Commercial underwriting and claims: champion a joined-up approach

In an upcoming presentation at Intelligent Insurer’s Commercial Lines Innovation Europe Virtual Event, titled “Commercial underwriting and claims: champion a joined-up approach”, on October 12, 2021, at 4:20pm, UK sales manager at FRISS, Martyn Griffiths, will demonstrate how insurers can use network analytics as a foundation towards understanding their portfolio better. He will reveal what real-time analytics look like, and how to embed them across the business and integrate insight-gathering across the customer journey, from underwriting to claims.

Why is now the time to be taking a joined-up approach to underwriting and claims?

A lot of people talk about the single customer view and many insurers have invested in that. There is a know your customer (KYC) requirement in insurance to make sure you’re complying with regulations but there’s also a ‘lower case’ KYC approach—the benefits of knowing and piecing together the commercial contexts of each of your customers are myriad.

That said, I don’t think insurers have solved this challenge particularly well. Network analytics is the biggest building block here, it’s what allows you to use artificial intelligence (AI) and start understanding data in real time. Why is real time so important? Because this is what allows you to get potential fraudsters—or simply poor risks—off cover quickly or stop them getting on cover in the first place.

Take, for example, so-called phoenix businesses. Not all are troublesome of course, but insurers often rate a phoenix business differently despite the fact that they could be insuring a business on the basis of its being claims-free, when its previous incarnation with the same directors, operations and location, had multiple issues.

Being able to understand who is behind new businesses, how they interact with other companies in your portfolio and leverage all the data will help you decide how best to write that line of business. It needn’t all be negative—this could be an organisation with several positive interactions with other companies on the books. As a result, you might want to offer them favourable terms to secure their business in a highly competitive marketplace.

Technology is an enabler but culture is vital. How can companies move their culture forward?

Any project, whatever it is, must have senior leadership buy-in. At some point you’re going to ask for money to do something different and if leadership pushes back, ultimately nothing will happen. Then, you have to engage stakeholders across the business and, at each level, they have to see a benefit to the change. Those benefits have to be distinct and tangible to each stakeholder.

It’s then about putting information in front of employees or partners and giving them context. The same information may have different impacts depending on the stakeholder’s priorities.

You need to get quick return on investment and do it in a scalable way. Network analytics allows you to deploy other strategies, it can be the basis to introduce other technologies. It creates that moment of realisation that clients can have multiple interactions across your portfolio, but unless you have that view provided by network analytics, you have no understanding of what those connections are and how valuable—or destructive—they can be.

There is generally among insurers a huge desire to do more, be better and use different types of data to inform different decision-making techniques. The challenge is in deploying them at the point of use. You have to make sure they’re being used at the right point in the purchasing cycle and, of course, there are the legacy systems to contend with.

What should carriers be looking for in an AI solution?

For me, it’s about using it in context. Everyone says they want AI but it shouldn’t be some kind of fashion accessory. What you’re looking for is a tool to help you make a good decision. That could be AI—but it might not be. Would you be using a sledgehammer to crack a nut? It’s easy to see that claims is a field that lends itself really well to AI—it has great datasets and lots of variables. But in underwriting too, where the variables are tightly defined, there are still benefits, especially if you can source data from outside those question sets that is relevant and in context.

I firmly believe that the source of competitive advantage for commercial insurers is the structured and unstructured data that can provide more variables to build better models. The key to both is still feedback. If you don’t give the model constant feedback it won’t improve, and underpinning that feedback is network analytics.

That’s what puts it all in context and you wouldn’t have that if you weren’t doing it all in real time. It has to be a learning process.

As one of our customers recently stated, writing insurance is like trying to drive a car forward while looking at the rear-view mirror—you are always trying to base your decisions on what you did in the past. We want to turn that on its head to make sure that insurers write risks based on most current information, and leverage the learnings to accelerate and secure the entire policy life cycle.

Martyn Griffiths, UK sales manager at FRISS, will be speaking on a session on Intelligent Insurer’s Commercial Lines Innovation Europe Virtual Event, titled “Commercial underwriting and claims: champion a joined-up approach”, on October 12, 2021, at 4:20pm.

This event is free for insurers and brokers, and you can register here:

https://www.commercial-lines-innovation-europe.com/home