Backward Reasoning – Is your Data Strategy fit for the future world of insurance?

I’ve recently been re-reading and re-acquainting myself with the excellent books and short stories by Arthur Conan Doyle, written about one of our most famous literary sleuths, Sherlock Holmes.

Each of the stories are fascinating and intriguing in their own very individual way as the inimitable and intellectual Sherlock Holmes and his trusty sidekick, Doctor Watson, grapple with the seemingly impossible, to come up with the highly probable and the more than likely.

It really does make for fascinating reading and gives an incredible insight to the murky and often macabre depths of the human mind but at the route of all the thinking in the stories, alongside logical thinking, is Sherlock Holmes’ ability to apply a forensic approach to backward reasoning and to work his way from the often-grisly crimes committed, back to the source of them and (in most cases) to the perpetrator of them.

Reading these books has got me thinking on how we in insurance very often miss a trick in the delivery of our propositions, wherever a company sits in the value chain but in particular in the area of Delegated Authority and Coverholder operations. If we look at the current climate for these types of operations, particularly at the moment here in London, there is a huge amount of work being done to modernise and digitise processes and procedures to meet the ever-increasing demands placed upon them in delivering such operations to an ever discerning and data hungry customer base.

It can be argued that perhaps a little too much focus is being given to the ‘current state’ and perhaps not enough is being done to focus on the ‘future state’ and where Delegated Authority in particular can be a driving force for the fast-changing environment of insurance delivery and the customer propositions of tomorrow.

I recognise and applaud the considerable efforts that are being made to deliver a marketplace of the future and for London to be seen again as a top global centre for the provision of insurance-based products and services, but the focus does seem about getting the best from a current state rather than a complete re-think on what a future state may look like. This is where some solid Sherlock Holmes backward reasoning work may come in handy and for it to be applied to the whole risk model and in particular the Delegated Authority offering of the future.

We can reasonably assume that the insurance market of 10 years from now will be vastly different to how it is now, the whole mechanism for delivering insurance to customers will have changed beyond recognition from that of which we observe today.

The economies of the world will be different, the buying habits of people will be different and the technology to deliver solutions will be different, but we appear to be working on solutions to problems that exist now and that fit the market of today and are not truly focussed on the market of a decade and beyond from now. We’ll see the continued ‘Uberisation’ of insurance and the creation of ‘hyper pools’ in which the whole insurance ‘mix’ is different in it’s make up, with Sovereign wealth funds of Governments, Reinsurers and Insurers and many others placing capital at risk in truly massive pools to meet the global and changing nature of insurance, catering for the different and global nature of risk.

It is here that Delegated Authority can and should be positioning itself, to act as the mechanism by which insurance is distributed effectively and efficiently on behalf of global capacity provisions and utilising slick and customer focused Delegated Authority propositions to deliver the service of the future.

Working backwards from here is where the real value will be derived, not from getting stuck in the ‘current state’ and focussing energy and effort to modernise existing processes and practices, which only serves the immediate or short-term need.

This is where data comes in. As we all know, the biggest and most profitable companies on the planet are at their heart, data companies and companies that have understood this for many years, hence their incredible dominance and prevalence in our societies.

Insurance (in all its guises) is all about data, it is fundamentally at its heart, pumping round the eco-system in vast quantities, supplying the nutrients and life sustaining energy required to support human activity and endeavour in all its varying forms, from private individuals to farmers protecting their crops and to global industrial concerns and everything in between.

It isn’t good enough just to accept that data exists but to truly get to the heart of it and how it affects the part of the world in which each company operates and plays its part, and this is where Delegated Authority can position itself as the insurance mechanism of the future state.

So, to summarise, consider more ‘horizon scanning’ and be a bit more like Sherlock Holmes and work backwards and assess what needs to be done now to make your future vision a reality. Be bold in your assertions and build your business on a solid future footing, with data at the heart of everything you do, become intimate with it, understand it, and treat it like a living and breathing entity that will fuel your business and help shape the future world of insurance.

Originally published in The CHART Exchange: https://www.dropbox.com/s/84jvovl94j76h9e/2021%20APRIL%20CHART.pdf?dl=0