This article first appeared in the Summer 2016 issue of The Record.
Regulatory changes and an increasingly unpredictable risk environment are challenging insurers to do more in less time while enabling faster responses. “Regulatory changes are significantly increasing the workload,” says Pat Renzi, a principal with the Life Technology Solutions practice of Milliman. “It’s a trend that is particularly strong in the UK and European Union at the moment, and we’re beginning to see the same pressures affecting US insurers. One of our customers estimates that they are having to do eight times more work to comply with regulations, in a shorter period of time. From a risk management perspective for the organisation, delivering that with confidence is a huge challenge.”
At the same time, the risk environment has changed and insurers need to be able to respond quickly to new and unexpected risks. “Risk management is no longer simply a case of planning for events such as fluctuations in interest rates or people living longer,” explains Renzi. “There are so many unknown risks now, and insurers need to prepare themselves to respond quickly to unexpected events, to assess the impact of the risk or identify the opportunities it opens for the organization. That means being able to do more real-time risk management, so having access to information in an almost real-time basis is essential in enabling insurers to be safer and more competitive.”
Insurers are now looking to the cloud in order to achieve the compute power they need to calculate risk more quickly, but Renzi says that the benefits of cloud solutions go far beyond that. “Having access to the compute power that you can get in the cloud is critical to achieving the productivity and real-time information insurers need,” says Renzi. “But compute power is just the beginning. We’ve seen a lot of organisations with systems for risk management and actuarial modelling that are just not as controlled as they should be, and that affects the quality of the data coming in and the information coming out. It comes back to having confidence in your information, and that necessitates a completely controlled environment.”
Milliman’s Integrate solution takes a holistic approach to the automation and governance of actuarial modelling and reporting, using the power of Microsoft Azure to deliver an environment that can support insurers in today’s business environment. “With Azure, Microsoft has focused on making sure the cloud is ready for enterprise customers, and that was really important to us,” says Renzi. “We’ve created a full end-to-end process, from the data coming in to the results coming out. It’s a very controlled, highly governed environment which delivers the speed insurers are looking for in a way that enables confidence.”
Integrate harnesses the power of the cloud to deliver key efficiency benefits too. “Having the system in the cloud enables us to deliver valuable collaboration capabilities,” says Renzi. “Everyone in the organisation, wherever they are, can access the system to get what they need, whether that’s data, results or collaborative workflow tools. People can review results, sign them off, pass them to colleagues and discuss them with colleagues wherever they are, simply by logging into the system. It eliminates the email trail and enables a very collaborative – and very efficient – environment in which everything can be tracked, logged, versioned and managed.”
As more insurers move to cloud-based solutions for actuarial risk modelling, they are also realising that a holistic approach can deliver tremendous benefits across the organisation. “Industry studies have found that people are spending 70-80% of their time on manual work, and only 20-30% of their time is spent on analysing the information – so highly skilled staff are spending most of their time doing low value work,” says Renzi. “If you can eliminate that manual work by automating everything, you free up your resources to focus on making strategic decisions. That delivers huge value to the organisation.”
Pat Renzi is a principal with the Life Technology Solutions practice of Milliman.
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