Last week our Vice President, Head of Sales, Mark Phillips presented his keynote address at Marine Insurance Nordics. In this Q&A he discusses the opportunities within the Nordic region, his career, and what he gets up to in his spare time. Read on to find out more.
1. What are the key challenges facing the insurance market right now?
There is a lot of change facing the market right now. We have seen the market harden for the first time in a long time. However, most of the challenges are coming from external forces. We have seen an explosion in digital and data technology with ship owners and logistic companies investing heavily in a range of digital and tracking technologies to improve the resiliency of their operations. The marine industry is starting to demand more from their insurers. This means the nature of the policy itself to a certain extent is under threat while for insurers the nature of risk itself is changing.
Today’s world is a lot more interconnected and dynamic and the idea that we should rely on traditional approaches to manage and price risk is outdated. We only have to look at the impact the pandemic had on the whole supply chain to understand that the experience of the past can no longer be used to predict the future.
We are also seeing a change in trading behaviour. Vessels are being exposed to new hazards such as cyber while the vessels themselves are getting larger and more complex. This has been highlighted recently with the Ever Given grounding incident. Now when an insurer thinks about pricing risk, they have to take into account more factors.
Profitability and loss ratios have always been a challenge. This however is steadily improving because insurers are starting to adopt the technology. There is a whole range of initiatives that are out in the market to prove this. E.g., digital cargo products and new digital insurance companies.
2. You delivered the keynote address’ The Digital Underwriter – A Virtual Journey from Submissions to Portfolio Optimisation’ at the Marine Insurance Nordics event last week. Can you tell us about this?
During the presentation, I talked about how insurers can stitch together their existing functions with a range of digital technologies to drive growth. We’ve spent a lot of time over the last few years thinking about how we can help insurers improve the resiliency of their operations, price better, and reduce loss ratios. We’ve learned however that data, digitalisation, and modelling is a growth story. If you pull together the right pieces of technology with their foundations in platform capability and linked by the web of a digital tool kit you can drive real transformation within an organisation.
Examples I used included how to use submissions triaging and predictive pricing to enable a 400% increase in the amount of risks being processed per day. Also, the combination of data, modeling and digital applications to enable digital prospecting by underwriters. And finally, how everything can be consolidated at the portfolio level to reduce reinsurance costs and dramatically enhance capital utilisation.
3. How do the needs of the Nordic region differ from the London and Singapore markets?
From our experience, most companies in the Nordic region have a real affinity with technology and are very advanced in both terms of their acquisition of technology as well as their thinking around how to best apply that to operations. You have some of the biggest P&I club presence there and a whole range of innovation going on across the market. E.g., DNK Raptor the Norwegian connected war product which is the first of its kind.
The Nordic market has an incredible customer-focused approach. When we talk to our customers everything they do whether that’s building models, developing applications, or building new products is with their customers in mind and improving the lives of their members. The market accepted some time ago that data is vital, and they tend to focus on improving the quality of the exposure data they have access to while combining this with tech, data, and underwriting expertise. This all added together creates a great value proposition for their customers. This is reflected in the trends as we’ve seen over the last few years with some major accounts that have left the London market and go to the Nordic market.
4. How do you see the structure of organisations changing through investment in new digital technologies?
The current tech that is being deployed and developed targets the daily operations of the insurer such as the management of policies, the processing of claims, and the entry of data. This will naturally lead to some structural changes but ultimately technology will be enabling and facilitating change within roles of the individual to free them up from manual tasks.
For example, an Underwriter will on average process two risks a day or less. This is because it takes a lot of data entry and human resources to process and underwrite the risk. Adding tech such as digital submissions management into the mix with the ability of OCR tech to triage inbound emails and the deployment of modelling capability to automatically price risks can help reduce time spent on manual data entry. Underwriters have more free time to spend on their portfolios, new business, and complex risks. Our work with clients has shown that this can result in a 400 percent increase in Underwriting productivity from pricing two risks per day to eight risks per day.
Automated underwriting will also be key in changing the way things are done. We have found when talking to executives that at the top of their agenda is automated underwriting. This could be driven by some of the high-profile London market entrances e.g., Ki insurance which is the first fully digital and algorithmically driven Lloyd's of London syndicate. This will help drastically reduces expense ratios and improve underwriting productivity while setting you apart from everyone else.
