Tag Archives: Insurance

Tapping the insurance ecosystem for insights

I had the pleasure last week of attending “Data in the New: Transforming Insurance” – the third annual insurtech-related thought leadership event held by St. John’s University’s Tobin Center for Executive Education and School of Risk Management.

To distill the insights I collected would take far more than one blog post.  Speakers, panelists, and attendees spanned the insurance “ecosystem” (a word that came up a lot!) – from CEOs, consultants, and data scientists to academics, actuaries, and even a regulator or two to keep things real. I’m sure the presentations and conversations I participated in will feed several posts in weeks to come.

Herbert Chain, executive director of the Center for Executive Education of the Tobin College of Business, welcomes speakers and attendees.
Just getting started

Keynote speaker James Bramblet, Accenture’s North American insurance practice lead, “set the table” by discussing where the industry has been and where some of the greatest opportunities for success lie. He described an evolution from functional silos (data hiding in different formats and databases) through the emergence of function-specific platforms (more efficient, better organized silos) to today’s environment, characterized by “business intelligence and reporting overload”.

Accenture’s James Bramblet discusses the history and future of data in insurance.

“Investment in big data is just getting started,” Jim said, adding that he expects the next wave of competitive advantage to be “at the intersection of customization and real time” – facilitating service delivery in the manner and with the speed customers have come to expect from other industries.

Jim pointed to several areas in which insurers are making progress and flagged one – workforce effectiveness – that he considers a “largely untapped” area of opportunity. Panelists and audience members seemed to agree that, while insurers are getting better at aggregating and analyzing vast amounts of data, their operations still look much as they have forever: paper based and labor intensive. While technology and process improvement methodologies that could address this exist, several attendees said they found organizational culture to be the biggest obstacle, with one citing Peter Drucker’s observation that “culture eats strategy for breakfast.”

Lake or pond? Raw or cooked?

Paul Bailo, global head of digital strategy and innovation for Infosys Digital, threw some shade on big data and the currently popular idea of “data lakes” stocked with raw, unstructured data. Paul said he prefers “to fish in data ponds, where I have some idea what I can catch.”

Data lakes, he said, lack the context to deliver real business insights. Data ponds, by contrast, “contain critical data points that drive 80-90 percent of decisions.”

Stephen Mildenhall, assistant professor of risk management and insurance and director of insurance data analytics at the School of Risk Management, went as far as to say the term “raw data” is flawed.

“Deciding to collect a piece of data is part of a structuring process,” he said, adding that, to be useful, “all data should be thoroughly cooked.”

Innovation advice

Practical advice was available in abundance for the 80-plus attendees, as was recognition of technical and regulatory challenges to implementation. James Regalbuto, deputy superintendent for insurance with the New York State Department of Financial Services, explained – thoroughly and with good humor – that regulators really aren’t out to stifle innovation. He provided several examples of privacy and bias concerns inherent in some solutions intended to streamline underwriting and other functions.

Perhaps the most broadly applicable advice came from Accenture’s Jim Bramblet, who cautioned against overthinking the features and attributes of the many solutions available to insurers.

“Pick your platform and go,” Jim said. “Create a runway for your business and ‘use case’ your way to greatness.”

Heat Hazard

We’re reading a lot about the dangers of heat waves and drought.

Aon Benfield’s latest  Global Catastrophe Recap report highlights the exceptional heat wave that impacted India from May 21-31, killing at least 2,500.

This is one of the highest death tolls on record for heat-related casualties, Aon notes.

The states of Andhra Pradesh, Telangana, and Odisha (Orissa) were worst affected by temperatures that reached 48.0ËšC (118ËšF) in several areas. Temperatures were so hot that roads literally melted in some areas.

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An opinion piece in the New York Times over the weekend spoke more to the deadly risks of heat and humidity.

Closer to home the ongoing severe drought conditions across much of the Western United States, with a particular emphasis on California, continue to exact an economic toll.

Aon cites a study conducted by the UC Davis Center for Watershed Sciences on behalf of the California state government that concluded that total 2015 statewide economic losses from the drought will top $2.7 billion.

Including damage from neighboring states, the overall total loss will rise to at least $3 billion.

Heat waves and drought can cause losses in many lines of insurance, according to Munich Re. Many losses are unseen, and the result of secondary events, making it difficult to assess the extent of losses involved.

For example, losses to the agriculture industry can run into the billions of dollars in drought years as harvest failures lead to multi-peril crop insurance claims and livestock losses may result from shortage of feed and heat-related stress. Long dry periods also create ideal conditions for promoting the outbreak and spread of wildfires.

In 2011 Texas suffered a severe drought and overall and insured wildfire losses in that state were also the highest ever recorded, Munich Re explains.

Heat waves have also been linked to an increased risk of mortality and heat-related stress with the potential to impact health and life insurance.

I.I.I.  provides facts and statistics on droughts and heat waves here  and  a  useful backgrounder  on crop insurance here.