WTW's global proposition leader for reserving, Tina Gwilliam, and its global proposition leader for business process excellence, Joseph Milicia, explain why insurers should use the company's technology tools ResQ and Unify for accurate and efficient reserving
What trends are emerging that change the ways insurers reserve?
Tina Gwilliam: There has been a shift towards more automation by insurers since the pandemic and WTW's technology products complement that. For example, we have made significant progress over the last year working with companies seeking to achieve the benefits of automation in their reserving processes. A number of our 400+ ResQ clients have added Unify orchestration to their reserving processes to achieve benefits ranging from reduced timescales, more frequent analysis, better oversight of the process and more.
Joseph Milicia: WTW's technology solutions ResQ and Unify provide insurers with the ability to transform the end-to-end reserving and financial reporting process. They allow processes to be automated and made more efficient, which in turn allows actuaries to do further and deeper analysis.
After reserving has been completed, we do a lot of work with insurers on their reporting to ensure the information is well communicated and properly understood by the rest of the organisation.
What reserving challenges do insurers typically face?
Tina Gwilliam: Actuaries in the reserving space often spend too much time on data preparation, which leaves less time for analysis. Almost every actuary has a list of things they would like to deep dive into, but are instead busy with preparation tasks.
This is where WTW's automation and governance platform, Unify, shines – automating the predictable to enable actuarial resources to focus on analysis and translating the numbers into actionable insights.
Joseph Milicia: There are a lot of tools available that are intended to help insurers with data. Companies have usually pursued one of two routes. In the first, the IT department has fully owned the data and that meant a robust, but fairly static solution.
The other route insurers have taken is that actuaries and the business have owned the data. But that means they have to build really complicated Excel workbooks, which are not robust enough.
Our software solutions provide the best of both worlds: a robust and agile solution but one that the business can own. We speak insurance. We have the technology and the practitioners, and we get great feedback and input from our clients, which enables us to build and constantly evolve best-in-class solutions.
How can WTW support insurers with reserving in today's high inflation environment?
Tina Gwilliam: Like Orthrus from Greek mythology, inflation is a two-headed beast. The insurance industry has always had to deal with economic inflation, which is now at a higher rate than it has been for a while. But the industry is also increasingly concerned with the impact of social inflation, so the quantification, modelling and impact analysis of both economic and social inflation is a real concern for today's insurers.
Not only can ResQ help insurers estimate the impact of inflation, it can run scenario tests reflecting future inflation changes, providing users with an understanding of the potential implications on the strength of their reserves if economic inflation rises in the future.
Joseph Milicia: Regarding social inflation, when we see particular types of claims or injuries that are receiving larger jury awards, this speaks to the need for insurers to investigate individual claim reserving approaches, claim models and use more advanced analytics as part of the process.
As insurers' reserving processes become more complex, that reinforces the need for insurers to automate, govern and control the process with a tool like WTW's Unify.
Has Covid-19 significantly impacted the insurance reserving environment?
Tina Gwilliam: The pandemic has impacted insurers' reserving processes because reserving practitioners are looking for patterns and prior experience to predict future outcomes. The degree to which current experience is not behaving like the past, or we expect the future to be different, makes reserving more challenging for insurers. Over the past two years, every reserve practitioner has been challenged to interpret the recent experience, and project future development of exposures.
How does WTW plan to develop its insurance reserving technology?
Tina Gwilliam: Historically, for many insurers, reserving has been mainly a regulatory requirement, with just leading insurers using the reserving function to uncover insights to drive business results. Now, insurers are shortening the control cycle and developing real-time monitoring of reserves. And given this increased frequency, automation of analytics and insight extraction is required. ResQ has always had automation capabilities, but we are able to extend that across the entire end-to-end reserving process with Unify.
Joseph Milicia: There are a lot of companies with reserving processes that work, but they are neither ideal nor are they delivering the value they should be. We continue to invest in having more pre-built components, standardised workflows and visualisation tools to quickly deliver value for insurers and enable the transformation of the reserving process.
