Making Risk Flow | The Future of Insurance
00:32:40 · Simon Cooper-Williams
[00:32:40] S1: Yeah, mean, one of our points on the strategy is for it to be fun. I mean, some of the other stuff, we develop pricing to quote. Historically, a lot of people will save up pricing models and they'll do it post bind and they'll use it as a benchmarking tool to use afterwards for a rate change calculation or a rate adequacy calculation. We look to put external data integration wherever we can. We've signed up to a lot of new external data providers over the last year under this pricing function. And I think a big one for us is moving to incremental calibration. I think that's a really big point. If I look at what happened before or can happen traditionally, is a model is looked at and then it's left, and then it's left for a long period of time. And then when it's picked up again, it's usually, Right, let's just start again. Let's rip it up. If you think about... I mean, that's a nightmare for data analysis, because you have to then map all the old columns to the new one. It's probably a new underwriter by then. And you basically start from scratch every time and you forget about the old data if it changes too much, which it often did. But a big one for us is getting to a business as usual calibration. And for me, that's incremental development. I wanna put SLAs around the pricing function. So I wanna say if an underwriter asks for a rating factor to be added, we should have that in within a month, two months. We haven't decided on that yet, but we wanna be able to add things quickly. So you don't have this backlog that is so large value you get to it that you might as well start from scratch and you could add things as you go and you can see the impact and you can do scenarios and you can really say, should we add it? Yes, no, let's experiment. And we can just be a lot more agile with our development like you would in sort of any sort of software development. And that's the vision for us is to make that pricing function working like that. Again, it all comes back to that rate adequacy and pricing being a critical part of the underwriting process. And if it's gonna be like that, that's how it should be.
00:34:37 · Juan de Castro
[00:34:37] S0: I like it. It's something that often, like you called it incremental calibration, right? Yeah. Jamie, for those of your clients who've been using HX longer, is that a reality?
00:34:49 · Jamie Wilson
[00:34:49] S2: It's a great question. It's, I think always, I think for some it's starting to become a reality. I think it's something that I always try and encourage our customers towards, because I guess there's two things there. One, you need a piece of technology that allows you to make changes very easily and seamlessly. And kind of say, a lot of our customers are very used to the mindset of what Simon was talking about. They've moved from a place where pricing tools get changed once every five years. And actually it's not just your pricing entries that need to change culturally for that to work. Your underwriters need to be able to accept that as well. Underwriters have got very used to kind of pricing models and pricing tools being very static. And if you come in and you make kind of like changes suddenly they're like, well, hold on a second. This isn't the pricing tool I'm used to. And so kind of there's a lot of cultural work that needs to go into that, but you start to see it happening. And it's kind of, I guess two things. One, starting to embed processes so that you can improve your pricing model over time. But then I think kind of having a kind of a calibration strategy as well. So like when you first release a pricing tool, thinking about what is the data I wanna be collecting so that in a year's time, I can do some kind of incremental data analysis. Rather than waiting five years and realizing you haven't been capturing the data you needed. And actually that last five years of data capture has been completely pointless. Instead kind of like from day one, think what am I going to do? What kind of incremental like calibration do I want to perform? What data am I gonna need? What level of granularity am I gonna need to add? And starting to put a plan together. Because I think to that point of getting underwriter buy in as well, if historically they had a spreadsheet rater that didn't connect to anything and they didn't trust and it wasn't accurate. And they can now actually be in a world where you've got this kind of like all singing, all dancing pricing model, which connects to things, which makes their life easier. That generates quote documents. There's all of these things for them.
00:36:42 · Jamie Wilson
And then on top of that, they get told that you've got this strategy for how you're gonna make that pricing tool more and more data driven every year for the next five years. And it's gonna become more and more accurate. And it's gonna become crucial cornerstone to their underwriting process. Suddenly you're gonna get even more buy in from the underwriting side, because they're like, actually you've already invested to make my life easier. You're now investing to kind of give me kind of an underwriting edge over the rest of the market.
00:37:10 · Juan de Castro
[00:37:10] S0: Well, has been an incredible session. It's an area we don't talk about. I will discuss it in this podcast. I am very passionate as both of you are about moving away from spreadsheet. My two takeaways from this conversation, and it's been really insightful to talk to both of you who are peer heading this transition in the industry. So my two takeaways is one is how do you move from one off calibration or one off building of pricing models to this incremental continuous calibration, which is, again, as you continuous improvement type of mentality. And the other one, which is at the core of this transformation I'm talking about is moving from producing a number to really producing insights and enabling underwriters. And I think definitely, Simon, you and Markel are making huge progress in this space. Jamie, you are now supporting a number of our insurers. I know you're really enabling this transition of the industry. So I just wanted to say thank you to both of you. It's been a really enjoyable discussion. Making Risk Flow is brought to you by Cytora. If you enjoy this podcast, consider subscribing to Making Risk Flow in Apple Podcasts, Spotify or wherever you get your podcasts so you never miss an episode. To find out more about Cytora, visit cytora.com. Thanks for joining me. See you next time.