Q&A: Swiss Re’s Even on parametric solutions, accountability

November 24 2021 by

Insurance Asia News (IAN) recently discussed a range of topics related to data analytics and innovation with Yannick Even, global analytics business partner with Swiss Re.

Among the topics explored with the Hong Kong-based executive were the growing demand for parametric solutions and how artificial intelligence (AI) can promote fairness and accountability in underwriting.

IAN: How are insurers incorporating new technologies and data into their commercial insurance offerings?

Even: The insurance industry is changing very rapidly across the APAC region. Customer preferences are shifting. They want more value, more dynamics and digital engagements, quicker turnaround, more personalisation along with newer protection needs. At the same time, insurance markets are hardening with a high level of uncertainty and volatility, with more focus from shareholders on efficiency and loss ratios. To address this growth, risk and costs challenges, insurers and their partners are leveraging technology and building more data-driven decision processes.

Evolving tech is now available at scale — intelligent and cheap sensors are all around us, starting from our smart phones collecting real time data, APIs allowing ecosystem and platform interactions, cloud computational power processing and transforming data into actionable insights. With approval from their regulators, Insurers have also been adopting digital technology such as eKYC, chatbots, engagement and claims automation apps to adapt to the new normal providing better services to their customers and better tools for their sales and servicing talent and partners.

IAN: As parametric solutions become more common, what kinds of insurance are likely to see the most immediate impact and why?

Even: There is increasing demand on the B2B insurance side, in particular for nat cat risks. Parametric structures are common in agriculture and engineering insurance and we see a constant demand there. We have launched parametric solutions supporting insurers across the world, APAC and China in particular, that are starting to scale and used as a first emergency financial response to an event. Those complement the more traditional protection products.

In terms of B2C insurance, it strongly depends on the distribution partner. It is challenging selling only standalone parametric products; however, some scenarios are starting to scale with embedded protection services within digital ecosystem customer journeys. For insurers, there are also opportunities to structure hybrid products such as parametric features embedded in existing traditional offerings, and more opportunities are emerging as insurers continue to transform their processes and operating models further integrating more digital interactions with their customers and accessing more data triggers from their partners.

IAN: How are new developments in artificial intelligence and data analytics affecting the reinsurance pricing process?

Even: Insurers and their partners are all looking to harvest the full power of data they have access to in order to better understand the customer and risk they onboard and better manage and prevent it. It starts from harvesting the full power of the data they already have access to but is often siloed in legacy systems or just too unstructured to be use as input. Then, this is augmented with alternative data from their existing and new partners leveraging new technology interactions such as the Internet-of-Things and apps.

With better data on hand, insurers are now leveraging advanced analytics techniques creating AI enabled solutions across the value chain such as overcoming uninsurability, better matching customer needs and product features, streamlining risk assessments during onboarding, better retaining and covering their existing customers, preventing and mitigating risk, helping customers adopt less riskier behaviours, predicting and intervening earlier at the time of claims to limit customer loss, better identifying fraud while accelerating the claims payment decision process, better managing portfolios and simulating the impact of systemic adversarial events. Together with our data scientists and our domain and risk experts, we are supporting insurers and their partners in this journey by solving business challenges with data and AI-enabled solutions providing them long-term benefits for both the customer and the industry.

IAN: How can AI help promote fairness and accountability in insurance underwriting?

Even: I strongly believe that bringing technology and AI at scale has to be done the resilient way. In order to build digital trust with our customers, solutions have to be fair, transparent, ethical and there should be someone accountable when things go wrong. Regulators across the world are looking at supporting the industry to navigate through the complexity of data privacy laws and regulations while embedding responsible AI principles.

As an example, the Monetary Authority of Singapore defined the FEAT (Fairness Ethics Accountability & Transparency) principles in 2018 and sponsored a consortium of 27 industry and tech companies. Swiss Re was selected by MAS to lead the Phase2 fairness assessment earlier this year. We developed a very detailed methodology on how to conduct fairness assessments and illustrate it by applying a Predictive UW model for a cross-sell campaign, which is one of our AI-enabled solutions already deployed with insurers across the SEA region. Definition and adoption of responsible AI principles are still very much in development and many aspects will require further alignment as those are gradually integrated in insurance company existing risk frameworks.

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