Put data first or lose market share to Big Tech: Verisk’s Rayner

Re/insurers may think they are fully engaged with the evolution towards digitalisation, but many of them risk being left behind by the data revolution led by the Big Tech firms, according to Tim Rayner, chief executive of Verisk Specialty Business Solutions (Verisk SBS), part of the analytics and risk assessment firm Verisk.

In an interview with Insurance Day, Rayner says both general and specialty markets face the challenge of “remaining relevant” in the digital age.

“There are elements even of the specialty market that could be algorithmically assessed, which presents a revolutionary risk because the Big Tech data firms know enough about the market’s businesses, clients and portfolios of companies to start to provide insurance services themselves,” he says.

The level of complexity an algorithm can handle is increasing all the time, he continues, but it is unlikely there will be one that is able to interpret every aspect of specialty products. This contrasts with general insurance, which has defined “real ranking factors” that determine what the technical price is.

“Aerospace, aviation, energy, oil and gas – they’re risks for which you would be wasting your time trying to train an algorithm because there aren’t the repeated patterns you get in, for example, home or motor insurance,” Rayner says.

Nevertheless, he warns: “If a revolutionary proposition came from a Big Tech firm that offered a fixed price, lower commission and lower broking fee, because they’re leveraging the market’s technology and data, then that could overthrow the specialty market as we know it today.”

Suite of tools

Verisk describes Verisk SBS as offering an “integrated suite” of end-to-end management tools that enables re/insurers to efficiently manage critical process steps and calculate risk accumulation and exposure impact across complex specialty lines.

This comprises web-based analytical engine Sequel Impact; workflow management solution Sequel Claims; pricing, underwriting and distribution platform Sequel Rulebook; and digital trading platform Whitespace. Rayner says these tools remove the “unnecessary human capital involvement” that can lead to poor client service, regardless of whether the market is general or specialty.

“It’s about removing the friction points by allowing algorithms to take views on risks, provide guidance or even, if it is a simple, high-volume, low-value piece of business, provide a real-time price or a real-time follow line back,” he says.

If the market fails to adopt such a strategic approach to digitalisation, then re/insurers and brokers could find themselves “disintermediated”, but as a former head of operations at Miller Insurance Services, Rayner believes no technology will diminish the importance of brokers. “Having spent 18 enjoyable years at a wholesale broker, Miller, I absolutely understand the value a broker provides to the insured as its agent negotiating complex claims and ensuring there’s capacity when there are market challenges,” he says.

“But if we don’t adopt things like algorithmic submission management and rating triage to deliver efficiency, then a Big Tech firm, with what they know about us and our assets through adverts, and from all the different online tracking tools, could take classes of business for themselves because they have come to know more about our insured corporate entities than we as the re/insurance market do.”

Growing interest

This warning has not fallen on deaf ears and Whitespace is “gaining very significant traction”, by putting data and application programming interface (API) first and thus “enabling what we believe is the only truly digital marketplace for re/insurance out there”. Verisk forecasts 300 companies will be trading on the platform by the end of this year, up from 230 at present.

“And through those relationships, cross-selling and upselling the algorithmic capabilities for Rulebook is a key focus,” Rayner says.

Some 13 members of the Belgian marine market have signed up collectively to the Whitespace platform, thanks to an initiative of the Data Exchange Commission of the Royal Association of Belgian Marine Insurers.

Increasing interest in Whitespace from overseas is taking Rayner to the Council of Insurance Agents & Brokers’ Insurance Leadership Forum, in Colorado Springs on September 29 to October 3, and the Singapore International Reinsurance Conference on October 30 to November 2.

“If we don’t adopt things like algorithmic submission management and rating triage to deliver efficiency, then a Big Tech firm, with what they know about us and our assets through adverts, and from all the different online tracking tools, could take classes of business for themselves because they have come to know more about our insured corporate entities than we as the re/insurance market do”
_{Tim Rayner
Verisk Specialty Business Solutions}

“We aren’t constrained to London,” he stresses, “and the global interest is strengthening as more firms realise the benefits of a data-first approach to complex specialty placements.”

He adds: “Whitespace and Rulebook have always been data and API-first. That differentiates us from the competition in the marketplace, which is still technically document-centric.”

Placing insurance business on a document basis means not getting to the granular detail of data, whereas Whitespace holds that detail “from the get-go”, he says, and it makes all the data available “on an inbound and outbound API basis for upstream-downstream integration”.

Verisk SBS is starting to see interest from brokers in how they can use that algorithmic follow capability.

