Digital capabilities transforming global programmes (Part One)
In the first of two articles, Zurich’s Carin Gantenbein and Armin Schaefer look at some of the problems that risk managers face when administering and managing global programmes, and examine some of the digital technologies that can help overcome these issues. In the second article, next month, the authors will explain in detail how these digital capabilities can transform global insurance programmes.
When running a multinational insurance programme, risk managers need to navigate different jurisdictions, different market practices and standards, in different regulatory environments. In doing so, they need to make sure they have control over their various multinational insurance programmes, with the right coverage for the places where they are needed, at the right level, while complying with the local regulatory and tax requirements, all in a cost-efficient and convenient way.
Typically, this involves various parties such as the risk manager, the broker, the insurer and the captive, if there is one, in various timezones and cultural environments. It takes an enormous effort to maintain and administer a multinational programme and keep it consistent with all the parties. Documents, data exchange, emails are all passing regularly between and within the various parties, with the need for many reconciliations and verifications and manual workarounds.
In addition, the global business environment is becoming more complex, interconnected and volatile. Risk managers are increasingly required to provide risk insights and foresee any developments and trends in order to put appropriate risk mitigation measures in place. This requires risk managers to have a holistic view of global risks: it is no longer sufficient to only have a view of the company’s own exposures.
Instead, the broader context must be taken into account, considering external risk information such as business, environmental, economic and political risks, and using benchmarking in order to gain a more holistic view. This requires substantial data and analytical capabilities within the risk manager’s organisation, which are not always available or require additional resources and investment. However, there is also a huge opportunity to collaborate with insurers, as they have risk engineering and claims data across all businesses and industries.
Providing risk insights as well as the pure complexity of running a multinational insurance program in today’s environment requires time and resources – two things that are scarce in today’s cost pressure environment. Fortunately, emerging digital capabilities have the ability to address some of these challenges and help risk managers and insurers to operate and collaborate more effectively and efficiently.
Application Programming Interface (API)
In today’s hyperconnected world, externally-facing APIs play a foundational role in realising efficiency and consistency gains when collaborating with risk managers, brokers and insurers. APIs enable systems to talk to other systems, efficiently share data and documents and allow them to execute business transactions. An API can bridge gaps between participating parties, acting as a connector. It is about bringing parties closer together and removing inefficiencies from sharing data via email, attaching spreadsheets and documents, and all the related uploading, downloading, verification and reconciliation steps that may be involved.
Robotics Process Automation (RPA)
The use of robotics is about diverting human expert capacity into more productive and value-adding work, while transferring repetitive and administrative activities to a machine. These highly repetitive and tedious tasks can have a huge impact on the service delivery and data quality if not performed correctly. Robots can significantly improve the speed and quality of these tasks, particularly where there is a vast amount of data flowing between systems. Not only small process steps can be automated and passed to the robot, but even substantial parts of the process chain leading to significant cost savings.
Cognitive computing
This builds on artificial intelligence concepts to mimic the human mind and make decisions using natural language, reasoning and judgement. This enables automation for knowledge-intensive processes so computers can make intelligent, independent decisions rather than simply following a set of rules. Cognitive computing can have a far-reaching impact on multinational programme business:
– Smart collection of data from a huge variety of internal and external data sources, trawling the information to find what is important and relevant
– Using the approach of a human mind in a machine, it can process and structure data with intelligence
– Applying cognitive algorithms that support the decision-making process or even take independent decisions
– In addition, machine learning can be deployed to improve cognitive capabilities over time.
This could be applied, for example, for enhancing risk prevention by analysing any deviations in coverages across all local policies of a multinational programme.
Blockchain and Distributed Ledger Technology (DLT)
Blockchain technology provides a way to create shared applications for the highly efficient, unsupervised execution of mutual processes across business networks while maintaining the data privacy of each party. It can also provide full transparency to privileged parties, and a fully auditable, indisputable single source of truth. Blockchain can substantially reduce or remove data duplication and processing, delivering substantial efficiency and streamlining benefits. Blockchain applications can be integrated with the core business and accounting platforms of each participating organisation in a programme.
Contributed by By Carin Gantenbein, head business development and transformation international programmes, commercial insurance, Zurich Insurance Company, and Armin Schaefer, head of digital and new technology international programmes IT, commercial insurance, Zurich Insurance Company
