Capitalise on ‘gold dust’ data

By Resolve Editor Kate Tilley

Insurers and underwriting agencies that don’t digitally transform will expire, says Kent Chaplin, COO at NZ-based underwriting agency Delta Insurance.

He said digitisation was driven by the need for heightened consumer experience. The industry needed to become analytics led. Insurers’ plethora of data was “like gold dust”, but it was important not to lose opportunities to capitalise on that data.

Mr Chaplin was participating in a NZILA conference panel session on international impacts with Dean Garrod, McLarens NZ MD, and Megan Howe, Berkshire Hathaway Specialty Insurance head of claims in NZ.

Mr Chaplin said insurtechs had blurred the boundaries between distribution, capital and manufacturing in insurance. They were changing the landscape and adding value to the insurance chain, which was why insurers were buying them.

“International markets are littered with failed digital transformations, [consequently there’s] now a trend to buy insurtechs, not build your own.”

Brokers reinventing

He said brokers were consolidating and reinventing themselves as risk advisers rather than just doing transactional roles and niche brokers were developing. Insurers and reinsurers were competing more with brokers and using insurtechs to engage directly with customers.

Underwriting agencies, or managing general agents, were on the rise with a 22% growth and 2022 revenue of $US20 billion.

Mr Garrod agreed the lines were becoming blurred between brokers, adjusters and other insurance market participants and, as traditional positions were challenged, “adjacency” would become the buzz word, overtaking “pivot” and “collaborators”.

The industry was facing supply chain disruptions, a fight for talent, and compliance issues with people working from home, but the insurance industry was resilient.

Ms Howe said insurers needed to boost profitability because they could no longer rely on investment income and had to make underwriting profits. “Claims costs are increasing in all lines, there’s a lack of skilled workers, delays in getting products into NZ, increasing regulatory costs, also broader exposures and the impact of climate change, with more frequent and severe weather events.”

Supply-side constraints

The reinsurance market was hardening, making it more difficult for insurers to maintain profitability.

She said the cyber market was challenging because there was an increase in the frequency of events and increased risk at board level. But there were also supply-side constraints with increased premiums and deductibles and decreased limits.

Ms Howe said: “It’s driven by claims experience and claims inflation, for example, a 34% increase in the value of successful ransom claims. The fast-evolving nature of cyber means we need to keep ahead of the hackers and price for uncertainty.”

Silent cyber was an issue with insurers inadvertently picking up cyber coverage via other policies. However, a Willis Towers Watson report showed capacity was stabilising, there was a focus on sustainable pricing, and increased board-level visibility and control.