Friday, November 8, 2013

Insurance: Regulations likely to bring back more focus on ‘Risk Management’ practices and global visibility

At recent G20 Summits, the G20 Leaders endorsed the implementation of an integrated set of policy measures to address the risks to the global financial system from systemically important financial institutions (G-SIFIs). Accordingly FSB (Financial Stability Board), in conjunction with IAIS (International Association of Insurance Supervisors) identified an initial list of Global Systemically Important Insurers (G-SIIs) consisting of 9 groups:
1) Allianz, 2) AIG, 3) Generali, 4) Aviva, 5) Axa, 6) MetLife, 7) Ping An, 8) Prudential Financial and 9) Prudential plc.

Basically, FSB is trying to solve 'Too big to fail' problem by hand picking large global institutes and subjecting them to a set of policy measures.

Although the initial focus is on these designated global SIFIs, it may eventually come down to all large, internationally active carriers. Many domestic regulators are likely to designate domestically important insurers and apply policy measures on the similar lines. In June 2013, U.S Department of Treasury FSOC designated AIG and Prudential Financial as SIFIs, and both will be subject to stricter regulatory standards and supervisory oversight under the 2010 Dodd-Frank Act.

The set of policy measures comprise:
• recovery and resolution planning requirements;
• enhanced group-wide supervision; and
• higher loss absorbency requirements ( including non-traditional non-insurance (NTNI) subsidiaries)

The impact of these regulations is still being worked out, however, at the minimum, it requires following from IT perspective -
• Integration of data sources for recovery/resolution and risk management across the group
• Identification of changes to Risk management metrics and bringing in visibility at group and legal entity level
• Identification of intra-group exposures
• Approach for ring fencing NTNIs and development of risk management plan & systems

In July 2014, Systematically important Reinsurers will be identified and they are likely to have similar impact. I will update this entry as we do more research on this.

Wednesday, September 18, 2013

New article : Big data Trends 2014

The recent article in Alsbridge Outsourcing Center - Big Data Trends 2014, includes some of my thoughts on how Insurance companies can effectively leverage the super abundance of data -
Here are some excerpts -
In this era of low interest rates, insurance companies need strong real-time analytics capabilities to achieve the elusive underwriting profit and sustained growth,” explained Amit Unde, chief architect and director of insurance solutions for L&T Infotech. “Going forward, the competitive battles will be played on the data turf. It’s the companies that leverage both external and internal Big Data, predictive analytics and adoptive underwriting models that will come out on top.
With Google Maps and location intelligence services, the underwriter can view a property from all angles and assess distance from a coastline, flood plain or other potential hazards. Online access to hundreds of different data sources—from videos to photos to loss trends and other documents— is now just a few clicks away,” Unde said. “But, without the right tools, mining this data is still a highly manual process.
I wouldn’t be surprised if, in the next five years, the next big player in the commercial insurance industry was a new company with a Big Data-driven automated policy issuance and claims payout model,” Unde said. “Automated decision-making has the potential to transform the industry, enabling small players to compete with large insurers, based on their technology.
In the insurance industry, companies should validate against a set of rules or cross-verify against multiple sources,” Unde said. “However, in most cases, it doesn’t make sense for insurers to boil the ocean to get 100 percent data accuracy. It makes better sense to apply the 80/20 rule to achieve the desired accuracy for the 80 percent of the dataset without having to invest intensive efforts—then asking ‘did you mean’ questions in the remaining 20 percent of cases.
Let me know what you think about the article.

Friday, August 9, 2013

Webinar : Aggregate, Visualize and Manage: The Fundamentals for Gaining A Single View of Risk

The ability to aggregate, visualize, understand and manage risk is fundamental to the profitability of insurance carriers and reinsurance companies. In some cases, it’s fundamental to legal compliance, overall solvency and long-term viability.
Yet it has been difficult to date for most insurers to gain a single, operational view of risk across their organizations. Until now…
Carriers are beginning to leverage technology solutions for a comprehensive risk management solution – one that helps carriers overcome siloed operational structures, IT systems and data sources to integrate information across the enterprise, ensure its quality, enrich it with third-party data – and then present a single, map-based view of operational risk in near-real-time.
View this one-hour webinar ( conducted on Wednesday, July 31, at 2:00 PM)as Rich Ward, Business Solution Architect with Pitney Bowes Software and Amit Unde, Chief Architect, Insurance Solutions with L&T Infotech, discuss new trends in location intelligence technologies and how near-real-time geospatial analytics are drastically changing catastrophe modeling, underwriting and risk management practices.