When risk managers purchase insurance for corporations, they have to master a balancing act. They need to figure out how much risk they can retain within the organisation, and how much they should transfer via the purchase of insurance and other financial risk transfer mechanisms. They then need to justify their decisions to senior management and the board of directors – most of whom will not be well-versed in the granular details or the small print of corporate risk and insurance.
Global insurance brokerage, risk management and advisory firm, Willis Towers Watson (WTW), has come up with a suite of technology tools to help commercial clients gain a holistic understanding of their risks in a language that’s accessible to all stakeholders. The global firm is equipping its brokerage force with data analytics and risk modelling capabilities in order to help clients establish optimal risk strategies across their organisations by developing portfolio approaches to risk.
“We decided a couple of years ago that we wanted to delight our clients and compete in the global insurance marketplace as that smart, technical, digital broker. We wanted to advance our use of technology so that we could empower our brokers to have the best possible conversations with our clients,” said John Merkovsky, head of risk and analytics at Willis Towers Watson. “Ever since, we’ve been building out our capabilities to deliver on that vision, and we’ve got a really exciting pipeline of products in the works.
“We started with the concept of core analytics tools. We built out a suite of stochastic models that are designed to be delivered by our brokers at scale in order to help our clients better understand risk. All of those models are built around Big Data, and they’re designed to bring the concepts of insurance and finance together. Rather than thinking about analytics for analytics’ sake, our desired outcome is to help clients make better decisions by bringing in finance concepts.”
As well as building out a suite of core stochastic models focused on individual risks (aka: cyber, property, commercial auto, etc.) WTW is developing technology that gives clients a holistic or dynamic total cost of risk across their portfolio.
One specific tool WTW launched for large corporate clients in April 2019 is Connected Risk Intelligence. Built around IGLOO, one of the leading proprietary decision support systems to the insurance sector, Connected Risk Intelligence brings advanced risk modelling and simulation capability, including dependency and correlation modelling, to the corporate sector. The tool identifies how organisations can take advantage of market inefficiencies, providing clients the ability to optimise the balance between retained and transferred risk across a broad range of risks that affect their businesses.
“We realised that through our early stochastic models we’ve helped clients optimise individual lines of insurance, but when we started looking at their wider portfolios, we found that some clients were inefficient in how they spent their money,” Merkovsky told Insurance Business. “We have good data on that, and we can use Connected Risk Intelligence to help our clients solve that problem. For the first time, companies can have absolute certainty that their risk strategy is exactly right for their business. This means they’re paying precisely what they need allowing effective capital deployment elsewhere.”