5. How has the market changed during your career and what do you think has been the biggest accelerator?
From the beginning of my career within the insurance market data has always been used while applying actuarial science to that data to make a decision. We’ve also seen especially within property and causality the widespread use of catastrophe models to drive a whole range of risk pricing decisions from insurance through to reinsurance. For a long time, the only line of business you could model was property risk because everything that moved around e.g., ships were much harder to track.
The first mega digital trend in the last decade within the insurance space was the internet of things and the explosion of sensors. Not only their widespread use but the availability of the data that they generate. The ability to track assets was a move in the right direction but not compelling enough. It is when you combine this with technology such as machine learning, and AI enabling us to process the data into models it becomes interesting.
The final piece of the puzzle which has accelerated over the last year due to the pandemic is the widespread adoption of digital technology. Whether that means zoom or recognition that not everything has to be done face to face. Every single insurance company in the market has had to have a digital agenda over the last 12 months and those who moved early had a significant trading advantage. These companies are in a much better place to layer on additional services around data, modelling, and digital to drive value for their customers.
Richard Turner put it well when he stated at the 2020 IUMI conference “COVID has changed the way the market operates, particularly in London. Brokers and underwriters have embraced remote working and we’ve seen more online placing than ever before. It is difficult to see this process reversing significantly once the pandemic is over”.
6. Given your role is client-facing, how have you found remote working?
There have been both positives and negatives. What we have found is that by having our meetings virtually we can speak to many more of our clients in a week than we would have when we were basing everything around face-to-face meetings. For example, if I wanted to speak to our clients Skuld the likelihood is I would have got a flight to Norway and had meetings there. Getting the opportunity to visit places like Norway and have meetings in person with our clients was fantastic however, the reality now is in a week I can have meetings with clients in Norway, London, and Asia. We have found that we can have just as effective meetings virtually. Remote working has sped everything up and made us arguably more productive.
We’ve also seen some challenges. For example, when you’re in the final throws of the engagement process of a sale whether that’s with an existing customer or a new client there is a point in which someone has to make the final decision. That decision because of the nature of what we do is a big decision. When you decide to work with us it is showcasing a vote for the belief in digital transformation. This decision cannot be made by one person but by numerous decision-makers. In these instances, you can get things done quicker with face-to-face meetings.
7. Why did you decide to move into InsurTech?
I started my career in sales at a telecommunications provider. This job was a tough learning experience and after spending two and a half years there I decided to move away from sales. I was told by a friend who happened to be an insurance Underwriter that I should look into working within the industry as a Broker. So, every Thursday I would go to pubs in the city with my CV in my bag and talk to the Brokers and expand my network.
I ended up meeting a friend of mine from university who was working at RMS one of the pioneer companies in providing catastrophe modelling. They were recruiting for a sales job and I took it. I thought at the time it would be a great opportunity to expand my network with different Brokers however, I ended up loving it. The stuff I was dealing with every day e.g., earthquakes, cargo ships, and supply chain were really exciting. It has been a real pleasure to work within this industry over the last decade.
8. What’s the one piece of advice you’d give to anyone looking to move into the insurtech space?
It is important to be passionate in any job but particularly within the insurtech space where we are trying to implement digital transformation within a 200-year-old industry. There are many more industries out there that are further along in the process of adopting technology. However, if you’re passionate and understand it won’t be easy then it’s a fantastic space to be in. Having an interest in the subject matter, not necessarily insurance as a whole but a line of business is also vital. There are some fascinating lines of business to get involved in e.g., aviation, property, and catastrophe. I’ve been fortunate enough to have worked within lines of business that I enjoy e.g., catastrophe modelling and now with Concirrus marine specialty. The next step is finding technology that excites you. If you don’t find the tech compelling, then you won’t be able to break down those cultural barriers and make the change that is needed.
9. What are your outside interests?
Anything with adventure in it! When I’m in London I work but when I’m not you can usually find me outdoors in nature exercising. I love to cycle, hike, dive and ski. I also love to travel. If I can find a small diving village and spend three weeks scuba diving every day that’s heaven for me.
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