economic and market drivers for the Insureware business and products have largely remained the same as last year. Munroe says that the flow-in effects and impact on long-tail liabilities from economic and social inflation are continual and ongoing.
He says that the key classes of business most affected by the current conditions are the ones connected with supply chain issues or labour shortages. These include some classes of automobile insurance, disaster recovery, and building insurance.
The Insureware team say the firm has responded to these insurance industry challenges and opportunities by engaging with reinsurers and/or capital investors to assess reserve levels. As part of this client engagement, Zehnwirth says the team has suggested appropriate levels of risk capital that should be priced into any transaction.
“We partner with brokers and reinsurers to ensure that transactions assess reserve risk so that any risk transfer can be priced fairly,” he says.
“The flow-in effects and impact on long-tail liabilities from economic and social inflation are continual.”
David Munroe, Insureware
Talking points
As industry luminaries gather at the Monte Carlo Rendez-Vous 2023, Zehnwirth expects a key topic of conversation to be the inflationary pressures brought about by the current volatile economic outlook. Such pressures, which include the massively expanded US debt, are likely to affect the cost of 1/1 renewals.
He flags the challenges to US dollar dominance in certain sectors as another talking point of note.
“How far will regulators go to help or hinder insurers writing contracts based in currencies outside the dollar-dominated sectors?” he says. “To that list you could add changing demographics, instability in real estate markets, the future of the war in Ukraine, and of course climate change.”
In addition to its software products, Insureware provides consulting services including advice on loss reserving, pricing, risk-based capital, optimal capital allocation, diversification and reinsurance.
Ben Zehnwirth is the founder and managing director of Insureware. He can be contacted at: benzehnwirth@insureware.com
Ben Zehnwirth is the founder and managing director of Insureware. He can be contacted at: davidmunroe@insureware.com
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