Rayner says: “The big brokers might have treaty arrangements or global quota-shares that automatically attach 5%, 10% or 15% of capacity according to the profile of that placement. Whitespace plus Rulebook enables that to happen automatically. Document-centric pricing platforms, on the other hand, typically have to engage an offshore team to process that calculation and attach the respective quota-share.”

He adds: “To be digital, you must put data first. And to offer a digitally inclusive solution, you must provide the APIs.”

Rayner also highlights Verisk’s recent release of Enterprise Exposure Manager (EEM). EEM is a scalable “cloud-native” solution that enables re/insurers to evaluate enterprise-wide risk, providing an improved understanding of global exposures and insights into portfolio-wide risk accumulations, he says.

It is a collaboration with Extreme Event Solutions (EES), formerly known as AIR Worldwide. EES combines the catastrophe modelling and probabilistic capability of Touchstone, Verisk’s enterprise risk modelling platform, with the exposure management and visualisations from Sequel Impact.

“That’s a solution for when our clients and prospects can’t manage the portfolio roll-up of an aggregation across multiple insurance companies or reinsurance treaties and arrangements,” Rayner says.

“Our capabilities in the catastrophe modelling/exposure management space are wide-reaching and we continue to invest heavily in this proposition across the organisation. As an example, the seamless Impact-to-Touchstone integration has now been rewritten to be more robust and efficient than ever before.”

Verisk’s acquisition earlier this year of Morning Data, a supplier of software to brokers and managing general agents (MGAs), enables Verisk to enhance and expand its solutions for straight-through processing and distribution to the “underserved and growing” market of small to medium-sized enterprise brokers, coverholders, MGAs, captives and re/insurers, Rayner says.

Morning Data’s core data record (CDR) checker is “topical” in the context of Lloyd’s Blueprint Two initiative, he says, pointing out the company’s chief executive, Kirstin Duffield, is advising the Lloyd’s Market Association on CDR requirements.

Rayner stresses: “We as a market absolutely must get behind Lloyd’s joint venture with DXC Technology and the International Underwriting Association to deliver the necessary market modernisation and digitalisation of the back office. Without that foundation, we won’t ever be able to truly move forward and realise the straight-through processing efficiencies and synergies we should in a fully digital market. It’s too critical for the London market’s global credibility to miss this step.”

The global market will only succeed with its digital transformation, he continues, if there is a cultural shift in every re/insurance company.

“You can absolutely digitise an existing process, but you won’t realise the full efficiency or synergies from that digitalisation unless you take people with you on the journey. Don’t let it be a case of imposing technology on the broking or underwriting teams. And don’t have the process managed exclusively by the chief information officer. A company’s approach to changing the culture of the business ready for the adoption new tools really is the ‘make or break’ of digitisation initiatives.”

Holistic approach

How does Verisk manage its existing and newly incorporated units?

“We have a ‘One Verisk’ solution because one of the things we’ve been challenged by is operating in business unit silos,” Rayner says. “That means we’re leveraging the cumulative, collective capability of Verisk holistically, rather than what happened in the past, when each business unit focused on its products rather than on a solution.”

Before taking on his current role 15 months ago, Rayner was business development director and then chief experience officer in Verisk SBS. “One thing I’ve been fixed on from the start and before becoming CEO is client engagement,” he says. “One of the biggest changes I’ve tried to implement is moving the focus away from a product company on to a solutions company where the client’s strategy is our strategy.”

His appointment as chief executive followed a flurry of exits by Verisk SBS executives in the summer of 2022. They included two chief commercial officers, for Europe, Middle East and Africa and the US, and the chief strategy officer. An arrival to Verisk SBS was Reid Stanway, who joined from Marsh as chief digital officer.

“Apart from Reid, all the other new executive appointments were internal,” Rayner says. “Internal career mobility is something we pride ourselves on at Verisk. We’ve got 7,000 employees globally and we want to make sure there is internal progression.”

Over the 11 months since the new executive team was formed, Verisk SBS has promoted the “solution-based approach”. Rayner says: “At the Verisk Insurance Conference in London a couple of weeks ago, the market saw we live and breathe the ‘One Verisk’ mindset. That’s our most critical achievement in the past year.”

Starting with a “clean canvas” from October onwards did not distract from the fact the amount of experience lost was “significant”. Rayner concludes: “I was on a team of eight execs when I joined and now six of the eight are no longer in the role we were in just over a year ago. The potential for disruption largely went unnoticed from a market perspective, however. That feels like an achievement in itself, just as bringing together all the different assets across the Verisk group of companies does.”