Seasoned actuary talks about the importance of Data

Jessica Leong ought to know, as she is a highly seasoned property/casualty actuary who has nearly 20 years’ experience in insurance data analytics with Willis Towers Watson, Milliman, Guy Carpenter, and Zurich North America. She served as president of the Casualty Actuarial Society from 2020-2021 and is still active in the organisation.

Now, as CEO of Octagram, a data and analytics firm she founded in 2022, Leong is partnering with VIPR Solutions to advise program carriers and intermediaries on effective ways to gather, organise, and analyse their proprietary data. VIPR Solutions (VIPR) provides software platforms supporting the automation of program business functions such as bordereau management and processing and coverholder management, as well as regulatory compliance.

As Leong sees it, program business partners often run out of money developing products and implementing policy administration and claims systems at the outset of a program. At that point, generating premium becomes the top imperative. Though few would admit it, managing the data derived from sales becomes a secondary concern, at least for the short term.

That “short term” becomes longer, however, according to Leong, as underwriters and program managers rely on manual spreadsheets to monitor the progress of a program. At best, this time-consuming, error-prone approach delays realisation of the planned benefits; worse, it can lead to misleading impressions that actually erode profitability.

For example, Jessica warns program administrators to be wary if they encounter surprisingly high bind ratios among some retail agents. “It’s easy to interpret such a trend as a sign of success,” she says, “but it may be an indication that the carrier is being selected against.” 

Data dashboards

If you compare managing a program to driving a car, Leong advises that you have a dashboard in place at the start of your journey. You don’t want to be too far down the road before you realise you’ve veered off the road.

To make the most of an insurance program, Leong identifies seven categories of data visualisations that should be available in real-time to all key players involved in program execution:

1. Performance data, including loss ratios by peril, coverage, type of claim, and new or renewal business. “On its own, this is table stakes,” says Jessica. “What gives you a competitive edge is the ability to combine performance data with pricing and underwriting data. That enables you to understand loss ratios by type of customer and policy features, thus revealing actionable insights about your portfolio.”
2. Exposure data, including detailed information from pricing and underwriting, including values at risk, limits of coverage, and coinsurance. “What kind of business are you writing, and where?  How does this compare to plan? Particularly for early-stage MGA’s, not writing the business they had planned to write is a key reason the loss ratio goes sideways.”
3. Distribution data, including bind, hit, and loss ratios for individual agents and brokers. Again, combining this with your pricing and underwriting data will give you an edge,” Jessica says. “You’ll be readily able to see the types of accounts where you have the greatest success, a critical capability for portfolio management and profitability, particularly for programs in the start-up phase.”
4. Aggregation data, to monitor geographic spread of risk and catastrophe exposure. “In today’s environment, being able to manage your catastrophe exposure in a timely fashion is key”.
5. Claims data, particularly in the current environment of high inflation and supply chain disruption, it’s critical to organize your data so you can understand claims trends.
6. Pricing data, so you can monitor the effectiveness of your pricing model. “Your pricing provides credits and debits to different customers,” Jessica explains. “You should be able to see that those you are giving credit actually deliver lower loss costs.”
7. Policy renewals, assessments of the six factors listed above to inform renewal pricing and underwriting strategy and avoid broad-brush rate hikes or rate cuts.

VIPR the proven leader

Founded in 2009, London-based VIPR was the first insurance software provider of its kind, and the first to be approved by the Lloyd’s London Market for direct reporting. By 2018, a third of Lloyd’s managing agents were using a VIPR product. In the meantime, VIPR has picked up several North American clients, including the Canadian branch of a leading international insurer and one of the top 10 carriers in the US.

VIPR provides access to several data platforms available individually or through customised managed service arrangements:

• VIPR Portal, a digital gateway for uploading bordereaux information directly or via a secure API gateway.
• VIPR Intrali, a bordereaux management solution that imports, validates, and converts data from multiple formats into user-defined templates.
• VIPR Insights, a data analysis application that generates performance indicators for monitoring risk selection, premium, claims development, and operational efficiency.
• VIPR Data Cloud, a secure repository for storing and sharing all data processed through VIPR platforms.
• VIPR Managed Service, the expert resources for managing and processing binders, reducing the strain on internal teams, freeing up time for internal resources to focus on more critical activities.

Leong looks to VIPR Solutions to support her clients as they seek to implement and update data analytics much earlier in the program lifecycle than their competitors.

“With VIPR,” she says, “you have a company that is already working with several Lloyd’s and non-Lloyd’s affiliates and a growing number of carriers and intermediaries over seven international markets. VIPR has been around for a much longer time than other providers, and that really speaks to their credibility.”

Octagram is a data and analytics consulting firm dedicated to the property and casualty insurance industry. They are a team of experts with a track record of scaling measurable financial impact in this space. They provide recommendations based on their deep knowledge of commercial insurance and well-tested experience in how data and analytics can increase premiums and reduce loss and expense ratios.