Technical Briefing (Technology) – Make Me Api
APIs offer the ability for (re)insurers to create truly bespoke user interactions without the hassle of disrupting existing workflow, says Jason Futers
This article was published in the Autum edition of Insider Quarterly
The insurance industry is in many ways a victim of its own success. It sits upon an infrastructure of systems, technologies, processes and workflows which have stood firm for decades and enabled many carriers to prosper. However, such rigid foundations mean that when change happens, and particularly the speed and scale of change witnessed in recent years, its ability to respond at pace is severely curtailed.
One particularly weak link in the insurance chain is data transfer. The degradation of data which occurs as it is transferred from original source to ultimate capital provider means that in many cases it is almost unusable when it reaches its destination. Passing through multiple teams and systems, often altered to fit specific use cases or technologies, the original integrity is quickly lost.
Attempting to alter ingrained data workflows can be a huge task, particularly when such workflows span multiple organisations. So, at a basic level, how can we at least ensure data consistency at all stages in the process? That is where APIs (application programming interfaces) enter the chain.
APIs provide a transformational tool which essentially opens up the underlying technology of a particular system or systems. Providing that open access means that users of the API can create a bespoke form of interaction with the underlying infrastructure or the data contained within it, one which overcomes the limitations of existing workflows and user interfaces and enables a solution tailored to the needs to the particular company or their client.
Placing APIs into the exposure data context, the user-specific interaction that they facilitate can generate huge benefits across modelling and exposure management workflows.
As mentioned, these workflows and the related user interfaces require significant time and investment to alter. Using APIs, the underlying workings remain unchanged, but what does change is the interaction with the data that flows through it.
What APIs facilitate is the ability for all parties in the chain, whether that be a broker, an underwriter, an actuary, to interact with the data in its original state, rather than a version of that data that has been transformed as it is transferred along the chain. While the existing processes used by the individual parties can remain unchanged, what has changed is that everyone is accessing the same data.
From day one, the Insurdata Platform was built as an API facility providing access to high-resolution building-level exposure data. Our APIs plug directly into the existing workflows and technologies of insurers and reinsurers, with our Microsoft Excel add-in component meaning that data analysis processes for the majority of companies can be maintained, but now they are accessing better quality, consistent exposure data at all stages, rather than data tarnished in the transfer process.
The API model effectively empowers users of a particular technology to make it better. At Insurdata, we are an ideas-driven company, but that does not mean that those ideas only come from within. We have created a platform upon which other organisations can build their own new and exciting ways of interacting with our technology, using our SDKs. That is the real value of the API approach – you can always keep building upon that foundational technology layer to improve the overall solution.
The potential which APIs offer the (re)insurance market is considerable. They provide a means of creatively overcoming the rigidity of many of the systems and workflows upon which the industry currently relies, resulting in significant efficiency enhancements and material increases to return on capital.
Thanks to Gavin Bradshaw, Editor of Insider Quarterly for commissioning this article.
BITESIZE IMPACT 25: INSURDATA REVIEW
Insurdata is the youngest company on Oxbow Partners Impact 25 list. Chris Sandilands, Partner of Oxbow Partners highlights the benefits that Insurdata offers to (re)insurers and brokers to improve insights used in underwriting, pricing, risk assessment and portfolio management in the firms monthly blog. The below is an extract from Chris’s article. The full piece is available to read here.
Insurdata recently concluded a pilot with reinsurer SCOR in Florida which revealed that 44% of properties (equating to 50% of total insured losses) were incorrectly geocoded in the existing dataset. Expected losses per location changed by up to 80% as a result of Insurdata repositioning. The pilot also revealed significant changes in both annualised and return period losses. Another pilot with a different company revealed that over 90% of locations were inaccurately geocoded at an average displacement in excess of 50m.
The technology scales to any portfolio size, but founder Jason Futers says Insurdata is most effective for addressing high impact issues (such as poor geocoding and the absence of first-floor elevation data) through a ‘data on demand’ service. He says the platform has the greatest perceived value at the point of underwriting.
Insurdata can be integrated via API, which Jason says will significantly reduce the time it takes for data to find its way through the value chain: some processes currently can take months of manual re-keying.
The platform is currently being used by clients based in the US and Europe. Jason says dozens of conversations with potential partners – including brokers, MGAs, insurers and reinsurers – are ongoing.
Insurdata says that for every dollar spent on its technology, users generate $13 of corrected technical premium for residential property, or $50 for commercial property.
The company received $1.3m in funding from partners including Anthemis and Plug and Play in October last year and is currently in advanced discussions for its next round. Headcount could as much as double to around 20 in the next 12 months to drive growth in multiple markets.
While the focus of the business is initially flood, the platform applications can be widened to other catastrophe events (e.g. terror) and to other impacts including infrastructure. Jason adds that Insurdata could be used for other coverages including parametric triggers in the future, and could support community responses to catastrophic events by advising on how and where new properties are built.
THE OXBOW PARTNERS VIEW
Insurdata was founded in 2017 and is the youngest company on the Impact 25. We included the company because the team is strong (Jason is ex RMS) and emerging results were impressive. This is a business that has come out of the gates quickly.
