Momentum to grasp data won’t be interrupted
While the soft market encourages re/insurers to get a better handle on their data, this momentum is unlikely to abate even if the cycle now reverses and the hard market returns, says Frank Fortunato, chief executive of CATEX.
The drawn-out soft market that re/insurers have been grappling with for so long has served to encourage many players to invest in gaining a better understanding of their data and how they can best use it to price and manage risk more accurately.
Now, with the first signs of the cycle changing in the aftermath of heavy losses from hurricanes Harvey, Irma and Maria, this momentum towards embracing the potential of data is showing no sign of abating, according to Frank Fortunato, the chief executive of CATEX, one of the original insurtech companies, founded back in 1994.
CATEX offers a number of data transformation products powered by artificial intelligence that are licensed to clients around the world. Fortunato says demand was driven by inadequate pricing during the soft market as companies sought any way by which they could gain a little extra margin or a competitive advantage in an environment where their profits were being squeezed on the underwriting and the investment side.
“People realised they could harvest data to their advantage. When premiums were low the importance of this data became paramount as good data on risks allowed them to price the business more accurately. With investment income also low there was no wriggle room,” Fortunato says.
“When premiums were going down, this became more and more important. An extra basis point was important; equally, using bad data or bad information could also be critical in that market.
“Companies were looking for smarter ways to consume the vast amount of data they receive. Many people approached us based on this logic; it was a major motivation of our clients.”
CATEX processes over $7 billion in premiums and claims in more than 20 countries and seven different languages. Its main product is the Data Vera suite, a software-as-a-service (SaaS) product designed to import, transform, validate and autocorrect data all while maintaining detailed audit logs of all changes. It also exports data in a variety of industry standard formats at the click of a button.
The system is a very practical, easy-to-use solution, which also has the capability to learn and adjust the way it processes data based on past experience. It uses algorithms and previously processed data to recognise data patterns in files sent by different users and systems and tweaks the way it validates/autocorrects data. It crunches through millions of records of data using a high processing computing environment in seconds to make decisions and informs the user of the changes using colour codes. The more data it processes, the smarter and more efficient it becomes.
CATEX offers Data Vera as two products: Data Vera for Binder Management, a DUA management system to manage facilities and bordereau data; and Data Vera for Exposure Management, a product mainly used by cat modellers to address data challenges around COPE management, address cleanup/geocoding, modelling vendor integration, and analytics. Both products have a sophisticated workflow management and robust team collaboration/communications capabilities built in.
A good start
While the market is showing signs of turning, Fortunato stresses that he anticipates no change in the enthusiasm of re/insurers to get a better handle on their data and gain an advantage from that.
“With the losses we have seen in the past month, rates may now swing in the other direction but we are finding that the flow of interest in gaining an accurate understanding of risks by better harvesting and analysing their data has not waned. I believe re/insurers will now want to do this to maximise their profits,” he says.
He adds that an additional driving factor has been the wide divergence in loss estimates given by the risk modelling community in the aftermath of the hurricanes. He believes the differences have illustrated to the market just how difficult it is to assess certain risks.
“There is no panacea for this but having a really good handle on your own data is a good start,” he says.
This is even more relevant in many Asian markets that lack established risk models to help re/insurers assess risks, he says. As such, CATEX sees great opportunity in this region, something that led it to launch an office in India in January.
“We see great potential in this region, both for the overall risk transfer market to grow and for companies to benefit from our services in the way we can help them better harvest, manage and use their data,” he concludes.
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