Making Risk Flow | The Future of Insurance
00:24:54 · Juan de Castro, Simon Cooper-Williams
[00:24:54] S0: Exactly. And then the other challenge we've seen is then, as you said, Simon, you've got all these underwriters filling all these spreadsheets, the inputs to those spreadsheets get lost. That's not data that's stored anywhere. It's stored in a file system, but it's not discoverable, right? [00:25:12] S1: Yeah, completely. Yeah, I'm very happy to go hard on spreadsheets. Are completely trying to move off them, so happy to dis them as we go. But yeah, mean, I think another theme with them is that the user interface and just that UI functionality of spreadsheets, we just lost people on that. I think you'd see whoever happened to develop it would have a different style. And if someone wanted to pick it up, they would completely make it their own again. It just, from a usability perspective, it just didn't feel like it was part of the company's infrastructure. It wasn't part of that underwriting workflow at all. You just completely lose people given that. They're also incredibly hard to pick apart as well. Mean, we've all been there where someone joins, someone's developed a previous model, you have to start and try and understand that. And if you want to add something as simple as adding a rating factor or even integrating external data. That's what a lot of people talk about, putting an API functionality in there and automating that data to come in. I mean, these things were just incredibly painful and pretty much impossible doing it in those sort of systems.
00:26:21 · Juan de Castro
[00:26:21] S0: Okay. So perhaps this is a good point to ask you, Jamie. Most of the questions so far have been about your history as an actuary in different insurers. A lot of what you're doing now within Hyperexponential obviously is helping insurers move away from spreadsheets and having a much more nimble way of pricing. So let's start with what does it look like? So like what does it mean? We've already complained a lot about the history of spreadsheets. What does it look like with a more modern rating engine?
00:26:51 · Jamie Wilson
[00:26:51] S2: Yeah, no, it's a great question. So I guess kind of the very, very short answer to the point Simon was making earlier, right? We spent years asking underwriters to enter data into these spreadsheets and then not giving them much in return. Kind of suddenly there is so much opportunity with a system like HX Renew to start getting return to the underwriter straight away. It's no longer this point of, okay, I've got this standalone spreadsheet and underwriter is gonna go and copy and paste a lot of data into it. Get a number out that they don't even trust. And then kind of go about their normal day to day underwriting. Like kind of what rating tools can look like, what pricing tools can look like is effectively a really embedded part of the underwriter workflow. So it's integrated with your other internal systems. So it's pushing and pulling data from your policy admin system. It's connected to your sanction screening. So all of this stuff, rather than me having to kind of copy and paste data into multiple systems, I put it into one place, click a button and my pricing tool is automatically populated or my policy admin systems automatically populated. I think that's one of the key things. I think kind of, there's a real opportunity there as well, Juan. The kind of the risk of us, me kind of talking about Cytora and HX for new integrations and going on about that for too long. There's the opportunity to properly integrate with platforms like Cytora. So that kind of data can be flowing in from the submission straight into the pricing tool, straight through to the policy admin system without the underwriter entering a single data field or kind of external data enrichment. Kind of suddenly an underwriting click a button and like we can scrape data from websites, pull in data from APIs, like query data from databases. So that kind of actually you start thinking about all of that processes automated. And then on top of that, you can start trying to work out what's the additional insights I can put in front of the underwriter at the point of pricing. So kind of rather than it being like the pricing tool is there to produce just a technical price. Instead it can, obviously it's still gonna produce a technical price, but what is the other insight I want my underwriter to see the at point of pricing?
00:28:53 · Jamie Wilson, Juan de Castro
Like, do I want them to see what the marginal impact of this policy is to my portfolio? Do I wanna see them what other quotes that have come through recently look like this one and what the pricing kind of decision was at that point? And kind of say there's all this opportunity, but you just can't get there with spreadsheets is the key point. It is the kind of, that's always been the limiting factor. And what love about my job to a certain extent is I get to go and kind of work with pricing actuaries across the market. Not all of them have been restricted by like kind of just Excel in the past, but a lot of them have. And I get to sit down with them and talk about, okay, now you're not limited by Excel. What's your opportunity? Like what could you do? Like kind of what can the future look like for your pricing function and for your underwriters? And rather than pushing out pricing tools that are almost a burden to underwriters, kind of saying, how can you build out pricing tools that really enable your underwriting team? So yeah, I think kind of that's what the future can look like. [00:29:52] S0: Definitely. And then Simon, you're sponsoring this transformation within Markel too in providing insights. How are you thinking about it? How are you thinking about moving from providing a number, a technical rate, into providing insights to underwriters?
00:30:09 · Simon Cooper-Williams
[00:30:09] S1: I mean, I guess our underlying pricing strategy that we've done recently is relevant to this. And Jamie's comments there, leads it into this, I think quite nicely. But one of our key points of our strategy is that pricing has to be fun, which I think is quite a nice point. And the subtleties behind that are like, it's gotta be easy, it's gotta be integrated. We re don't keying, like single pane of glass feel has to be there. We want people to enjoy it and not be, the system shouldn't be a burden for when people click on it and go, I've gotta do my pricing now. Like if you're trying to change behavior and make pricing be like a valued and critical part of the process, it's gotta be enjoyable to use. And that's really what we're trying to do. We want more data in there. Examples we're doing now, now we've moved to HX, we're putting a ton of external data in there. We don't know how it affects the price. We're not having it load or discount the price, but we're putting it in and it's shown as a rating factor. It just doesn't do anything. And we couldn't use to do that and people can see it and go, okay, I might change my decision now. It might not affect my technical price yet, but at least it's there and people are looking at it. And, you know, Pete, I think the whole point of what we're doing is just trying to make that pricing process more insightful, but then also easier for everyone at the same time.
00:31:26 · Juan de Castro, Simon Cooper-Williams
[00:31:26] S0: So are you thinking about it capturing more data through hyperexponential, more external data for each risk. Initially, probably not changing your rating algorithm, as you said, based on that. But as you capture it, then you can run analysis later on and say, Okay, did any of these factors correlate, or any of these data points correlate with the loss experience? And then I guess the additional beauty of not using spreadsheets is you can seamlessly start embedding those data points into your writing into your writing calculations, right? Without having to distribute in a new version of a spreadsheet. Is that how you're thinking about it? [00:32:06] S1: Exactly, yeah. Yeah. We've got functionality like we can batch rate, we can run lots of our older policies through a new model. We can do that in a process, in a controlled process. We don't have to start a VBA code from scratch and sort of help us to do that. We can just ultimately press a button and it'll happen, which is pretty transformational for us. [00:32:25] S0: Definitely. And you touched there on something which piqued my curiosity. You talked about pricing strategy and making pricing fun. What is a pricing strategy? Is it like a vision for pricing? Is it... Do you think about it?