Everyone is chasing data, aggregating data and analysing data. The projects often sound impressive but do they deliver value, especially to clients? That is the key question that is always at the forefront of JLT Specialty’s approach to data analytics.
As the conversation across the business world moves from big data to artificial intelligence, ensuring that data projects focus on using relevant data that helps clients gain greater clarity and better insights into the risks their businesses face is essential.
Data analysis projects often sound very impressive but their huge complexity and massive datasets can inhibit the delivery of the crucial insights that are going to help a business to understand, manage, mitigate and transfer their risks more efficiently.
This throws the spotlight on brokers. Their mission has to be to add value, and data has become essential to enhancing their role as trusted advisers.
“It is no longer good enough for us to go into a client with a proposal once a year and tell them that is the best the market has to offer in terms of price, cover, deductibles and retentions. Clients rightly expect us to provide detailed evidence to support the proposals we put to them,” says Adrian Donald, Partner at JLT Specialty.
“Customers are more and more expecting the advice we give and the recommendations we make to be underpinned by good quality data and an analytical approach. This has not only changed the conversation we have with clients but has moved that conversation up to board level,” says Donald.
Protecting the balance sheet
Historically, the challenge was to explain how insurance can help a business. At the centre of this was information about premiums and claims, but this is not enough nowadays.
“The finance director does not think in those terms and that is who now needs to be engaged with key buying decisions.
“They will be thinking about how their company’s balance sheet is exposed to financial risk, not just how much insurance is costing. So we need to explain how insurance can be used efficiently as a hedge to protect a company’s balance sheet and measure its value on this basis.
“This empowers the risk manager; it is helping them to articulate the value that they bring to the company and do so in terms that the finance director and other stakeholders easily understand without being insurance experts. And it makes the risk manager more central to a firm’s strategic planning,” says Donald.
This can be achieved in various ways. The fresh analytical insights might be gleaned from a client’s own data, third-party data or a sophisticated combination of the two.
“The work we have done on trends in the directors' and officers' losses is a good example of how our analysis of external data adds value,” says Paul Umpelby, Head of Data and Analytics at JLT Specialty.
There, the JLT team has pulled in information from a wide range of publicly available sources to produce a series of insights into the trends across different jurisdictions.
“This has given clients a clearer picture of the risks they are facing now and in the future. It informs wider business decisions, predicts and protects against volatility,” says Umpelby.
“We are also having success with playing back a firm’s own data to them, helping them to assess their risk appetite as well as their potential exposures.
“By looking at historical data we can show the power of the data they’ve already got, where data collection can be improved, often raising questions the client might not have thought about before.
“By analysing their data, we can give them better tools to manage and reduce risks,” says Umpelby.
For instance, for a large motor fleet, traditionally risk managers and insurers would have been able to track trends in claims costs.
Now, the powerful analytical tools in the JLT armoury can be deployed to help them see what is causing those variations in great detail.
“This is an iterative process,” explains Umpelby. “We take them through the current data, show them how they can use it and then start discussing how they can improve it.
“This has to be in the client’s language and not the language of the insurance broker and underwriter. We must be able to translate our knowledge and their data in a way that is relevant to clients.”
Making the most of data
Throughout this process there is a clear focus on value it will deliver. It is easier now to collect vast amounts of data but the effort required to do that and analyse it often loses sight of the benefit you get from it.
JLT’s data analytics teams are very aware of this danger, says Umpelby: “The power of data is what you do with it, not just having it.”
Building the right analytical skills into the market-facing teams at JLT has been key. It has enabled JLT to blend traditional market knowledge with data skills and present a compelling output to clients.
It makes use of talented data visualisation experts in London and in its overseas offices.
"We can do anything from charts and simple tables to interactive heat maps to show people where their biggest exposures are,” says Donald.
The demand for deeper data analysis, faster reporting and predictive analytics will grow rapidly over the next few years.
“We are moving towards data-driven decision-making and more of that will be real-time. Many sectors are already producing real-time data such as telematics in motor fleet and tracking metrics around production and distribution in the energy sector.
“They will expect the insurance market to take that data and respond to it. As we do, it means we can move away from the old, annual conversation about insurance renewals to a more dynamic relationship with our clients,” says Donald.
As those new demands emerge, the key focus for JLT will remain how to ensure client analytics continues to provide real value.
For more information contact Paul Umpelby, Head of Data and Analytics on +44 20 7528 4326 or email firstname.lastname@example.org.
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