Soaring insurance costs are not inevitable. Cost containment starts with prevention, but is not limited to it. Insurers can also substantially reduce their management costs by streamlining their information systems. By piling on the layers of technology, regulation and sales, they lose efficiency. Co-founders and directors of insurtech Apidata, Christophe Burlot and Michel Ramos warn them that this sedimentation is costing them a lot of money and putting them at risk.
“When I see the amount of information processed by excel files, I can’t help thinking about the time wasted and the risks involved,” says Christophe Burlot, co-founder of insurtech Apidata. It’s a waste of skills, because an actuary has other, higher value-added tasks to perform, while data collection can be carried out by a third party. Waste for the company, which has every interest in industrialising its data collection and management processes. All the more so at a time when data flows are becoming ever more abundant and complex.
Outsourcing
Over the years, insurance companies have tended to refocus on their core business: insurance itself, i.e. actuarial, compliance, risk management and internal control. “They are quite right to want to diversify their other two core businesses of sales (entrusted to tied agents and brokers) and management (delegated to specialised service providers): these partners do the job just as well, and at lower cost!” observes Michel Ramos, co-founder and CEO of Apidata. In his view, management delegation is no longer an issue: “The social risk of outsourcing remains real,” he admits. “On the other hand, the risks of loss of control and decline in quality are no greater with delegated management than with in-house management, as long as the insurer organises itself to steer the relationship correctly.”
Industrialisation
The key to success lies in the industrialisation and urbanisation of data flows. “An insurer’s core mission is to manage risk by calculating all technical reserves as accurately as possible,” explains Christophe Burlot. “He must therefore ensure that all teams in all lines of business use the same calculation methods. This requires, first and foremost, the industrialisation of data management to standardise processes. But this industrialisation on the scale of the insurance business alone must be carried out with an information system that is entirely focused on this objective, “and which therefore does not perform any other marketing or management activities”, insists Michel Ramos.
Urbanisation
This industrialisation of commitment data modeling enables better organisation of information feedback, with a logic of flow urbanisation: “Insurers have tended to compartmentalise their tools, with a CRM for sales, a management system for personal insurance, another system for group contracts…” explains Christophe Burlot. They end up creating a data lake to store their data, and then they have to teach their managers to go fishing to get their reports out. It’s counter-productive!
His solution: “Each employee should only have access to the data that concerns him or her,” he says. This means we need to better organise the circulation of information, with a centralised approach for commitment management, and a decentralised approach for data flows to management and marketing partners.
Cost control
Controlling the flow of information is a key factor in controlling costs: “Data collection and consolidation are very expensive,” observes Michel Ramos. I’m convinced that better organisation of data flows leads to economies of scale. Industrialising data flows reduces management costs, while making processes more secure. At a time when climate change and the demographic revolution are raising questions about the insurability of certain risks, these productivity gains can give insurers the leeway they need to rethink their business model. So it’s not just an operational challenge: it’s also a strategic one.
Read the article on L’Argus de l’assurance