Digitalisation

Data analytics: the logic behind long-term partnerships

Unlocking the power of raw data has opened up a whole new world of insurance solutions. From sales to pricing and underwriting to claims, the use of internal and external data to make predictions, introduce new applications and inform business decisions can have a revolutionary impact on a business’s ability to increase profits and control costs. Munich Re’s data analytics solutions can give primary insurers the tools and insight they need to optimise their entire value chain.

10.02.2021

Insurers have various options for incorporating data-driven solutions into their business strategies. They can go it alone, performing data hunting and analytics in house. While this may be an option for larger organisations, small- and medium-sized companies often find the cost and lack of infrastructure insurmountable. Data analytics services are also offered by many consulting firms. But the defined nature of consulting contracts can limit the scope of their interaction with the client. 

Benefitting from clout and commitment

Munich Re’s key differentiator among those who provide data analytics consulting is its relationship-based approach, which takes a long-term view to managing data-driven solutions. “In most cases, we already have a relationship with the client, so there’s already and established level of trust,” explains Markus Gützlaff, senior motor and mobility consultant at Munich Re. “Our competitors are consulting companies, and of course, they don't have that relationship to clients. For us, it's always a deep-rooted relationship.”

The reinsurer – primary insurer relationship means Munich Re has a true stake in their clients' success. “The difference is our business model,” says Massimo Cavadini, head of actuarial consulting and data analytics at Munich Re. Munich Re’s data analytics are often highly integrated in the reinsurance contract. “That means we have skin in the game,” continues Cavadini, “because if we are able to link the services to their insurance contract and we claim, for example, that we are able to improve the sophistication of pricing so that the loss ratio will go down, we have to deliver on those claims. If the loss ratio for the client goes down, the client is happy. And we are too because we are in the same boat. We have a relationship driven by a common interest.

The reinsurance relationship makes for a strong symbiotic partnership, agrees Gützlaff. “If there’s a reinsurance contract in place and we are able to improve the results for our clients, we will automatically improve our results as well. So, it's a win-win situation.” Unlike consulting firms who swoop in for a defined period of time and then move on to other contracts, Munich Re’s partnership with primary insurers is ongoing. “While we start our projects with data analysis, the next step is to dig deeper into the claims process,” continues Gützlaff. “This is something we really do together with a client, sometimes for many years.”

This long-term partnership not only provides greater integration, but it allows primary insurers to take advantage of the full breadth and depth of Munich Re’s offerings. “As a reinsurer, we establish a trusted relationship with our client that is usually quite long, measured in years – not months, or even weeks,” says Cavadini. “With this abiding relationship, the client can leverage our international talent pool of experience and expertise in consulting as well as benefit from our ongoing support. Munich Re’s specialized expertise, its domain knowledge, is something primary insurers can draw on to benefit their business over time.

The continuous nature of this relationship means that primary insurers can trust that the investment they are making in the process is worth it. 

Implementing a revolutionary and evolutionary toolset & skills

Munich Re's proprietary applications, like its Claims Cockpit dashboard, receive ongoing inputs and support as the landscape evolves. “After we have analysed the data and come up with bespoke dashboards and insights, we do not simply leave it at that,” says Gützlaff. “We can then update it on a regular basis, establish a platform so that the client can send us updated data ideally each and every month in a standardised, structured format. And then we can engage with the client in the development of their KPIs and offer a proper and evolving monitoring tool where they can really see all the developments of their KPIs over time. It does not need to be a one-off tool. Other proprietary tools, such as the Customer Value Score, use up-to-date information to provide valuable ongoing customer insights to primary insurers, while our RE_Chart tool allows our clients to enhance their property portfolio leveraging on internal Munich Re data topped by our consulting expertise.”

Munich Re’s data analytics solutions experts thrive on seeing their relationships deepen and strengthen over time. “We also want to be challenged by the client, and we want to see if there is any kind of improvement after they have implemented our recommendations,” says Gützlaff. “Because of our enduring commitment, it's really important for us to identify any problems with implementation, tweak our recommendations as needed and share as much as possible of what we've seen in other markets so we can help improve the optimisation of every single client.”