Gianni Biason: Head Property & Specialty Solutions, Swiss Re: Insurance product innovation at scale

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Founded in 1863, Swiss Re is one of the world’s largest reinsurance companies and is well known for its innovative use of technology, data and willingness to address global issues like climate change.

Head of Property & Speciality Solutions Gianni Biason joins Matthew on Podcast 109 to discuss the opportunities for growth in insurance, building new technology solutions for clients, and what Swiss Re is looking for from external partners.

Listen now to learn about:

  • Areas of focus at Swiss Re
  • Balancing partnerships between early-stage and established companies
  • Parametric insurance growth and opportunities
  • Understanding the risks from climate change
  • What insurers can learn from Covid-19

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Insurance product innovation at scale - Podcast 109 highlights

Matthew: You started your career as an aviation underwriter. Do you still follow what’s happening in that space? 

Gianni: Yes, I do. I spent more than 20 years in aviation and developed a parametric product for flight delays, which brought together all the buzzwords that we hear about in insurance today. Aviation has quality data and we used machine learning capabilities. That was the starting point in digitising and bringing digital aspects to parametric products. I didn’t reinvent the wheel, but we brought a different dimension to it. 

Matthew: So that makes you an early leader in flight cancellation coverage?

Gianni: In Europe, yes. It was common in China but wasn't combined with an algorithm that calculated flight delay probability for every single flight in the world. We used big data for underwriting - that is our area of focus on the property side and all the speciality lines.

Matthew: Is there an underwriting function to your Head of Property and Specialty Solutions role, or is the primary focus on helping to build new products for clients?

Gianni: I had the highest underwriting authority in aviation, but I moved away from underwriting when I moved into this new role three years ago.

I work with underwriters and other colleagues that are involved in the development who look at the underwriting angle, but I myself no longer underwrite.

Matthew: We’ve talked about parametrics. What other types of products does your team look at? 

Gianni: From a client perspective, we look at how to support clients and help them improve the technical combined ratio. We help on three areas: the cost side, the premium side, or the losses side. We also look at the value chain, from risk assessing, to quoting, claims, automatic capacity, etc. There are different views depending on the dimension. We tend to think about three dimensions: pre-event, during the event and after the event. 

Matthew: What’s involved in the pre-event and during the event? 

Gianni: The pre-event stage is where we do risk assessment, it’s everything that happens at the beginning of the underwriting process. It can be risk surveys, risk assessment, understanding the risk, but it’s also about designing new products, such as covering protection gaps in the market.

When an event is occurring, we look at disaster management. One example is the work we are doing with the public sector unit at Swiss Re. This is about providing immediate response to people in need and we see a lot of insurance companies entering this space now. Historically, the industry was always strong in the pre-event, but it’s now moving into during the event and post-event as well. 

Matthew: We interviewed your colleague Ruta Mikiskaite earlier this year and she highlighted the importance of partnerships to Swiss Re. How does the organisation engage with its partners? 

Gianni: Our cooperation with corporates is simple. We hope that one plus one is more than two and every partnership is slightly different. 

The corporate brings a lot to the table that adds to our capabilities. That could be a simple distribution network, technical capabilities or IT capabilities. It could be remote sensing or satellite images that are not available within Swiss Re.

Matthew: Is there a recent example of a partnership that you can share? 

Gianni: We announced one with Daimler recently. It didn’t involve my team, but my peers created an MGA with Daimler. It looks at automotive insurance, but it’s not an insurance carrier in that sense. They use the risk score that Swiss Re has developed to give credit to drivers that drive appropriately.

Matthew: Swiss Re has proprietary tools for data and analytics, but has there been a shift towards using analytics provided by external partners?

Gianni: I'm not sure whether there's a shift, but there's certainly an openness to working with external partners. That could be large corporations or smaller ones offering niche services and products. There are pros and cons as to whether we build or buy something. Every reinsurer has to make their own decision whether it should be part of their DNA or not.

It's also a question of having the budget to run the tools correctly. These are not cheap resources. At Swiss Re, we see the power of using internal data and models, and also the power of combining it with external partnerships.

Matthew: Is Swiss Re working with early-stage companies? Or is there a preference for working with more established companies?

Gianni: It depends on the capabilities. Smaller companies are usually more agile or quick in the market. Maybe there is more reliability with large corporations, but not the same agility. It depends how quickly we need something; how important speed is. 

There are three aspects to a successful product launch. These are: distribution, the technical aspect and underwriting. If it's an insurance product, we can offer a lot of the underwriting aspect. Many companies and start-ups are strong on the IT aspect, and there are other companies who are strong on distribution. A mix of the three is probably the best thing. There are hardly any companies that offer all three in one.

Matthew: In terms of helping early-stage companies, does Swiss Re have an incubator? Are there ways for people to get support? 

Gianni: We have an innovation portal for people with ideas. We have certain focus areas and the focus in my team is on the underwriting side. We look at areas such as basis risk assessment, underwriting, costing and claims as well. 

We focus on an area, then look outside at the markets to see what capabilities are available, what start-ups are offering and where we can combine forces.

