Digital solutions assist in recalibrating insurance risk

Munich Re Africa

Global insurers and reinsurers are leveraging technology to get closer to data, gain new insights into risk and recalibrate their traditional take on risk rating factors. Michal Nejthardt, recently promoted to Head of Digital at Munich Re of Africa (MRoA), says that his new role involves identifying business development opportunities that can be accelerated or unlocked using the array of digital tools and solutions that Munich Re has developed in recent years. 

“My core focus is to blend digital solutions that are being developed within Munich Re with our client’s emerging needs,” he says, before adding that a great deal of customisation is needed to adapt global solutions for the Sub-Saharan Africa market, which includes South Africa as the reinsurer’s biggest individual Africa market. New solutions are being developed using advancements in augmented underwriting, improved risk assessment models that integrate at point of sale and enhanced claims rules engines, among other innovations. 

MRoA’s Group Life Underwriting Workspace (GLUW) and digital funeral solution are examples of South Africa built innovation that could become part of the reinsurer’s global toolkit. GLUW allows reinsurer clients to price their own group risk solutions in the cloud, with access to global Munich Re expertise. The tool enables clients to follow a defined cloud workflow system to price group risk business while tapping into the traditional market leading pricing expertise. The digital funeral solution, meanwhile, assists smaller insurers to obtain greater risk insights into the business they write, and to automate this business so as to enable scale. 

Augmented underwriting is a subset of integrated analytics, which involves using technology to drawing insights from repetitive data that could not have been achieved with traditional, manual analyses. So, integrated analytics involves creating an ecosystem within which a client can collate and analyse data, whether this data is gathered from historic records or from current operations. The ongoing trend towards digitalisation makes it possible for reinsurers to process more data and gain greater insights into risk than ever. “The real opportunity for Munich Re is to get closer to the risk through data, which underpins our core competence of risk assessment and providing reinsurance capacity,” says Nejthardt.  

Reinsurer clients, meanwhile, are benefitting from the step-changes in cost and transactional efficiencies that go hand-in-hand with digitalisation. “Cloud computing allows us to use artificial intelligence (AI) driven models and advanced digital processes to identify and analyse links between the data and possible customer journeys, before integrating these findings into cloud-based processes for clients,” says Nejthardt.  

Stakeholders in the Africa insurance and reinsurance sectors often find the cost of new technology to be inhibitive, and they struggle to achieve the scale necessary to support the initial capital investment in digitalisation. “The main challenge is the cost of technology; and we are always looking for ways to reduce these costs by achieving scale,” says Nejthardt. “Digital solutions are like any other asset that a company manages, they require ongoing financial support to perform optimally”. Those deploying digital solutions in Sub-Saharan Africa must also overcome the challenges presented by vast differences in levels of digital maturity, from one country to the next. 

Africa is just starting out on its digitalisation journey; but the process has been accelerated by the Covid-19 pandemic. “There is a lot of interest from markets like Botswana, Kenya and Mauritius to digitise and create insurance onboarding strategies that leverage off digital solutions,” says Nejthardt. Insurance and reinsurance professionals are also keenly focused on using digitalisation to enhance consumer education, product distribution and product design. In this context, the role of business development shifts to identifying and developing client-centric, solutions-orientated opportunities within the sphere of reinsurance. 

What does the future hold? As mentioned, the focus is on maximising the potential in technology to unlock new ways of distributing and developing insurance products. “One of the best examples of this process is the GLUW tool, which we built after identifying group risk solutions as an urgent local need,” concludes Nejthardt. The next step will be to determine if there is a need for similar solutions across the Munich Re footprint, before customising and sharing the tool as part of a growing arsenal of tools that can be deployed worldwide. 

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