Earnings Call Roundup: Data Analytics, Cyber Insurance, New Ventures, and More

In Q3’17, the insurance industry grappled with a string of large-scale catastrophes including Hurricanes Harvey, Irma, and Maria as well as major earthquakes in Mexico. So it wasn’t surprising that catastrophe losses also dominated earnings calls over the last two weeks. As Chubb CEO Evan Greenberg noted, “Frankly, it’s part of the business we’re in.”

Outside of historic catastrophe losses, here’s a list of comments from insurers ranging from Aetna to Argo Group to XL Catlin that caught our eye from a technology perspective below.

1. Insurers are still proceeding with caution on cyber insurance 

Argo Group:

“Most of our – most of the in-force policies that we have are for small businesses, and I suspect that will continue in the near term. And I say that because I don’t think that cyber is adequately priced for larger risks. And I think that as we’ve seen a number of events happen over the course of the year, I think that the market will continue to get a bit more level set. We’re looking at both first party and third party coverage, and I think that we’ll continue evolving our product just as we do others over the course of the year. But it is one of many products that we offer. It is not the leading product that we’re focusing on at the moment. So I would say that’s probably a better discussion a year from now than right now.”

Travelers:

“There’s an increasing awareness and consciousness in the mind of the risk manager (of cyber risk) and whether that’s a job description for somebody in a big company or proprietor in a small business. I think there’s a greater sense of the need for the product and we think that’s a healthy thing and we think to a degree that we’ll be there to help solve that problem.

Having said that, we are extraordinarily mindful that it’s an emerging risk and there’s a lot about it we know and there’s a lot about it we don’t know and that gets factored into the way we think about the industries we want to write in, the individual risks we want to write, the lines we put out, the reinsurance programs that we have. And so we do think that it will continue to be a growing opportunity and we will continue to be cautious in the way we approach it.”

2. AIG CEO Brian Duperreault: “2018 is the year of the underwriter”

“It is the underwriter, properly armed with this information that is the central control point in our business. So, it is important that we get the balance back. Our use of technology and data will complement the strength of seasoned underwriters with the skill-set to evaluate business on a risk-by-risk basis.”

3. Allstate starting to carry the underwriting risk of SquareTrade, which has grown to 34.1M policies

“There were a couple of contracts domestically. The larger of those contracts was transferred to Allstate. So we’re taking the underwriting risk that was in the second quarter. I expect the other contract will transfer towards the end of this year beginning next year.”

4. XL Innovate working on in-house climate venture

“Within XL Innovate, we have had the team called Climatesure addressing the (climate change and volatility) risk as an opportunity to apply better analytics, particularly on small commercial properties.”

5. Aetna upping data analytics capabilities

“Looking forward, our business model will be increasingly driven by data and the application of advanced analytics to enhance our understanding of each of our members.

As you know, in the data analytics world, these techie people love to get a hard problem to solve. So we’ve geared up pretty significantly in the numbers and types of people we’ve hired around that. We are now using these data analytics and these findings throughout the whole P&L. And even in the Commercial Group market, we’re using it to better understand how we can approach employers in different market segments…On the medical cost line, we’re now able to detect fraud based on looking at charts and looking at claims as they come in, and looking for keywords and patterns of behavior that may give us insights on fraud, may give us insights on practice discontinuities.”