Adopting a Data-First Approach
Undergoing a Data Transformation.
The (re)insurance industry understands the importance of data and until recently, did not have the tools to truly undergo a data transformation. New tools such as Artificial Intelligence and Machine Learning, have fuelled the growing momentum and importance of data. In this digital age, adopting a data-first approach has become the new norm, revolutionising how insurers and reinsurers operate.
Every day comes a new announcement of data partnerships, for example, when PPL and Whitespace have partnered with Morning Data to accelerate the creation and validation of CDR, as well as new data platforms, such as WTW launching Neuron, a digital insurance platform connecting underwriters and brokers globally.
Other than AI, a catalyst for organisations to move to a data-first approach has been the launch of v3.2 of the Core Data Record (CDR) and v3 Market Reform Contract (MRC) standards. Will organisations choose this moment to go data-first or continue with a document stepping stone (and manual) approach to become compliant?
A data-first approach will significantly optimise the placement, operations, settlement, and claims processes. Traditionally, these areas have been document-heavy and data-dispersed, and the current wave of change is undeniable.
The what and the why.
It’s a common estimation that 70% of the London Market continues to rely on documents. This might seem a convenient and flexible approach—simply update a Word document each year – yet the traditional method isn’t as straightforward or adaptable as it appears, easy for one role in the value chain of placement leaving others to rekey, rekey again which means data cannot be reused, processes are slower, inefficient, and prone to error.
The antidote to this is the shift to a data-first way of operating. This approach melds technology and data, streamlining operations, bolstering risk assessment, and enhancing the insured’s experience. Focusing on the London Market, the benefits of this approach are already being realised by a handful of forward-thinking brokers and underwriters. It brings individual benefits, fosters collaboration, and enhances overall market efficiency.
Starting with the insured, one of the most significant advantages of a seamless data flow is personalised coverage. The more accurate and comprehensive the data that the insured can provide, the better brokers and underwriters can understand their specific risk profile. In turn, this allows for customised insurance solutions, tailored to fit the precise needs of the insured. This not only reduces the risk of over- or under-insurance, but it also ensures that premiums reflect the true level of risk.
From a broker’s perspective, a streamlined data exchange process can dramatically improve their ability to serve their clients effectively. With access to accurate, up-to-date data, brokers can make informed recommendations, negotiate better terms with underwriters, and respond much more quickly to any queries or concerns from their clients. This enhances the reputation of the broker, increases client satisfaction and retention.
For underwriters, having access to quality data, can significantly enhance their risk assessment capabilities alongside the internal (e.g. risk engineering reports) and external (e.g. third-party data feeds) data. Taken up a level to having data at a portfolio level can enable portfolio segmentation and recommendations to price their policies more accurately, ensuring competitiveness and profitability.
The Bigger Picture
Beyond individual benefits, the seamless flow of data can also bring about collaborative advantages. The synergy between the insured, broker, and underwriter can lead to innovative insurance products and pricing models. For instance, integrating real-time data from IoT devices into underwriting decisions can open the door to usage-based insurance or embedded coverages, where premiums adjust according to the insured’s behaviour or usage patterns.
Lastly, in the age of stringent (and ever increasing!) regulations and compliance requirements, the data trail created by a seamless flow of data can prove invaluable. It provides a clear audit trail, aids in regulatory compliance, and reduces the risk of errors and omissions, safeguarding all parties involved.
This seamless flow of data between the insured, the broker, and the underwriter is a game-changer.
Contact r10’s Advisory team to help you comprehend further your digital transformation journey, including understanding, defining and implementing your strategic priorities.