Travis Pearson, senior director and product leader for commercial (middle market) financial institutions at Markel, was recently listening to a podcast in which an insurance professional on the revenue-generating side was talking to an actuary.
“The actuary said: ‘Did you know that if there isn’t a claim within three years, there’s a 60 percent chance there will never be a claim?’” Pearson said.
“That information has always been there, but the fact that this person was able to identify it means that the product leader can now look at their book differently,” he added, speaking to the Re/insurance Lounge, Intelligent Insurer’s digital hub for interviews, debates and panel discussions.
And that is precisely what Markel is seeking to do. In the past, the corporation has sometimes not fully utilised its abundance of data, explained Pearson, but now it is “attacking data and using technology” across many of its segments, directly benefiting its customers.
“If someone has a claim, it’s not a good day for them. If we can design a process to make the experience easier for the customer—even though the outcomes may not be exactly what they want—and it’s a better experience than they get from our competitors, that’s a win for everyone.
“It creates loyalty, which is retention. We hold on to business and we can make the broker happy. If the broker’s happy, they send more business to the company. If the client’s happy, they’ll talk about their experience with friends and they’ll want a quote from Markel.”
“The use of data and technology forces you to look at your entire process.”
Travis Pearson, Markel
Changing the playing field
Data is changing the arena, changing the requirements for new talent and opening up the industry to new entrants.
“COVID-19 has disrupted the entire world and has exposed us in numerous ways. At the moment, there’s a labour shortage, and you want to be the employer of choice. If you’re underwriting the same way you were 90 years ago, that’s not going to be attractive to people who grew up with technology,” warned Pearson.
In the future, he believes, the underwriters most insurance carriers should be looking for are the ones who know about data as well as underwriting. “When you hire someone from college, you expect them to be able to use Word and Excel. The same thing is true for data going forward,” he said.
Pearson expects the number of data vendors to create numerous opportunities for current insurance carriers as well as new entrants.
“Historically, a product leader at 20-plus years had what they thought was a good risk to go after, with 10 or 15 different variables. It was successful and it worked. But if you’re able to create an algorithm with those variables, and then add 25 more, you can target the business much more effectively,” he explained.
“Setting aside regulation, if you’re able to figure out what you want to do and the context you want to do it in, by outsourcing data-scientist information you can compete with some of the bigger players on pricing. Obviously, you need to maintain a certain capital position, but that’s something you’ll be able to do with good data analytics.”
While data may be alluring, it’s important to remember that one size doesn’t fit all. “You have to understand your business before you can say that you want to use data from another department. The use of data and technology forces you to look at your entire process,” he added.
“One team at Markel has created a model to show underwriters the success of binding an account, so that the department—which experienced issues with brokers shopping around—can go after certain accounts first,” he said.
Pearson’s team, which has a high retention rate, needed something a little different. To go after more business they are now doing more claim analysis and trying to match their book with accounts they don’t have in the marketplace. There’s a lot of public data available, so a third-party vendor is scrubbing that data to put it into a scoring model.
“A lot of underwriters feel that technology has replaced other jobs, but that’s not the case.”
An ideal scenario
While a lot of data may be available for certain books of business, that’s not true for all, and Pearson admitted the opportunities are not limitless because of privacy issues. He expects future friction here, as the industry cannot use data as robustly as possible because people must opt in for it to be used.
In an ideal scenario, he believes that we should be able to create underwriting systems—for workers’ compensation, professional liability or property and casualty (P&C)—in which you can tap in an address and it will show you what type of coverage you can provide the insured, and at what type of profit.
“Don’t be scared of data or technology, embrace them. A lot of underwriters feel that technology has replaced other jobs, but that’s not the case. We use data a lot, and technology as best we can within my division, and we need to hire more people now because we’re becoming very efficient.
“If you show efficiency to the brokers, they send you more business. Use technology and data to streamline the process—it doesn’t take away jobs, it adds to the pie,” Pearson concluded.
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Travis Pearson is senior director and product leader for commercial (middle market) financial institutions at Markel. He can be contacted at: travis.pearson@markel.com
Main image: Shutterstock / Everett Collection
