In an ever-changing reinsurance industry ripe with an influx of alternative capital and new competition, reinsurers have had to identify new ways to boost the profitability of their portfolios. One approach to enhancing the strategic planning process—portfolio optimization—assists underwriting and executive teams in determining how much share to allocate to each individual contract and in constructing reinsurance portfolios that balance maximizing returns while minimizing risk. In this post, let’s confront 6 myths about portfolio optimization and debunk them once and for all! Read More
Editor’s note: This article originally appeared on Global Reinsurance.
From chatbots that streamline how insurance is being sold directly to customers and fully automated claims processing via mobile apps, to monitoring driver behavior to inform eligibility for discounted policies, it’s no secret that artificial intelligence, or AI, is a disruptive technology that is here to stay, with many use cases that can be applied to the insurance industry. The ability to reduce the need for humans to be part of an external customer interaction is a major efficiency gain, but there are also a host of less spoken about, but perhaps just as impactful, ways that machine learning (a facet of AI) is now being used to find efficiency gains within property reinsurance companies. There is still a place for human interaction with customers utilising technology, however, there are some companies that have implemented the use of the customer service chatbot similar to those by Botpress which have become increasingly popular for such use. Nevertheless, there are still those who prefer the human element, with software like help desk by Salesforce is the sort of customer service solution that businesses find to benefit customer relations... what is help desk? Read More
Deciding how best to go about running additional analyses and integrating catastrophe modeling output into a reinsurer’s own internal analytics system is no simple matter, and the consequences of getting it wrong can be significant. According to McKinsey, 71% of large IT projects (those with price tags exceeding USD 15 million) face cost overruns, and 33% run at least 50% over budget. Read More
Historically reinsurers have had to invest heavily in developing their own proprietary IT systems. Much of this was driven by the fact that third-party solutions were simply not available in the marketplace. Over the past 10 years, the insurance technology landscape has been transformed dramatically, and reinsurers regularly confront the decision of whether it makes more sense to build their own proprietary system to solve a problem or purchase a third-party solution. Read More
It used to be that reinsurance portfolio roll-ups—combining the estimated probabilistic CAT losses from all the reinsurance contracts you write into one global portfolio displaying your business’s overall expected loss and exceedance probability curve—were done annually because of the time and resources needed. But this traditional rolling up for the once-a-year snapshot of a business appears to be waning. At AIR Envision Europe 2017, we polled the room and found that only 4% of attendees are still rolling up on a yearly basis—65% are rolling up their global portfolios on a quarterly basis, and the remainder are rolling up even more often than that!
This raises the question, why are 31% of AIR clients now taking the trouble to roll up so frequently? Read More
A lack of major catastrophes in recent years (aside from this year), increased competition brought on by the inflow of alternative capital from investors, and the need to spend more time and resources processing increasing volumes of data are several of the key forces that have created today’s soft reinsurance market conditions. With combined ratios increasing and global property reinsurance rates online (ROLs) having declined for 11 straight years, describing the underwriting environment as “challenging” would be an understatement. Read More