A Global Conversation
Insurance industry professionals speak to A.M. BestTV about the future of claims.
- September 2018
Italy is actually the first market in Europe for a number of insured vehicles to be fitted with black boxes. We do see this trend as continuing in the short term. Insurers have tried to tackle the problem of fraudulent claims, trying to tackle for this risk by introducing this innovation. The government is trying to support this trend as it has introduced some regulatory changes at the beginning of 2018, trying to formalize a consolidated practice and so providing discounts to policyholders that decide to adopt this technology and fit their vehicles with black boxes.
Senior Financial Analyst
By utilizing blockchain, every time there’s a transaction we create a block. It gets added to the chain, but everyone is instantaneously notified of that transaction. Everybody’s working off of that distributed ledger. The potential for it is enormous because instead of taking months to get a claims payment made, now it’s almost instantaneous. Claims happen. Brokers are aware of it. The reinsurer knows about it immediately. It will compact that entire process from a timing perspective. It also removes a lot of the transactional cost of making those things happen.
As a reinsurer, the level of interest rates is very, very important. Because we all have big portfolios of casualty business, of motor business. Most of the time, it’s non-proportional business. Which means that all the claims that we have in our book of business are claims where interest rate is very important.
If interest rates are a very low level, automatically, your reserves will go up. We are really looking forward to a moment that these interest rates will go up again, because this is something that we have seen. Or the problem we have seen in all European countries, in the U.K. with Ogden, in Belgium, in all countries.
We hope that in the near future, at the end, interest rates will go up again.
Brussels, QBE Re
If you write better risks up front then, at the end of the day, you hope to have a more accurate assessment of your claims activity on the back end. This can impact the expectations you have around loss activity, claims activity. It can also improve the claims handling experience for customers on the back end.
Ultimately, from a financial perspective, applying the appropriate data to better select and price risks should increasingly impact the positive performance you would expect.
Underwriting for Business Solutions, RMS
Fred Eslami, Associate Director, A.M. Best
We have seen the number of [cyber] claims going back to 2015, ’16, ’17 increasing, with a trend of increasing in the number of claims, actually, if you look at the numbers from 3,500 in 2015 to about 6,000 in 2016 and almost 9,000 in ’17.
We know that the number of claims on the stand-alone policies are lower than the packaged policies, which, again, reflects what we indicated last year. We noted that the stand-alone cyber was increasing in 2016, but we saw a reversal of that in 2017.
You have a stand-alone policy which is defining the policies with the specific language, with the specific exclusions and inclusions, it’s more defined. This way, they can manage the claims, as well. That’s why you see the difference between stand-alone and packaged claims at almost a difference of about 2,600 in terms of number of claims during the past three years.
Again, we want to reemphasize the fact that we consider these stand-alones, although they may be a bit more expensive to underwrite, ultimately, it helps the companies to reduce the number of claims because definitions, exclusions, inclusions are more defined. It would be good risk management tools, too, for the companies to actually focus on, stand-alone versus packaged.
Some of the same techniques that are being used on the underwriting side are being applied to claims. Artificial intelligence and predictive analytics, to be able to identify the claims that are most likely to be fraudulent, to identify potential opioid abuse in workers’ comp and medical claims.
Stuff like that uses the same underlying analytics, both on the underwriting and the claims side.
Senior Director of Products