When reinsurance technology solutions provider Supercede published its whitepaper on open data, “Supercharging the reinsurance ecosystem” in November 2021, it took a novel approach. Rather than simply outline its vision of a digital future for the industry, it invited a range of voices from technology, insurance and modelling to contribute.
“It was an opportunity to highlight what we’re seeing around all of these companies coalescing to solve collective pain points,” Supercede co-founder and chief executive officer Jerad Leigh said in a video interview with Intelligentinsurer.com, the digital hub for interviews, debates and panel discussions.
Leigh was joined by two of the other contributors to the paper: Silvi Wompa Sinclair, group head of portfolio underwriting for Swiss Re and an advisory panel member to insurance-focused venture capital fund Eos Venture Partners; and Karl Stanley, formerly VP of RenaissanceRe, and now busy with tech startup Redlake Technology, which is to focus on reinsurance analytics modelling.
An embarrassing state
Leigh explained his view that the collaboration involved in the whitepaper reflects what is needed across the reinsurance industry: collaboration to develop a digital ecosystem that will bring it into the new century. Or rather, it needs to revise the ecosystem that already exists.
“The industry has an existing natural ecosystem, but all the historical efforts around technology have begun to cause more and more silos. People are adopting technologies that don’t talk to each other, and you’re seeing industry experts working in isolation rather than sort of as a part of a more collective ecosystem,” he said.
“We’ve seen the impact of burying your head in the sand in the music and film industries.”
Jerad Leigh, Supercede
“The aim of any ecosystem, whether it happens organically or is forced into existence, is to drive the efficiency and productivity of its members,” he said. In reinsurance, it’s failing to do so.
“We’ve begun to go digital around things such as placement information and basic criteria, but when people receive the submission, there is still huge amounts of data that they’re rekeying and trying to interrogate,” said Leigh.
That wastes time and potentially introduces errors, but it also has more profound consequences, according to Wompa Sinclair. First, it hampers the industry’s efforts to close the insurance gap for known risks.
“We’re not there today, and much of that is because we don’t know how to deal with data in the best way,” she said.
“Second, it limits the ability of the industry to understand and price new types of risk. And it impacts the sector’s ability to deliver shareholder value and attract more investment.
“For me, that comes down to having a 21st-century approach to data and technology. Look at stock exchanges or commodities exchanges; do they rekey any data today?” Wompa Sinclair asked. That impacts those outside the industry, but it also undermines the sector’s appeal for those within it.
“Over my 20-year career, there have been moments where I have been embarrassed that we cannot solve fairly simple issues,” she said.
Many of these problems would be solved by agreement on data standards and a common approach across the industry.
A competitive edge
Part of the reason no consistent approach has taken hold is an understandable caution in the industry.
“In any properly competitive market like insurance and reinsurance, it’s reasonable that a company is suspicious of another’s way of doing things,” said Stanley. Partly, however, that’s also down to a failure to keep abreast with what factors make businesses competitive. Activities that were differentiating a decade or more ago maybe not be so today.
“Twenty years ago, if you were sending data around in Excel spreadsheets, you couldn’t have more than 65,000 rows, so being able to handle datasets bigger than that was a competitive advantage. Now I’m surrounded by computing devices, such as my phone, that can crush that,” explained Stanley.
“It’s worth taking a step back and thinking about the things that truly differentiate us from our peers,” he said. “I’m not convinced it’s our ability to scroll principal names, so there is an argument that some of those things could be outsourced in a way that is better for everybody.”
There’s another factor, too: competition for the skills re/insurers increasingly need to make use of data captured from the internet of things and telematics is intense.
“The challenge there is making sure we have the right people with the right brain power looking at it,” said Stanley. “There may not be room for every player in the industry to have their own department doing this when they’re mostly just duplicating each other’s work.”
“We don’t know how to deal with data in the best way.”
Silvi Wompa Sinclair, Swiss Re
This recognition is, to an extent, already taking hold in the industry—the adoption of serverless solutions is an example.
“Historically, companies would build or maintain their own server farms, but it’s not their core technology,” he said. Instead, they are now using Microsoft’s Azur and similar suites.
“Those solutions are robust because that’s all that business unit does, so the companies using those tools benefit from the additional analytics and business intelligence and artificial intelligence that comes out of them,” he added.
Increasingly, too, businesses are showing themselves willing to work together for the sake of shared benefits.
And there are some benefits for insurers in being late to address some of these issues. First, there can be little doubt of what will happen if they don’t.
“We’ve seen the impact of burying your head in the sand in the music and film industries and others that have been radically disrupted,” said Leigh. That’s partly why many of the biggest industry players are now leading the charge towards collaboration.
There’s also the possibility of learning from others. “We have the advantage of our industry not being pioneers,” said Stanley. The industry can learn from other sectors, such as the banks that have gone before, to mimic their successes and avoid their mistakes.
Stanley quotes a favourite saying of the former CEO of RenaissanceRe: “The pioneers get the arrows, and the settlers get the land”, but if the industry doesn’t want to see others swoop in, it still has to stake its claim.
To view the full interview visit: intelligentinsurer.com
Image: Shutterstock / Rawpixel.com, Phonix_a Pk.sarote
