20150820-奥纬咨询-Clear_Sailing_for_Commercial_P_C_Distribution_8页_363kb

Oliver Wyman - Commercial P&C Distribution Transparency Analysis

Context

The commercial property and casualty (P&C) insurance industry is undergoing a transformation driven by digitalization, enhancing transparency through data integration and analytics. This transparency will significantly impact distribution and competitive positioning.

The Current Challenge

• The insurance market lacks a comprehensive, up-to-date "master map" of risk due to reliance on traditional "trading routes" and intermediaries (brokers).
• This limits visibility into market size, opportunities, and carriers' risk appetites.
• Insurers face difficulties in efficiently distributing business and deploying capital because brokers primarily use deep individual experience to source risks.
• A significant portion of the insurer's effort (66%) is wasted pursuing business that won't bind (Exhibit 1).
• Existing large brokers and third-party data providers offer some datasets, but these are not yet a complete industry map.

The Coming Transparency Revolution (Next few years)

• New sources of data combined with advanced analytics will create a high level of transparency.
• Changes are underway:
  • Data is used to describe exposures, measure underlying risks, price policies, and guide claims triage.
  • Risk managers increasingly use analytics in their decision-making.
  • Large brokers are institutionalizing market knowledge.
  • Large carriers are investing in data and analytics groups.
• Distribution activities are catching up.

Building a Map (Steps)

1. Build the Map: Integrate diverse datasets (broker pipelines, submissions, loss runs, internal claims, risk reports, third-party data).
   • This requires significant effort to digitize previously analog data.
   • Goal is a dynamic map showing all risks and profit pools.
2. Develop Analytics & Tools: Create predictive tools for underwriting, pricing, and routing.
   • Ability to proactively seek risks where an insurer has competitive advantage.
   • Requires development.
3. Manage Change: Overcome ingrained workflows and habits; corporate oversight for underwriters increases.

Benefits (Ascending Order of Difficulty)

• Better Strategic Planning: Identify attractive pools, develop products, set targets; map enables effective capital allocation and objective performance measurement.
• Efficient Routing: Match customer needs with underwriter skills using predictive algorithms, reducing wastage significantly (up to 50%). This involves changing work habits and communication strategies.
• Nimbleness: Ability to quickly adapt strategy and allocate capital (entering/exiting markets); built upon efficiency; the highest value from the map.

The Path Forward & Destination

• Creating and using the map (often over a year or two) is key for companies to position themselves advantageously in the new, transparent market.
• Competitive advantage goes to companies that understand and adapt to using the map. Scale becomes less important.
• New players (start-ups, alternative capitals) will enter the map.
• Transparency supports new arrangements like pre-arranged risk pools and facilitates capital market penetration.
• Market disruption and opportunity for nimble companies who "choose to go someplace new" are expected.

Conclusion

The increasing transparency in commercial P&C distribution presents a significant opportunity. Companies should proactively build and leverage a strategic map to capitalize on this window and secure a competitive position in the evolving marketplace.