The Changing Face of General Insurance

From driverless cars to claims “big data is nothing new”, from telematics to robotic exoskeletons and the impending effect on actuaries, this General Insurance Seminar held a mirror up to Australia’s insurance industry and called for change. David Gifford reviews a jam-packed One Day event.

On 2 June 2015, the Institute hosted the inaugural One Day General Insurance Seminar. The Seminar took place following feedback from the 2014 General Insurance Seminar that members would like further opportunities for presentations and discussions on a range of contemporary topics.

Over the course of the day, 14 speakers covering four plenary sessions presented on a wide variety of topics of current interest within the general insurance industry. There was an excellent mix of thought provoking presentations and lively debate in the panel sessions which followed. The event was well attended with over 100 delegates and presenters, demonstrating the merits of this style of event. 

Pictured L – R: Kevin Gomes, Mark Kimberley, John De Ravin and IAG’s Chief Actuary Tim Clark who chaired Plenary 1.

The day kicked off with three speakers examining the current General Insurance landscape and Outlook. The first speaker was John De Ravin from Swiss Re who examined the history of the general insurance industry in Australia and actuarial involvement in the industry. John highlighted the growth in actuarial involvement in general insurance – from 6 Fellows in 1981 to approximately 500 today. He also highlighted how social, technological, environmental, economic and political forces have shaped the industry over the years. John left the audience to consider how many of the changes which have taken place were unforeseen and to continue to keep learning and to be prepared for change.

John was followed by Kevin Gomes from Taylor Fry who gave an update on the industry based on the latest JP Morgan industry survey. Kevin predicted that a likely upcoming El Nino effect would lead to reduced claim costs (approximately $0.6bn in catastrophe costs in El Nino years compared to more than $3.0bn in La Nina years). Kevin also spoke on the growing use of alternative reinsurance capital compared to traditional capital.

The final speaker in the first session was Mark Kimberley from HWL Ebsworth; the lone lawyer presenting for the day who was nonetheless very comfortable with numbers. He highlighted the significant cost of regulation within the general insurance industry and more broadly, with $94 billion dollars being spent annually on regulation, and with 10% of the Australian population being employed in compliance related activities and questioned the value of such levels.

The second plenary session looked at Technological Change and its impact on General Insurance, with three speakers each examining a different aspect of how technology would impact the industry in years to come. Jess Truong from the Transport Accident Commission looked at past changes in vehicle technologies and upcoming devices.

“If all drivers selected the safest car in their class, then road trauma levels would drop by one-third,” said Jess.

Natasha Anning from Ernst and Young spoke on how telematics will impact general insurance, flagging that by 2025, over 100 million vehicles worldwide will have some form of connectivity.Pictured L – R: Alex Collie, David Gifford, Jess Truong and Natasha Anning

Pictured L – R: Alex Collie, David Gifford, Jess Truong and Natasha Anning

Evolving technologies and customer expectations will significantly influence the takeup of telematics in years to come, said Natasha, as will the challenges posed by privacy legislation.

Alex Collie from the Institute for Safety, Compensation and Recovery Research (ISCRR) finished up by with ‘horizon scanning’ on new medical and rehabilitation technologies ISCRR have recently undertaken. He gave some examples of particular emerging technologies which will have major benefits for those with spinal injuries, including  the “Bionic” Ekso Robotic Exo-skeleton and “Smart-e-Pants” for Pressure Ulcers. These technologies will benefit both insurers (through lower claims costs) and those unfortunate enough to incur a spinal injury.

Following lunch the focus shifted with the third plenary, Data and Analytics: Bottom Up or Top Down?. Karl Marshall from Quantium spoke on his firm’s approach of utilising both actuaries and other professionals to deliver their services, providing insight into the growing analytical profession within India. Karl spoke to many of the benefits he saw actuaries possessing relative to other analytics professionals.

Matt Kuperholz from PwC, Darren Robb from Allianz, Karl Marshall from Quantium and Julie Batch from IAG delivered the Data Analytics Plenary.
Matt Kuperholz, Darren Robb, Karl Marshall and Julie Batch delivered the Data Analytics Plenary.

Matt Kuperholz from PwC was next, entertaining the audience with his journey via actuarial studies to analytics professional. He talked about how Facebook data can be used for risk rating purposes and also spoke about the key forces shaping big data – “CroSoLoMo” (Crowd, Social, Location, Mobile).

Julie Batch from IAG examined how past industries had been substantially disrupted by new technologies. She reminded the audience that Kodak developed their first digital camera in 1975, but that the company’s unwillingness to invest in innovation led to its downfall. Julie challenged the general insurance industry not to suffer the same fate.

Finally Darren Robb from Allianz spoke on the factors which led to successful utilisation of analytics within institutions. Darren highlighted the importance of a strong cultural foundation within the organisation, with the value placed on analytics by senior leadership being critical.

The panel session certainly led to some interesting discussion with a wide range of views on the future role of actuaries within the insurance and data and analytics industries. Some panellists were of the opinion that actuaries’ role in the future would be limited to compliance and regulation – a view that was certainly not shared by the majority of the audience! It was fantastic to see the robust debate on this topic.

The fourth and final plenary looked at The Changing Role of Actuaries. James Lee from Westpac challenged the audience to consider that “responsibility” was actually more important than an actuary’s “role”. He gave the example of a fireman whose responsibility (to save lives) gave them a higher purpose than simply considering their role.

2015 Institute President Estelle Pearson pictured with event sponsors.

Jenny Lyon from SKL spoke on the challenges and opportunities for actuaries in being employed in the future, making the point that strong analytical skills led to better decisions. Jenny challenged the audience to consider the industries which would offer new opportunities for actuaries.

Richard Brookes from Taylor Fry talked of the bright future he saw for general insurance actuaries, saying that those industries where long term projections change decisions (such as education, justice and social welfare) were all strong candidates for actuarial involvement.

GIONEDAYNETWORKINGRounding out the day was Craig Price from Suncorp who highlighted the importance of actuaries’ ability to communicate risk and uncertainty and how the profession’s Professional Standards provided a potential advantage relative to other analytical professionals. 

Once again a fascinating panel discussion followed with each panellist giving their views on the skill for actuaries to focus on to remain relevant – customer focus, problem solving, humility and listening were all raised by the panellists.

GIONEDAYNETWORKING2At the networking drinks which followed it was clear many of the points raised has given the audience a lot to consider, in particular in terms of the role of actuaries in the medium to longer term.

As convenor of the organising committee I’d like to thank each of the speakers for their thought provoking presentations. I’d also like to thank the other members of the organising committee (Aaron Cutter, Abhijeet Agarwal, Jonathan Cohen, Les Coleman, Nancy Li, Rashi Bansal and Rebecca Haden). Finally I’d particularly like to thank Lisa Pronesti and Liz Gemmell from the Institute’s events team who did a sterling job of bringing such a fantastic day together.  I would hope that the Seminar creates a successful blueprint for future such events.

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