Swiss Re Reinsurance Solutions CEO on getting to grips with data

As a 160-year-old company operating in every insurance market around the world, Swiss Re has a 360-degree vantage point of what’s happening in any specific sector or business line at any given time. In his three decades serving with the re/insurance behemoth in a variety of roles, Russell Higginbotham (pictured) has seen first-hand the amount and the quality of knowledge and data this provides – and it was with this in mind that Swiss Re’s Reinsurance Solutions division was established.

Now a year into his tenure as CEO of the division, he noted that its ultimate aim is to commercialize the organization’s risk knowledge assets and deliver them to other members of the re/insurance ecosystem and beyond, with clients including brokers, MGAs, governments and property fund managers. It’s an ambition that closely aligns with Swiss Re’s mission and purpose, he said, which is to make society as a whole more resilient.  

Utilizing data to bridge the global protection gap

At its core, insurance is an intangible proposition, based on a promise to pay and trust is at the heart of this offering. It’s much the same with data, especially as data becomes more widely available and accessible because if it’s not used ethically, then people will be less willing to share it and regulators will impose greater restrictions on its use.

“There’s this great opportunity to improve societal resilience, to close the global protection gap and to get more insurance into the hands of the right people in the right way,” Higginbotham said. “But as insurers and reinsurers, we have to make sure that we do that properly, otherwise that opportunity will become much more narrow. So I think it’s on us to almost self-regulate around that.”

Speed and efficiency – the twin demands of data

Speed is the first consideration, Higginbotham said, because people want things done faster. But while underwriting and issuing a policy in real-time sounds relatively straightforward, it simply doesn’t happen that way for a lot of products.

Alongside the demand for speed is the appetite for increased efficiency, he said, as firms want to make more accurate decisions, based on better data optimization. That supports them looking across their books of business and understanding in detail how they are performing, where the issues are and where the opportunities lie. Having this more granular clarity on their business is what supports growth because it unlocks more insights into new areas for growth, whether that’s a market, a geography or a product.

“With better quality data, you’re then able to build a strategy around that with greater understanding and confidence,” he said. “Ultimately, all of these things make insurance more accessible, more affordable, and more profitable in combination. It’s about trying to find the right balance for growth – people need to be able to see products that they want and products that they can afford, and insurance companies have to be able to provide that. So, it all comes together quite neatly.”

Understanding the connection between digital advancement and resilience

The link between digital advancement and general resilience is clear from the outcome of using the right data in the right way, Higginbotham said, however, it’s not just about the data itself but also the interpretation of that data to allow companies to understand and price risk more accurately and more efficiently. Because, as an insurer or reinsurer, you have to charge for uncertainty because without knowing how a risk will perform, you need to build safety margins into your pricing and allocate more capital to that risk.

“So, ultimately, you have to be more conservative around that risk because of uncertainty,” he said. “But if you take elements of the uncertainty away, to increase accuracy and understanding, it builds a much stronger foundation for solutions development, because you can do it with confidence. Essentially, if you know how your car’s going to perform, you can go faster. That’s what data gives you the potential to do.”

How is the insurance market responding to this offering?

Assessing how the market is responding to this opportunity, he noted that reinsurers and insurers have been on a data enrichment journey for some years now. The pandemic accelerated interest in this area, he said, because companies had to find different ways to conduct their business and support their customers. What might previously have been labeled as ‘innovation’ or  ‘competitive advantage’ simply became table stakes for swathes of the market, because to be without these capabilities was suddenly a competitive disadvantage.

“Naturally, there is always going to be more to do,” he said. “But the fundamental challenge, which hasn’t changed, is that not enough people and businesses have insurance cover. Either they don’t have it at all or they don’t have the right cover, or they don’t have the right amount. And the environment we all live and work in is increasingly uncertain and we all have to make sure that insurance is there to play its role in societal resilience.

“Ultimately, the role of insurance is to provide a safety net when all the other forms of mitigation that you have don’t work. That hasn’t changed, rather I think the advent of data and technology just allows that to continue to happen. And I believe that the insurance industry is fully embracing that now because it has to. If you want to be competitive in the future you have to be operating on that level or you’re going to find yourself becoming increasingly uncompetitive.”