regional marine manager, starr underwriting agency (asia ......starr underwriting agency (asia) ltd,...

Black Box Underwriting - Opportunity or Threat?

Jill Murphy Regional Marine Manager, Starr Underwriting Agency (Asia) Ltd, Melbourne, Australia

Introduction

To be resilient and sustainable - we must first remain relevant

• To Clients

• To Shareholders

• As a profession to attract young practitioners

Implications of technology

1. How can technology assist us manage our portfolios and deliver better underwriting results?

2. How will we remain relevant and responsive to our clients?

3. With so many career options open to young people these days how will we attract and train the underwriters of tomorrow?

Insurers who anticipate and

plan for change can create

their own future

Insurance 2020: Turning change into opportunity PWC January 2012

“Affordability and flexibility of technology is creating new opportunities.”

“Automation is essential if they are to remain

competitive and defend market share.”

Mitchell Wasserman, President & CEO, Oceanwide

Investopedia explains 'Black Box Model'

The "black box" portion of the system contains formulas and calculations that the user does not see nor need to know to use the system. Black box systems are often used to determine optimal trading practices. These systems generate many different types of data including buy and sell signals.

Black box

• Predictive Modeling Tools

• Catastrophe Modeling

• Accumulation Tools

• Risk Assessment

Corporate functions

• Compliance Matters

• Sanctions Screening

• Accounting and Credit Control Functions

• Sales and Distribution

• Training

Model calculations “Garbage in-garbage out” paradigm

GARBAGE DATA

PERFECT MODEL

GARBAGE RESULTS

PERFECT DATA

GARBAGE MODEL

GARBAGE RESULTS

How can technology assist us

manage our portfolios and

deliver better underwriting results

Data

• Internal • the quality and depth questionable

• data bases too small to be useful

• External • Where is the accurate data on shipping casualties and the cost to us as

cargo insurers?

Are you obsessed with data?

• Understand attritional losses

• Justify ratings and quantify other underwriting decisions

• It is an underwriters role to understand risk

Our changing world

Globalization and Containerisation

• Smaller packages delivered “Just in Time”

• Small Medium Enterprises (SME’s) – • driving force of the modern economy

• Influencing insurance industry changes

• Defining the future of a sizeable amount of our business as cargo insurers

Our changing world

Direct to Customer Channel

• Less face to face interaction

• An integration of Products

• Increase in simplicity and speed of transactions

How do we remain relevant

and responsive to our clients?

Automation

• Commoditization / Standardization

• Minimal Advice

• Ease and Speed to Market

• Multiple Distribution Channels

• Cost Efficiencies

• Increased Sales

• Efficiency Gains v Increase in Smaller Claims

• What risks should be automated

• Increased Profitability??

Black box technology

• It is just a distribution channel!

• Risk selection and pricing adequacy are still our responsibility!

How will we attract and train the underwriters of tomorrow?

Claims

• Generalized and Centralized Claims Teams

• Principles of marine are being ignored

• Claims Department detached

Are we learning from our mistakes as underwriters?

Training

• It is each generations responsibility to promote and enable the transfer of knowledge from senior to junior underwriter

• Technology presents us with new challenges not encountered by our predecessors

• Taxi Driver

• Bookkeeper

• Paralegal

• Air Traffic Controllers

• Parking Meter Attendants

• Travel Agents

• Interpreters and Translators

Cargo Underwriter?

Thank You

Black Box Underwriting - Opportunity or Threat?

Jill Murphy Regional Marine Manager, Starr Underwriting Agency (Asia) Ltd, Melbourne, Australia