Talking to The ReInsurer, Basi, managing director at Russell Group, explained that insurers will need to increasingly make use of big data to understand the interconnected nature of global trade and to help carriers create products for intangible risks.
Clients are going to want more access to higher quality data, Basi said, noting that insurers will need to utilize big data solutions to take advantage of information sources such as trade volumes held nationally by tax offices to establish which firms operate within a supply chain and what risks they face.
“The industry has been talking about big data for a while but this is a classic application of that big data,” he said in a video interview.
“The implication of the pandemic is not just a new way of operating. People are going to want more accurate data more often as the decision-making becomes real-time going forward.
“You cannot do this without having good data,” he added. “That’s going to increasingly get bigger and bigger.”
The use of big data will help the sector address the insurance gap and should help identify solutions to cover intangible risk types, he added.
“The industry needs a better understanding of the underlying trade picture so that we can form a view between trade, risk and exposure and move away from the fixation of premium,” he said.
“This type of analysis and thinking will enable the industry to start to move away from the 20 percent insured pot and move into the 80 percent that currently is not insured. If not dealt with properly, it will be a missed opportunity,” he warned.
Russell Group is working to encourage this type of thinking from insurers, Basi added.
2019 saw a “slight reduction” in global trade from the prior year, a downward trend that is continuing into 2020, he added. Citing data from Russell Group, Basi said over $19trn of goods were traded across the globe last year with about $6trn traded in services.
“What we want to do is dissect the figures so that we can understand who is doing what with who,” Basi explains. “Once you start to allocate down to individual countries and companies, you begin to understand how much a firm such as Apple or IBM holds.”
Such a use of data allows underwriters to analyse a firm’s exposure from a number of different perspectives, Basi explains.