Insurance in the Age of Data | Point of view


The insurance market has suffered its worst dislocation since the financial crisis.

Inflation is reaching levels never seen even by the top executives of our industry in their working lives; bonds and equities fell in tandem for the first time since the early 1980s. Largely as a result, dedicated reinsurance capital fell 11% in the first half of the year, and d primary insurance potentially more. This coalescence of events is creating capacity constraints that mean online prices continue to rise in most geographies and lines of business.

What does this mean for the future development of the insurance market? Those with the longest tooth will be able to tap into past memories of tough markets, which in itself is a valuable resource. However, two questions remain unanswered: where is the data and where are the analytical tools to allow us to navigate this new phase of the cycle?

The insurance data gap

Until now, the insurance industry has lagged behind other financial markets in its ability to access deep and consistent market data and analytical innovation. In other capital markets, historical prices for thousands of assets, commodities and derivatives are available with just a few clicks. While this type of information exists in some areas of insurance, it is either fragmented into specific markets or jealously guarded by individual entities. And who can blame them? Data and analytics are an extremely valuable tool for navigating this market dislocation.

Howden’s Nova platform provides this much-needed access and capability to industry data and analytics. It draws on all publicly available historical data, is continuously updated with new entries, and provides quick analysis and comparisons of prices, earnings, claims, and buyer behavior across lines of insurance. generic and specific.

Naturally, we believe that Nova can become an industry standard. But you don’t have to be as enthusiastic about Nova as we are to recognize that data is our industry’s greatest untapped resource.

Analytics provides the advantage

Perfect decision-making is not possible, but with the right information and analytical tools, decisions get better. The direction of the markets and the likely longevity of market cycles – including the current cycle – can be better understood with accurate data and intelligent analysis.

Excess profits are typically generated by taking informed, often contrarian positions. The right information and analysis can identify these opportunities and “white spaces” before consensus catches up.

Benchmarking can be improved, especially outside of the US Yellow Book consistency. Identifying key metrics, such as the actual performance of peer companies in different markets, becomes simple with hundreds of data sources and nearly perfectly consistent financial models accessible through a digital platform.

Likewise, in volatile asset markets, counterparty credit becomes a critical issue. Data and analytics make counterparty risk assessments less of an art and more of a science. Ceding companies can upload their entire reinsurance panel to Nova and monitor it as information is updated.

These apps are just a taste of what is already possible. The potential uses are endless, and advances in machine learning and AI will open up even more opportunities.

Draw a smoother course

The history of insurance is made of cycles, and that will not change. But data and analytics are becoming increasingly essential to understanding how these cycles work and identifying the challenges and opportunities they present.

With Nova, the industry’s leading market intelligence platform, these opportunities can be better targeted.

David Flandro is Head of Analytics and Michelle To is Head of Business Intelligence at Howden


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