Aon: End-to-end risk modelling solutions
As the insurance industry faces evolving challenges, ReMetrica and Tyche have united to help insurers to optimize their capital explains Alun Marriott, chair of the technology group within Aon’s strategy and technology division, and Aon’s head of risk software, Paul Maitland.
Following Aon’s acquisition of Tyche earlier this year, how are ReMetrica and Tyche being positioned?
Alun Marriott: As the insurance industry tackles inflation and climate change, coupled with the tightening in capacity, insurers need financial modelling tools to better understand the risks and opportunities they face.
In response, Aon brings a choice of tools across ReMetrica and Tyche that helps actuaries tailor their modelling environment to individual needs – from “no-code” out of the box models to fully customised solutions – to make better informed decisions on capital, pricing and reserving.
The Tyche and ReMetrica products are already adding tremendous value to over 160 clients worldwide and Aon will be actively supporting both platforms going forward – backed by an integrated actuarial and engineering team. We’re able to leverage innovation across our technology platforms to accelerate development roadmaps for each capability.
Whereas Tyche’s core premise help clients delve into the more bespoke and customized model arena, ReMetrica’s premise helps clients less keen to code - embracing actuarial techniques using modular plug-and-play functionality. There is absolutely a need for both ReMetrica and Tyche in the market.
How do Tyche and ReMetrica fit into Aon’s global offering?
Alun Marriott: Forward-thinking insurance companies need the resilience and capacity to embrace the increase in current and future risks.
In response, Aon has formed the Strategy and Technology Group (STG) to help insurers futureproof their businesses whilst exploring profitable opportunities, boosting enterprise efficiency and driving the financial health of our clients.
Our strategy proposition is underpinned by our technology suite (Tyche, ReMetrica and PathWise) that helps clients deploy capital efficiently and effectively across the enterprise. As companies seek to optimise this capital, they face numerous regulatory and operational constraints; these tools provide the platform on which to explore these challenges and respond with confidence through better informed decisions.
Paul Maitland: The suite of tools means we can serve re/insurers across life and non-life – which we believe a unique capability. Both ReMetrica and Tyche also feature well-developed APIs that facilitate integration. For example, the Tyche Reserving software or Pricing system can feed results into a capital model in either Tyche or ReMetrica in an integrated fashion.
With a wide-ranging team of 400 specialists, we are able to support re/insurers throughout the whole process of their analytical needs, whether it is actuarial risk management, capital modelling or reserving, and not just around transactions. The benefit to clients is that they do not need to do their own in-house integrations via spreadsheets or in-house custom development.
How do you expect risk modelling to change in the next five years?
Alun Marriott: The volume of data is exponentially increasing – and we need ever more powerful models to handle it. Both the analytical and hardware layers are changing to cope with this increase and we are seeing clients move cost effectively to a more SaaS-type world that ensures clients remain at the forefront of technical innovation.
It is about trying to service that need with more cloud-based calculation servers and coping with the scale of the data we now see.
You hear lots of talk about AI and quantum computing – and the reach of these technologies is already coming to bear, e.g. in AI helping execution strategies in our Pathwise hedging platform.
Given the current high inflationary environment, can Tyche and ReMetrica help insurers deal with inflation risk?
Alun Marriott: The modelling of inflation, whether nominal, implied or real is increasingly important in the current economic environment. As Aon, we are building an economic scenario generator (ESG) that generates a cohesive suite of global economic metrics focussing on user control of the likely risk paths that most impact the client’s business. We will be bringing this to market in the coming months.
Both ReMetrica and Tyche allow economic scenario projections to be brought into your model and applied to both sides of the balance sheet.Our tools will feed in economic scenarios to model the effect of inflation on asset returns, and also apply the same inflation projection to simulated claims based on their payment times, meaning long tail classes are naturally highly impacted.The same economic scenarios will contain built in relationships with other variables that can also be used as stresses in other parts of the model such as counterparty credit risk, FX risk, etc. impacting the balance sheet in a holistic way.
Why should insurers choose Aon’s technology tools?
Alun Marriott: We have a skilled advisory team dedicated to and embedded in the insurance industry. When coupled with the depth of expertise across the analytical and execution space, and our market leading technology platforms, our holistic approach offers clients a unique opportunity to make better informed decisions that builds resilience and helps them flourish.
