This article was originally published in the Autumn 2018 issue of The Record.
In today’s challenging operating environment, insurers need to work faster than ever, all while offering clients great usability, governance and audit features. Supporting teams with tools purely for regulatory compliance purposes is not enough – products need to contribute more broadly to a business, whether that is adding value through providing insight to support business decisions or reducing costs and risk through the streamlining of processes.
This ‘smarter tools’ approach determines that we provide solutions with the systems integration capability, controls and flexibility to deal with the kind of challenges insurers face now and that can support a future development pathway.
In practice, this approach applies to all of our products without exception. The most prominent illustration at the moment runs through what we’re doing on IFRS 17 – insurers are becoming much more aware of the challenges associated with this standard which in many ways are more onerous than Solvency II. In particular, collaboration between actuaries, accountants and IT is key but, as always, real world coordination and coherence is notoriously difficult.
To address this, we have taken advantage of our integrated systems to combine elements of DataValidator, Unify, ResQ and RiskAgility FM to create a highly efficient solution for calculating the contractual service margin (CSM) based on existing models and processes, including those that would have been implemented for Solvency II.
Through this approach, the CSM calculation framework can be implemented as part of our overall IFRS 17 reporting technical architecture and workflow. This offers a complete end-to-end solution that fully integrates with accounting systems and delivers automation, control and auditability ‘out of the box’, saving time and money and allowing experts to be deployed on higher value tasks and value to be driven in the business outside of regulatory compliance. The building block design allows companies to integrate component parts with the systems they already have, adding further components at a later date if required.
Other examples of this smarter approach are reflected in our move to the cloud. We have gained competitive advantage, saved costs and broadened the market for our solutions by using Microsoft Azure to support the RiskAgility FM platform. In fact, we’ve achieved hyperscale financial modelling in a tiny fraction of the time that a more traditional solution would require. Meanwhile, by moving Igloo into software-as-a-service (SaaS) and usage-based pricing, we offer customers the potential for greatly enhanced performance and reduced costs for licensing, IT infrastructure and maintenance.
Throughout Solvency II, and now IFRS 17, the focus has been on ‘getting it done’ to achieve compliance; but this is not enough. Added to this, we think it’s essential to consider ‘value’, which can range from providing support for strategic decision making, through to being part of wider finance transformation, and which can have a bearing on factors such as organisational design and working methods, including how and where big data, automation and expert analysis are deployed.
This is not only evident in our approach to modelling and compliance solutions, based around Igloo, RiskAgility FM and Unify. Our pricing and reserving products, including Radar Live on the general insurance side, are also designed to support and encourage the innovation that enables process transformation.
Looking ahead, across our software suite we are continuing to expand the availability of cloud, flexible hosting and SaaS solutions and to develop ways in which strategic systems can be brought together more effectively using products such as Unify and Brovada One.
We are particularly excited about the further roll-out of Igloo Gen2 which, while retaining the backwards compatibility to earlier editions, represents the largest single leap in the power and functionality of Igloo since it was first launched. This performance boost will support models moving into more areas such as underwriting and pricing whilst also providing the opportunity for radically reduced costs of operation.
We have considered ourselves an insurtech business since well before the term became widely used, and still do. We’ve been providing innovative insurance technology solutions to clients for over 30 years and remain at the forefront with our expertise. Machine learning techniques and applications of advanced analytics to assist in risk identification and management are high on our agenda for further applications that can improve our clients’ enterprise risk management practices going forward.
Mark Brown is global product leader for Life Financial Modelling at Willis Towers Watson
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