Matthew: Another area of focus is on risks with supply chains. Is there new technology that helps provide a better understanding of those movable risks and interconnectivity of supply chains?

Gianni: We are evaluating the exposures and Covid-19 has exacerbated this topic. Also, we look at things through a sustainability lens and our biodiversity and ecosystem services, and we are starting to draw some connections. It's challenging but we see an opportunity there.

Matthew: Can you share an example of Swiss Re’s work in that area?

Gianni: We have created the Biodiversity and Ecosystem Services Index (BES Index) on our CatNet tool, and it's available for free until the end of the year. It aggregates different categories like water security, timber, pollination and so on. 

One example is the protection of coastal properties in hurricane or typhoon prone areas by mangrove and coral reefs. The index assesses how intact coastal ecosystems are in a given location and in conjunction with the property data in CatNet, it provides insights on the properties that they protect.

We are finding that the biodiversity and ecosystems have a direct link to the vulnerability of property risks that might be exposed, even more than we thought a few years ago.

Matthew: So CatNet essentially aggregates different data sources which insurers can use as part of assessing their portfolios?

Gianni: Exactly, and this is at the beginning of the value chain. We're not there with a final product yet, but we are trying to understand the interconnectivity of various exposures and how they are dependent. 

Critical infrastructure is another example. We ask questions such as: how dependent  certain sectors are from critical infrastructure? What happens if there's no water supply? What happens if there's a lack of energy? We have to understand these things, and this is the first step.

Matthew: Are those services available through an API? 

Gianni: There is a web user interface for people to access, and there is an API connection so partners can integrate it into their system. A lot of clients already have that and are now receiving the additional layer that we've built. 

Matthew: Another theme for Swiss Re is “Quantum Cities and resiliency”. What does that involve?

Gianni: Quantum Cities is something that the Swiss Re Institute is working on. Swiss Re has a whole team dedicated to working on a municipal level and my team is working very closely with them on the solution side. 

Parametric products can now cover certain protection gaps for people that don’t have access to insurance products. We are looking at products that can offer disaster management during an event, connect the data source and inform clients accordingly. Post-event there is an immediate payout to families, SMEs, or whoever is in need. 

Matthew: Where are the best opportunities for parametric insurance going forward?

We don't see parametric replacing traditional indemnity-based insurance products. It's a very good add on to reducing the protection gap and basis risks in indemnity-based insurance policies like exclusions and deductibles.

It was a B2B product in the past, but with digitalisation we are moving into the B2C area. There are certain hurdles to overcome, including regulation, and we work with regulators to demystify the parametric products.

Matthew: Which areas are going to see the most growth in the next few years?

Gianni: Non-damage business interruption is certainly one, not just because of Covid-19. There are great opportunities in terms of digitalisation of coverages and simplifying it for smaller companies. 

Climate change has been a big topic for us over the last 30 years and the effects are evident. We’re seeing warmer average term temperatures, rising sea levels, melting ice caps, longer and more frequent heat waves, and an interaction with human activity as well.

Matthew: What would be an example of an index and trigger used for a non-damage business interruption payout?

Gianni: SMEs may see a drop in footfall after an earthquake, but it's not something we can quantify that much, so the claims process is tedious. That’s where parametric is a simplification that benefits the insured and the insurance company.

Matthew: Covid-19 and pandemics is another big topic right now. What lessons can we learn in that space?

Gianni: This pandemic has shown us that these covers need to be carefully underwritten. The whole industry is on the journey of understanding and covering it, and this is very similar to cyber risks. A pandemic doesn't slow down Mother Nature, so we need to work on faster and safer ways to support people holistically. 

Matthew: Swiss Re has been one of the leaders in supporting initiatives to reduce the impact of climate change. Is the increased interest in parametric indices being driven by a more volatile and active climate?

Gianni: Climate change has an impact on various fronts. We are developing a climate risk score and our CatNet tool now includes information on things like drought areas. There is also a human aspect to it, and the combination makes it difficult to distinguish between what is caused purely by climate change, and what the human impact is. 

Urbanisation has a huge impact on the severity of losses and understanding those interactions is the challenge. Climate change has an impact and insurers can create parametric products, but there are human factors that impact the severity of losses that can’t be underestimated.  

Matthew: We're seeing more frequent catastrophic events like the wildfires in California. Does the industry need a better year-to-year understanding of climate events? 

Gianni: Climate change needs a long-term outlook and we’re looking at an aspect of the next 20, 30 years. These days everybody's basing figures and projections on one year, or one to five years maximum. It's really difficult to come up with a product that helps calculate appropriately for the next 50 years.

There are real-time factors that we take into consideration, but our understanding of climate change is not yet at a point where we would promote using real-time data to our clients, because it will not change in real-time but over several years. 

Matthew: If people want to know more about your team’s work, where can they get more information?

Gianni: If they are interested in the individualisation of perils, our CatNet tool is probably the best solution we can offer. People can email for more information.  

If you are interested in parametric insurance, Matthew and Gianni Biason were on a panel hosted by the Italian Insurtech Association available here.

InsTech London recently released an extensive report “2021 Parametric Insurance report and companies to watch” which you can download here.

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