Contingencies in a crisis

In the face of the biggest global health crisis for a generation, organisations across the insurance community have been working hard to develop and deploy contingency plans to better understand what this unprecedented situation means for their business – both in how they need to operate and what business they write. Read on to learn more.

First published in Insurance Day on 13th May 2020..

In the face of the biggest global health crisis for a generation, organisations across the insurance community have been working hard to develop and deploy contingency plans to better understand what this unprecedented situation means for their business – both in how they need to operate and what business they write.

Coming into sharp focus is the urgent need to rethink the traditional operating model, which, to date, has relied on face-to-face interactions and key person dependencies. One thing is clear: the sharing of knowledge is proving crucial if businesses are to improve resilience and endure.

Commonly attributed to Sir Francis Bacon, we have all come across the phrase “knowledge is power” and, as such, there is a natural reticence among many people to disclose their know­ledge, with the thinking being if you share or write down everything you know, why would your organisation need you?

This has been particularly true of the insurance market, where reliance has been placed on the in-depth knowledge and experience of the underwriters to make judgments on the risks they were being presented with and what price should be charged – all of which has been conducted within a “physical” environment.

Sharing knowledge

Although this approach has been extremely effective, when faced with a country-wide lockdown, how can this knowledge still be shared when the physical environment has disappeared? People have been forced to adapt – harnessing technologies and coming together as a team. What does this mean for the underwriter both in the short and long term?

Organisations are quickly waking up to the fact this notion of tribal knowledge (that is, having pockets of expertise residing in the heads of their individual underwriters) is not sustainable and the sharing of this knowledge and insight makes the “whole” stronger. Intelligence should be distributed across the entire organisation, so the same decision would be made, based on the same data, by every person – a consistent “customer-focused” approach.

We have replaced face-to-face interactions with technologies such as Zoom and Microsoft Teams, which have had to become an integral part of everyday working life. This has provided organisations with the opportunity to enable information to be shared – the first step in the wider development of a digital strategy.

With the April 1 renewals just completed, it marks the first time in the history of the market that this was done without physical meetings, no access to offices and no international travel. If we would have contemplated this as a goal at the turn of the year, can you imagine the cacophony of voices telling us this was “impossible”, “ridiculous” or “naive” – yet here we are, having done it. For all the wrongs Covid-19 might have brought us, the one “right” it has brought is a new sense of possibility – the age of digitalisation is upon us.

Prospective knowledge

As businesses embark on this journey, the untapped value digital technologies can bring not only to the business, but also to underwriters cannot be under­estimated. Significant and unforeseen situations, such as the global health crisis we face today, will continue to happen – events that create their own unique set of challenges and questions for the marine industry.

Digitalisation allows us to codify the industry: every vessel, shipment, all ownership, all flag changes, every movement, inspection, policy, price and claim. By removing the need to ingest and analyse billions of records of data, underwriters can have more time to do what they do best: curate prospective knowledge – a genuine opinion that can be used to develop their hypothesis on how the world is going to be. They can then use this to drive consensus into their organisation about their risk selection and risk management process more widely.

The judgment of underwriters can be unlocked and harnessed. Ultimately, it is the application of judgment that will secure the organisation’s future under this dark cloud hanging over us now and beyond. We have never needed the wisdom and insight of the underwriters more so than we do today, it is just not for the reasons we needed it yesterday.