An interview between Pranav Pasricha, Global Head P&C Solutions at Swiss Re and Stephen Yap, Research Director at Insurtech Insights
Q:
Thank you so much for joining us today, Pranav. Please tell us a little bit about yourself and what you do.
A:
Thank you for having me. I am leading Property and Casualty Solutions at Swiss Re. That is where we bring together next-in-class technology, risk data, extensive partner network and our unrivalled industry expertise to design solutions that help our clients grow their business. The support we give to our clients ranges from development of new products, to expansion into new channels and markets, as well as providing tools for risk assessment, claims management, portfolio optimisation, and risk transfer.
Q:
Swiss Re has been around a long time, longer than most organizations, coming up to 160 years. And yet Swiss Re is very much at the forefront of innovation in the industry. What is the secret of Swiss Re’s longevity? How does Swiss Re manage to be such a long-lived business and still stay at the leading edge of innovation?
A:
Great question. Sound business and innovation are not contradictory. They are complimentary. Innovation is at the heart of Swiss Re’s values and supports our vision to make the world more resilient. Our senior leaders are passionate about innovation, and you see this reflected throughout the organisation. If you look at our history, Swiss Re has always been at the forefront, whether it is building new products, finding creative ways to close the protection gap, or pioneering the adoption of technology and data in our industry.
In the world of turbulent change, this is even more important. You need someone like Swiss Re, a proven name that the industry trusts. You know that Swiss Re has done the due diligence and you can be confident to write risks based on Swiss Re’s analytics and tools. That trust and our reputation have been key drivers of our ability to innovate over the years.
Q:
Property and casualty insurance (P&C) is such a diverse sector. You have an array of different lines with their own distinct dynamics. But if you look across P&C and focus on the commonalities, what would you say are some of the common trends that are affecting the P&C landscape today?
A:
First, let us have a look at the changes that are happening from a customer’s point of view. Customers are asking for a simpler insurance experience, more certainty, more protection because their lifestyles have changed. They are looking for increased price transparency, fairness, and are more careful than ever in selecting the right product for their specific needs. This goes across all lines, both personal and commercial, and it is forcing a lot of innovation in the front end and in channels. It is bringing embedded insurance to the fore.
Then, you have a big wave of product innovation that is happening, such as parametric constructs for business interruption, usage-based products, telemetry, and IoT-based products. Finally, you have now a lot of new entrants coming into the market.
The other theme is internal process change. Insurance operations today look quite different to how they used to. Application of innovative technologies such as big data, machine learning and cloud have really accelerated the pace of applied innovation. There are a lot more autonomous processes, meaning fewer people sitting in the back office going through paperwork and dealing with long turnaround times. Robotics, automation, and data analytics are eliminating the need for human intervention in many cases and powering efficiency in the industry. A large part of that then goes back as better service or prices to the customer.
Q:
I like the way you framed the front end and the back end, and you have described how innovation is transforming both. I would be interested in hearing more about the benefits to the insurer. Have you seen tangible benefits in terms of cost savings, in terms of efficiency benefits that carriers are now experiencing because of, for example, automation? Have you seen concrete examples?
A:
It can be hard to distil the savings into dollars and cents. You are becoming more efficient but at the same time you are providing enhanced coverage, or prices are coming down. Now, in terms of tangible examples at the top end of the process, automating data collection in underwriting, using new and unstructured or better sources of data, is helping the carrier to improve the underwriting process. The customer experience is improving as you do not have to ask a lot of questions. The insurance company can write business with a lot more confidence and with much better exposure values. And in the back office, there is a lot more applied artificial intelligence (AI). For example, we rolled out automatic claims assessment using satellite data, drone imagery and machine learning. There is no need to wait for field assessors to go out and look at damage. This speeds up claims processing and significantly reduces cost.
Q:
On the one hand we are getting better quality data, and data from new sources such as satellite imagery. On the analytics side, are you seeing similar gains in terms of our ability to extract value from data, including existing sources of data as well as new ones?
A:
Absolutely. First, the ability to convert unstructured data into structured data has led to a revolution in the industry’s ability to ingest data. Not just new data, but data that we already had but were not using. That improvement in data quality but also data bandwidth, as in the number of fields that you can now ingest, has significantly stepped up. We are doing a lot of work to translate that data into better risk models.
Second, cloud-based tools and new modelling techniques allow us to run models very quickly and democratise them, making it easy for actuaries and product managers to be able to model their portfolios, visualise them and take real-time portfolio steering actions. We are providing various tools for this, such as a Motor Market Analyser, a Portfolio Insights tool, and others. We can create new product constructs, drive new ways to engage customers and develop different pricing strategies using these tools.
Q:
There has been so much innovation just in the past two decades. Have we made the big gains? Is it more about incremental progress from now on? Or are there big game-changers still to come?
A:
I am a big believer in that exponential philosophy. The pace of change is only going to accelerate. The industry is still at an early stage in the adoption of many things. The biggest gains to the consumer are on the horizon. I do not have a crystal ball, but the world of P&C is going to look quite different from now in 20 years. A more seamless, more usage-based insurance will become the norm. Right now, we use the buzzword embedded insurance, but it will go much further than embedded does today. There will be deeper integration of insurance into our day-to -day lives: in our cars, in our homes. What we are seeing right now is just the beginning.
The customer experience is going to be quite different. Pricing and price transparency will change a lot. It may not always be visible to the customer, but the carriers will be using much more sophisticated risk segmentation and pricing based on your actual characteristics.
Finally, my strong belief is that we will see a lot more product verticalisation in commercial lines. Currently most commercial general liability policies are fairly uniform. The underwriting is not specialised for a certain line of business. In the future we will see a lot more verticalisation; here is a product for retail and here is one for logistics. You will have a lot more fine-tuning of product, wording, coverages, and pricing for different commercial customers.
Q:
Do you also foresee that level of personalization and micro-targeting happening within personal lines as well?
A:
It is more complicated in personal lines, because of regulation. In many jurisdictions the ability to harvest data becomes a very tricky regulatory subject. In commercial lines you have a lot more room. In personal lines you get into more sensitive privacy territory.
Q:
How do you think Swiss Re’s relationship with its partners and with the industry evolve?
A:
Reinsurance traditionally has played a significant role in being the financial backstop to the industry. That will continue as the world is only getting more risky. Volatility is only increasing. But reinsurers are increasingly using their resources, data, knowledge, and financial capability to drive innovation. We will work even more closely with our partners. I see a closer collaboration than in the past between the carrier and the reinsurer, and a lot more cross-pollination of innovation, platforms, and technology.
Q:
Thank you very much, Pranav.