Exposure modelling is big business. Revenues of RMS, the leading loss modelling platform, were £233m in 2017, and Jason estimates that the total exposure-based (re)insurance analytics market is close to $1bn. (Re)insurers’ investment in modelling infrastructure and capabilities, for example the Oasis framework, suggests that investment in improved risk insight will continue for years to come.
The full article is available to read here
Thanks to Chris Sandilands and the team at Oxbow Partners for publishing their article in Oxbow Partner’s June 2018 blog.
For further information contact Jason Futers on firstname.lastname@example.org
Don’t become shackled by the ball and (block)chain
Jason Futers’ comment piece in the Oasis article series warns against a ‘big picture’ blockchain approach and encourages re/insurers to deconstruct the potential benefits to identify the key use-case for their individual business.
This is a great time to be in re/insurance and an even greater time to be in Insurtech. There are many challenges ahead, but the excitement and potential fulfilment considerably outweigh these. There’s an almost palpable feeling that we’re surrounded by an extraordinary energy pulling together people, ideas and capital. More energy than at any other time in the industry history. Energy that will change re/insurance… and that’s a good thing.
The technology options and the magnitude of potential change seem to be overwhelming. There’s a lot of ‘noise’ and it makes it difficult for many to see the signal and take action. This noise is important to create interest, attract capital, and build momentum. However, the interest, capital and momentum have arrived now, and I believe it’s vital that we focus on creating a cycle of identifying and implementing small changes that can make a real difference. To move from the big picture and zoom in on the smaller details that will make a genuine difference to a key area of your business; focus on one small change, then another and another and so on.
Let’s take blockchain as just one example. Along with the likes of AI, AR, VR and other new technologies, there’s considerable noise around blockchain for sure, and of course recognition of the considerable benefits. These benefits include immutability of data (data can’t be changed), decentralisation (the blockchain is operated independently of any single entity), reliability (decentralisation means it is very resilient so doesn’t or shouldn’t! crash), transparency (by definition, a public blockchain transparent to everyone, and a protected blockchain is transparent to all members) and of course secure (data is encrypted).
When considering blockchain for your organisation, there are now many potential use cases to help identify the most relevant benefit to your business such as smart contracts for claims processing, purchase and sale of data or other ‘policy assets’, business workflows and compliance, and economic efficiency of crypto currency to transfer value instead of fiat currencies, to name but a few.
And as you explore your use-case, don’t be shy in asking apparently basic questions. Last summer I was asked a great question – what is the benefit of blockchain compared to technology built on a well-structured, secure database? My answer at the time was the MVA (Minimum Viable Answer) so I went away and thought about it. Really thought about it. At the time we were developing our blockchain strategy using both Hyperledger and Ethereum, so we already had at least some realworld experience. After this period of reflection, I concluded that the core advantage of blockchain to our users is the independent verification of data. This could change, but for now that’s the primary blockchain benefit for us – the independent verification of data.
And that’s not to be dismissive of other benefits. Independent verification of data is incredibly powerful. If you take exposure information today, regardless of the data type and use, in most if not all cases it has been produced or manipulated by someone with a vested interest and a focus on their role in the lifecycle of that data. As schedules of exposure information are created and transferred from the insured all the way through the carrier, reinsurer and into the capital markets, it could be touched by 20 stakeholders or more. Each has a purpose for the data, and anything not required is not cared for or is potentially left behind.
There’s nothing divisive in the processing or editing of the data; it’s actually rather pragmatic in many cases… take a look at schedule of values and try to avoid wondering what all these columns are for! When the data eventually arrives at its destination, it’s incomplete and in many cases not fit for purpose. The power of blockchain in this use case is independently verifying what data was available when. As simple as that.
Of course, one must bear in mind that independent verification of the data is very different from verification that the data is correct… or useful! It’s just verification that the data is what the creator says it is. And how is that useful in practical terms? In lots of ways. For example, to retrospectively understand what data was known when a claim is being assessed is very important… and to have that independently verified could make all the difference in settling a claim. Today, the independent verification is missing and blockchain can provide that. Currently, blockchain is the only way to provide that.
Continuing to focus on all that blockchain is, or all that it can become, goes against one of the core beliefs everyone in Insurtech should hold dear… move fast and break stuff. Waiting to implement blockchain for an entire process is unlikely to be successful. Deconstructing the potential benefits leads to the identification of the key use case for your business; use this as the basis for embracing the technology, allowing you to deliver your blockchain MVP, learn about the benefits and challenges, and then go again… and again. Realise the small changes with the right technology at the micro-level and before you know it you’ll have created positive change across parts of your business at the macro-level.
If you’d like to chat about this then drop me a note; I’d be delighted to discuss anything blockchain, API, ML, AR, or even AI if there’s coffee on offer.
The full article is available to download here
To contact Jason Futers please email email@example.com
Thanks to Dickie Whitaker and the team at Oasis for publishing the article in their May 2018 newsletter.