Swiss Re Reinsurance Options CEO on attending to grips with information

As a 160-year-old firm working in each insurance coverage market world wide, Swiss Re has a 360-degree vantage level of what’s occurring in any particular sector or enterprise line at any given time. In his three many years serving with the re/insurance coverage behemoth in a wide range of roles, Russell Higginbotham (pictured) has seen first-hand the quantity and the standard of data and information this supplies – and it was with this in thoughts that Swiss Re’s Reinsurance Options division was established.

Now a yr into his tenure as CEO of the division, he famous that its final purpose is to commercialize the group’s danger information belongings and ship them to different members of the re/insurance coverage ecosystem and past, with shoppers together with brokers, MGAs, governments and property fund managers. It’s an ambition that carefully aligns with Swiss Re’s mission and objective, he mentioned, which is to make society as an entire extra resilient.  

Using information to bridge the worldwide safety hole

At its core, insurance coverage is an intangible proposition, based mostly on a promise to pay and belief is on the coronary heart of this providing. It’s a lot the identical with information, particularly as information turns into extra broadly obtainable and accessible as a result of if it’s not used ethically, then individuals will probably be much less keen to share it and regulators will impose better restrictions on its use.

“There’s this nice alternative to enhance societal resilience, to shut the worldwide safety hole and to get extra insurance coverage into the palms of the precise individuals in the precise means,” Higginbotham mentioned. “However as insurers and reinsurers, we’ve got to ensure that we try this correctly, in any other case that chance will turn into rather more slim. So I feel it’s on us to nearly self-regulate round that.”

Velocity and effectivity – the dual calls for of knowledge

Velocity is the primary consideration, Higginbotham mentioned, as a result of individuals need issues accomplished sooner. However whereas underwriting and issuing a coverage in real-time sounds comparatively easy, it merely doesn’t occur that means for lots of merchandise.

Alongside the demand for pace is the urge for food for elevated effectivity, he mentioned, as corporations need to make extra correct selections, based mostly on higher information optimization. That helps them wanting throughout their books of enterprise and understanding intimately how they’re performing, the place the problems are and the place the alternatives lie. Having this extra granular readability on their enterprise is what helps development as a result of it unlocks extra insights into new areas for development, whether or not that’s a market, a geography or a product.

“With higher high quality information, you’re then in a position to construct a technique round that with better understanding and confidence,” he mentioned. “Finally, all of these items make insurance coverage extra accessible, extra reasonably priced, and extra worthwhile together. It’s about looking for the precise steadiness for development – individuals want to have the ability to see merchandise that they need and merchandise that they will afford, and insurance coverage firms have to have the ability to present that. So, all of it comes collectively fairly neatly.”

Understanding the connection between digital development and resilience

The hyperlink between digital development and common resilience is evident from the end result of utilizing the precise information in the precise means, Higginbotham mentioned, nonetheless, it’s not simply concerning the information itself but additionally the interpretation of that information to permit firms to grasp and value danger extra precisely and extra effectively. As a result of, as an insurer or reinsurer, it’s important to cost for uncertainty as a result of with out figuring out how a danger will carry out, it’s essential to construct security margins into your pricing and allocate extra capital to that danger.

“So, finally, it’s important to be extra conservative round that danger due to uncertainty,” he mentioned. “However in case you take parts of the uncertainty away, to extend accuracy and understanding, it builds a a lot stronger basis for options growth, as a result of you are able to do it with confidence. Basically, if you understand how your automobile’s going to carry out, you may go sooner. That’s what information provides you the potential to do.”

How is the insurance coverage market responding to this providing?

Assessing how the market is responding to this chance, he famous that reinsurers and insurers have been on a knowledge enrichment journey for some years now. The pandemic accelerated curiosity on this space, he mentioned, as a result of firms needed to discover other ways to conduct their enterprise and help their clients. What may beforehand have been labeled as ‘innovation’ or  ‘aggressive benefit’ merely turned desk stakes for swathes of the market, as a result of to be with out these capabilities was all of the sudden a aggressive drawback.

“Naturally, there may be all the time going to be extra to do,” he mentioned. “However the basic problem, which hasn’t modified, is that not sufficient individuals and companies have insurance coverage cowl. Both they don’t have it in any respect or they don’t have the precise cowl, or they don’t have the correct amount. And the surroundings all of us reside and work in is more and more unsure and all of us must ensure that insurance coverage is there to play its position in societal resilience.

“Finally, the position of insurance coverage is to supply a security web when all the opposite types of mitigation that you’ve got don’t work. That hasn’t modified, quite I feel the arrival of knowledge and expertise simply permits that to proceed to occur. And I consider that the insurance coverage business is absolutely embracing that now as a result of it has to. If you wish to be aggressive sooner or later it’s important to be working on that degree otherwise you’re going to seek out your self changing into more and more uncompetitive.”