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Cytora: achieving digital risk flows in commercial insurance

InsTech’s Henry Gale speaks to Richard Hartley, Co-founder and CEO of Cytora, about how commercial insurers are digitising their submission intake process, the competitive advantages of implementing a digital risk flow and the value of partnerships

Member Spotlight: Cytora

Henry: Richard, why did you found Cytora?

Richard: Commercial property and casualty insurers are looking to decouple premium growth from expense growth; that is, underwrite more insurance without spending more on personnel. A key factor holding them back has been the manual workflows that exist in insurance.

Because brokers send underwriters unstructured and non-standardised information about risks, underwriters spend time looking through documents and emails and searching for data. Digitising these processes can enable insurers to scale up their underwriting without increasing their expenses by as much.

My co-founders and I founded Cytora to help insurers digitise their workflows to solve this problem.

Henry: What does it mean for insurers to digitise workflows?

Richard: Digitising a workflow means turning incomplete and unstructured information into structured data that a machine can act upon.

For example, no insurance submissions currently arrive at an insurance company ready for an underwriting decision. First, the relevant information needs to be extracted from emails and documents. Second, this data must be combined with internal information such as broker licences and data about existing customers. Third, external data sources provide hazard information, such as cyber or flood risk scores depending on the line of business. Finally, insurers need to classify the business seeking coverage into industry and business activity.

For many insurers, there are manual elements to bringing together this information, which take up an underwriter’s time before they are ready to decide on whether to underwrite the risk. A digital risk flow involves streamlining each part of the process. Data from submission documents are extracted automatically, combined with other data sources and business rules are run on the data to prioritise submissions and send them to the right underwriting team.

Henry: What are the main reasons insurers look to adopt digital risk flows?

Richard: There are three main reasons. Firstly, it enables underwriters to write more business. One of Cytora’s clients, Markel, has written 38% more premium per underwriter since adopting Cytora’s platform.

The second benefit is more control over risk selection. A digital risk flow means insurers can control how incoming submissions are prioritised, based on their risk appetite. Insurers can change these priorities over time to manage their portfolio and focus underwriting on the most attractive risks. This can improve insurers’ loss ratios by up to three percentage points.

Thirdly, digital risk flows can transform the broker and client experience by making insurers more responsive. For example, Allianz, another Cytora client, is achieving faster speed to market with our platform. The average time to prepare a quote has been reduced from three days to less than 24 hours.

Henry: Can insurers use digital risk flows to create a competitive advantage?

Richard: Insurers that use digital risk flows can write more premium per underwriter, increasing their profit margin. Decreasing loss ratios also help insurers increase their profit. Finally, because insurers with digital risk flows can provide quotes more quickly, they can win more business.

The insurance market is increasingly realising that speed to market also helps insurers with risk selection. Insurers that are slower to provide quotations tend to win business that other insurers chose not to quote for or chose to quote higher prices for. Insurers that quote more quickly are more likely to end up underwriting profitable risks.

Henry: How does the use of digital risk flows vary depending on line of business?

Richard: Cytora is focused on commercial property, casualty and specialty insurance, across all levels of the market: from small commercial to middle-market to large commercial. For small to medium sized enterprise (SME) insurance, insurers look to use digital risk flows to achieve straight-through processing. For larger commercial risks, the focus is on maximising underwriters’ capacity, so they spend more time looking at submissions that are in their risk appetite and will benefit their portfolio.

Henry: Have you seen any recent shifts in how insurers approach workflow digitisation?

Richard: Insurers’ estimation of the value of digital risk flows has significantly increased. Digitisation has gone from an interesting idea or an innovative project to a key driver of value and competitive benefit.

For example, one of Cytora’s customers, Beazley, aims to achieve straight-through processing for up to 80% of the US-based submissions they receive through their Beazley Digital unit. Instead of a small innovation, insurers are looking to make digital workflows a core capability.

Insurers also realise that companies that do not digitise their workflows will fall behind in the market, with lower underwriting productivity, lower conversion rates and less profitable portfolios.

Henry: What advice would you have for insurers just starting their digital transformation journey?

Richard: I would advise thinking about digital risk flows as a series of incremental progressions. Insurers should start with something simple. For example, an insurer could choose only to digitise submission ingestion at first, so that important data points from incoming submissions would be automatically inputted into an underwriting workbench. The next step could be adding rules to prioritise submissions or route them to different underwriting teams.

When insurers have digitised every data point they need from incoming submissions, they can present underwriters with decision-ready information. After that, insurers can analyse the decisions being taken and start to automate more steps, such as automatically declining submissions that are not in appetite.

Henry: Can you explain how Cytora’s digital risk flow works?

Richard: Cytora’s low-code platform is designed to enable insurers to configure their risk flow uniquely, in a way that encodes their underwriting strategy and target portfolio. The platform consists of building blocks which automate different parts of the risk flow. Some building blocks extract data from documents, others validate data, others apply business rules. This modular structure makes it cost-effective to scale the platform across new lines of business or geographies.

A submission can be collected from any source and processed automatically through various steps. For example, some risks that meet certain criteria are assigned to a lower priority queue and moved to a different branch. Cytora’s platform is like a conveyor belt where incoming submissions are moved in different directions, and the insurer has a console that can adjust the rules where necessary.

Henry: How does Cytora interact with other platforms and tools that insurers use?

Richard: Cytora is a back-end processing layer that processes risk information and inputs it into downstream systems such as CRMs, rating engines and underwriting workbenches. Cytora does not replace these systems; it removes the manual aspects of inputting data from one system to another.

Cytora also integrates with data providers that insurers use. For example, we recently announced a partnership with CyberCube. When an insurer receives a new cyber insurance submission, the connection with CyberCube allows Cytora to add the corresponding cyber risk score for the business seeking cover. This information can be passed through business rules before it reaches an underwriter, so that organisations with a lower risk can be prioritised, for example. Cytora’s partnerships with data providers, such as Moody’s, CyberCube, Addresscloud, JBA Risk Management and Wenalyze, also lower the cost to insurers of integrating new data sources.

In the past, every submission would have to be examined by an underwriter, who would look up data about the risk on separate screens. Cytora’s digital risk flows make the information decision-ready when it arrives to an underwriter.

Henry: What does the implementation process look like?

Richard: Cytora has a customer success team consisting entirely of people with underwriting or underwriting operations backgrounds. They work on configuring the platform to an insurer’s needs. We can go live in under three months. Once live, clients can choose to have autonomy to modify their business rules independently.

Henry: Why is Cytora a corporate member of InsTech?

Richard: InsTech is a great forum to learn about the insurance industry’s key areas of focus, the challenges faced by insurers and new opportunities. InsTech has helped Cytora build a valuable network in the insurance market that has been useful for recruiting, meeting customers and partners. Cytora has also benefited from Matthew and the team’s expertise on our product strategy and go-to-market strategy.

Henry: What sort of companies would Cytora like to connect with?

Richard: Cytora is interested in connecting with any insurer looking to digitise their core underwriting workflows. Cytora’s platform can help, but we also have built up knowledge of how to make these deployments successful for those going through this process and have questions. Reach out to Cytora to start implementing digital risk flows in your organisation.

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