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INTERVIEW WITH
David Ovenden
Chief Underwriting Officer
Innovating Insurance: Understanding Emerging Risks in an Uncertain World
What challenges do you see taking top priority in the insurance sector both in the short, medium and longer term?
In the immediate short term future, the industry is grappling with challenges around the economic situation. There is significant inflation, changes in the business environment post-Brexit with challenges to export trade, and a shortage of workers to address new market opportunities. While this is a significant challenge today, looking forward it’s clear that the sector’s most significant challenge is climate change. We can’t predict the exact nature of that challenge because the situation is changing. Who would have thought that insurers in the UK would need to plan for grass and forest fires, for example? The insurance sector needs innovation to address the challenges of climate and climate transition. This innovation isn’t just about technology but also about building underlying data assets to support customer, risk and new product insights. We need good data for good analytics, scenario modelling and visualisation. Alongside that, we need curious innovative people who know how to use the technology and tools to understand our customers exposure and build new products.
That innovation isn’t just about technology but also about building underlying data assets.
The more granular data that is available, the richer models we can create, and we can then provide critical insight.
How can insurance organisations use location intelligence to identify opportunities and expose hidden risks?
A location intelligence strategy should be based around the most granular data possible, which can be provided to an underwriter to support better decision making. We use location intelligence around a range of geospatial perils including flood, subsidence and windstorm. The more granular data that is available, the richer models we can create, and we can then provide critical insight. In the future, we will look to own location intelligence, rather than just buying it in from third parties. That means moving to an environment where we create and deploy our own intellectual property at the location level. AXA is investing in and supporting research into climate change, which will be transformed into location intelligence, education and practical propositions. We’re also building more expertise across our teams, partners and customers, through the creation of a climate academy. This team sponsors, creates and delivers primary research to support our business and our clients. We have also trained everyone in the science of climate change, so they can understand the inherent risks it presents, and activities they can undertake to mitigate their own carbon footprint.
Is your organisation working towards a more refined understanding of risk, and what does that look like?
A more refined understanding of risk is one that is both more granular and more accessible. It’s having more information and more insight into the exposures that we underwrite, and it can take many different forms. For example, an insurer might gain a more refined understanding of risk through using Internet of Things (IoT) technologies, using a water leak detector in a residential building, or telemetric data from commercial or privately owned vehicles. We have the ability to collect huge amounts of granular data and the challenge for insurers is that you could spend all your money trying to understand all of the risks better. As an industry, we need to evaluate where our investment will deliver the best outcomes both for our clients and financially. We also need to address two significant challenges, building the required connectivity in legacy IT systems to surface this information and having highly skilled people who can make accurate, confident decisions at pace.
As an industry, we need to evaluate where our investment will deliver the best outcomes both for our clients and financially.
David Ovenden
Chief Underwriting Officer
AXA Commercial