The reinsurance industry is no stranger to the struggles of managing data and analytics.
From personal horror stories to client anecdotes, we've heard countless accounts of the pain points faced surrounding reinsurance data, inadequate quality, availability, and transfer between systems.
The reinsurance industry, a critical part of the global insurance ecosystem, has been grappling with numerous data-related challenges that hinder its growth and potential for decades.
The Nightmare of Receiving Data
Imagine being an underwriter or pricing actuary, eagerly awaiting the submission pack for a risk, only to find yourself in a tangled web of zip folders, PDFs, and data portals.
This not only wastes time but also adds unnecessary frustration to the process and your life.
The fact that reinsurance professionals in the digital age still face such obstacles in transferring and accessing data is astonishing.
The Pain of Sharing Data
The reinsurance industry operates in a complex environment with multiple stakeholders, including insurers, brokers, and reinsurers.
Managing reinsurance data often involves handling numerous files, email lists, and spreadsheet trackers.
Large submissions might require brokers to manage dozens of different files, with the responsibility of ensuring the right person receives the correct thing.
As a result, keeping track of data access becomes a daunting and time-consuming task.
Pursuing Consistency and Accuracy
In an ideal world, data should be consistent, logical, and accurate.
Unfortunately, the reinsurance sector falls short in this regard.
Reinsurers frequently deal with inconsistencies and inaccuracies, such as miscalculations and disparate data formats, which impede their decision-making capabilities.
The Hurdle of Data Inconsistency
Despite having substantial innovation budgets, many prominent reinsurers struggle to address the issue of data inconsistency.
When data from cedents and brokers differ significantly, reinsurers often spend more time sorting out incoming data than effectively analysing and utilising it.
Consequently, the potential benefits of new data sources and innovative technologies are eclipsed by the challenge of managing inconsistent and low-quality data.
The Lowest Common Denominator Dilemma
While emerging technologies like telematics and real-time driver data offer great promise, the reality is that many companies continue to rely on outdated methods of data collection and management.
Reinsurers often work with the lowest common denominator of data due to missing information and a low-level of confidence in the data they do receive, limiting their ability to make informed decisions and leverage the potential of cutting-edge technologies.
To better illustrate the struggles faced by the reinsurance industry concerning data, consider the following two analogies:
- Reinsurance underwriters are like tailors creating custom suits for clients. However, they must work with inconsistent and vague data instead of precise measurements, making it difficult to achieve a perfect fit.
- Storage units appear standardised on the outside, but upon opening, their contents are chaotic and disorganised. Access to information is limited, and trust in relationships becomes essential in pricing risks.
These analogies emphasise that reinsurance contracts cannot be treated as commodities, as each treaty and program is inherently unique.
It's crucial to recognise the nuances of various underwriting strategies and the context and expertise required to comprehend an insurance business.
Disrupting Traditional Markets
The insurance landscape is rapidly changing, as full-stack insurers invest in technology that helps them gain deeper and wider understanding of their policyholder base.
Insurtech companies are helping insurers through data enrichment, digital customer journeys, single customer data aggregation and open insurance technology. Never in the history of our industry have insurers had greater insight into the true risk their portfolio represents.
However, reinsurers are struggling to keep up, facing difficulty in ingesting and utilising this new wealth of information.
To drive meaningful change and improve the industry's overall data quality, collaboration and transparency must become the norm.
Challenges in Sharing and Utilising Data
A significant challenge faced by reinsurers lies in bridging the gap between their own practices and those of their cedent clients who are embracing new technologies and gaining greater insight into the end consumer’s profile and behaviour..
To overcome this hurdle, pioneers in the industry need to push for transparency and collaboration.
Insurers must work alongside brokers to present data in a format that reinsurers can effectively analyse and utilise.
As reinsurers become more adept at handling this data, they will start demanding similar standardised information from everybody, leading to a gradual improvement in the industry's overall data quality.
The Path Forward: Embracing Collaboration and Innovation
The challenges of reinsurance data are numerous and varied, from the frustrations of receiving and sharing data to the struggles of ensuring consistency and accuracy.
For the industry to fully embrace the potential of innovative technologies and make data-driven decisions, these issues must be confronted head-on.
By fostering an environment of collaboration and innovation, the insurance industry can harness the power of data to drive meaningful change - which is what we’re working on here at Supercede!
As insurers, reinsurers, and insurtech companies work together to navigate the complex landscape of reinsurance data, the industry will gradually transform, embracing a more efficient and data-driven future.
Until that day comes, reinsurers must continue to grapple with the pain points and limitations of an industry in need of a digital transformation.
