Speciality insurance is both critical and complex. It protects the global economy from a broad and complex set of risks and helps us manage the impacts when things go wrong. The sector, therefore, plays a critical role in keeping things moving, in good times and bad, and it is in all of our interests that it works as well as possible.
Stefan Schrijnen is Chief Commercial Officer at Insurwave, a software platform that connects insurance buyers, brokers and re/insurers and supports the placement, administration and servicing of speciality insurance contracts. Here he shares his views on why speciality insurance needs to be a connected experience.
Speciality insurance tends to be for insurance buyers with complex needs, for example, a multinational with assets owned and operated across the globe, and with dynamic exposures that change all the time. The complexity continues into the insurance brokers, insurers and reinsurers that provide insurance to these multinationals. These risks are typically shared through syndication, where several insurers and reinsurers come together, often because the scale of potential losses are such that they cannot be borne by one insurer alone.
Speciality insurance buyers, brokers and insurers have historically been burdened with inefficiency and high administration costs due to lack of process standardisation and system automation for managing these risks; some of the biggest impacts being lack of valuable insight into risk and exposure, and inefficiencies in engagement with insurance partners when administering contracts – producing and exchanging documentation, and reconciling costs. In addition, liability for these risks is often shared across multiple insurers and reinsurers, so that no one organisation has to carry 100% of the cost in the event of a loss event.
The good news? Technology is making it possible for everyone across the speciality insurance ecosystem to be seamlessly connected, share data and insights in real-time, and eliminate administration. This reduces costs and delivers a better customer experience, creating much-needed room for growth and innovation.
A connected insurance experience
To consider a practical example, if a consignment of COVID-19 vaccines were produced by a factory in Belgium for a client in Gambia, it might travel by truck, train, plane and ship, with hand-offs in several jurisdictions before reaching its final destination. The array of insurance products and services for a risk like that is significant, as indeed, are the sheer number of insurance market participants involved: insureds, co-assureds, brokers, insurers, reinsurers, and local insurers. And when something goes wrong, the number of organisations and people involved expands further still.
So how could technology help? To start with, all parties involved in the insurance chain would be connected via an online platform: the vaccine producer, the insurance buyer, and the brokers, insurers and reinsurers. All participants, contracts, and insured asset data would be accessible to all on a shared online platform, providing complete transparency into the condition and exposure of the insured assets, with a lens on each participant’s own covers and exposure.
Many of today’s administration tasks would be eliminated. If, for example, the value of insured assets changed due to a production or supply issue, the change in insured value would trigger the insurance contracts impacted to update automatically, notifying all parties of the change in risk and premium. Where documents are still a regulatory requirement, they would be auto-generated. And where people had access to the data they needed on a connected, shared platform, they would stop relying on documents altogether.
Underwriters would have better data and insights than they’ve ever had about the underlying risks and exposures of their portfolios and prospects. Rather than wrestling with complex excel files as part of renewing a policy, or producing periodic reports, underwriters would be connected to a live data stream, providing insights on historic, current and predicted asset condition, exposure and behaviour. This would enable underwriters to deepen their understanding of their client’s risks, and of their portfolio exposures, aiding underwriting decision-making. Back to the Covid-19 vaccines example, such a platform would provide real-time updates about the consignment – such as the condition of the vaccines, what type of transport they were on, the party responsible for the vaccines at that time, and environmental data impacting risk, such as temperature. It would also give an underwriter an accurate picture of aggregation exposures, helping them proactively manage out of tolerance exposures, for example around major transit hubs.
All of this would mean that manual admin was drastically reduced, costs were lowered, and insurers and brokers were free to spend more time on services that really add value for their clients. As for clients, they would receive services and products better suited to their needs, but most importantly, they would get what we all now expect: a great customer experience.
What could a connected insurance experience look like?
A connected speciality insurance market – where you can share data and transact easily with everyone along the chain, based on up-to-the-minute risk information – creates an opportunity for everyone.
The question is, how would you look to create value:
- If you eliminated administration, would you increase profit, or reinvest in your clients and services to grow?
- How would you use your new capabilities to provide more value to your distribution partners and end clients?
- As the data around clients’ risks and exposures becomes more fine grain, (how) would you innovate your offerings?
Perhaps the toughest and most critical question is how to start executing. Those able to embrace technology ahead of the pack, will go further, faster. Whatever your take on how you differentiate, and create more value for your clients and partners, building towards a connected insurance experience will be a common characteristic of those that win. And connecting speciality insurance platforms will be the connecting tissue that makes it possible.