During the past 12 months, AIR has received a considerable number of requests from (re)insurers to learn more about the benefits of integrating catastrophe modeling into their workflows. (Re)insurers are concerned about the complexity of their workflows, personnel needs, and time needed to understand model outputs and integrate these results into their underwriting and risk management decision-making tools.
In this blog, I will share some of the most common obstacles (re)insurers face in their daily operations and how Application Programming Interfaces (APIs)—one of many integration solutions—can help remove these obstacles.
The data we gathered from interactions with our clients and industry experts show that (re)insurers consider the risk modeling process a time-intensive, manual task that involves too many clicks. Also, the modeling process often gets interrupted to fix human errors.
(Re)insurers’ immediate goals are to not only increase efficiency in their organizations by automating repetitive steps but also to increase the productivity of their staff without compromising the accuracy of the modeled results or quality of their work. In the modeling process, this type of automation means not having to enter exposure data multiple times and not having to copy and paste the results from one application to another to continue their workflow.
Modeling Process Complexity
Obtaining accurate modeling results involves working with large volumes of data that may contain millions of location records and correctly setting up the model runs, which can involve setting dozens of options. Modeling workflows are becoming even more complicated as more analytical tools are adopted and larger volumes of data need to be processed.
On top of this, the number of perils modeled will only continue to grow as new models are developed and become accepted within the market. Modeling will assume a larger role in the (re)insurance marketplace, and the need for underwriters to evaluate risk before making decisions will become even more critical.
Understanding Model Outputs
Another challenge (re)insurers are facing is how to interpret model results and find particular metrics relevant to their business that they are comfortable using to make strategic decisions. The long-term goal of many (re)insurers is to deliver customized modeling output to different stakeholders in their organization while ensuring that these metrics are appropriate for each audience. For example, underwriters making go/no-go decisions about single locations consume modeling output very differently than the executive team overseeing capacity for an entire region.
One recent trend in the industry is the way (re)insurers are planning to leverage the full extent of data they possess to create a competitive advantage. Thus, finding time to use manage big data sets and make meaningful strategic plans is another challenge (re)insurers are facing.
(Re)insurers’ internal systems are often disconnected, which creates more work to export and import data and files. APIs allow two or more different software components to communicate and transfer data seamlessly. You can leverage APIs to link disconnected standalone systems and create an ecosystem that interacts and responds in real time.
Another benefit of using APIs is that they can automate the process of sending and receiving files and analyses results from one platform to another, similar to the apps on your smartphone. For example, when you purchase a plane ticket, the app automatically links your flight information to your calendar, and you can access your boarding pass on your e-wallet and receive notifications on your phone before your flight.
APIs offer you the same flexibility to build customized solutions that can help you transform your modeling operations and exceed performance goals. With APIs, you can automate your entire workflow and control the modeling process from importing data to creating exposure data sets, executing detailed loss analyses and assessing marginal impacts, and ultimately extracting results.
APIs save you time and cut down on human error by reducing the number of clicks required. Your automated workflow can select everything from the mapping set, contract and location files, and reinsurance file to the exposure data set and destination database. You can use APIs to create an exposure view automatically, identify a specific project and select a currency, and even name and save the exposure view. If you are running a detailed loss analysis, APIs can automatically select the right event set, perils, whether or not to apply demand surge, and all of the output options.
AIR offers more than 170 publicly available APIs. Our library of APIs covers all the main functionality available in Touchstone® and Touchstone Re™, from data source management to data import and export, project management, and analytics. We have helped more than 25 companies migrate from another CAT modeling platform to AIR and streamlined their workflows by using APIs. On average, 41% of AIR clients have licensed our suite of APIs.
These APIs have helped clients reduce their modeling processing time significantly, which means employees can spend more time making meaningful strategic decisions and far less on repetitive manual work.