Innovation is a mindset

In the reinsurance market, adoption of new ideas will be the marker of innovation, according to QBE Re’s Ibi El Moghraby and Piet Haers.

The world is changing every day, and (re)insurers must keep up – so it’s important to keep changing and to keep improving.

Innovation can be seen on all levels of operations, from product development to the distribution models of reinsurance products.

The pandemic has helped change our collective mindset and showed us that alternative approaches are possible – that other ways of working are effective; that other operating models do work; and that these new methods can be quicker than initially thought.

Pre-pandemic, few of the players in the Lloyd’s market would have considered operating and surviving without their physical marketplace – but it is possible.

How much product innovation is happening in the reinsurance market?

In reinsurance, innovation is focused predominantly on electronic data exchange solutions. Back in 1987, the reinsurance market started programmes to set up an electronic data exchange between insurers and reinsurers. Driving initiatives at that time were RINET in Europe and LIMNET in the London market – and 36 years ago, innovation was the right word.

Years later, blockchain is presented as a more refined solution – but to move the market forward now, we believe it’s less about the technology available and more about our collective mindset.

We must define innovation as an open mind and a willingness to adopt new practices, rather than equating it with new technology. In the reinsurance market, adoption will be the innovation.

Where are the opportunities to adopt and innovate with data?

There are significant development opportunities to integrate our data systems with brokers’ data systems in the reinsurance space. When we integrate, the data exchange is much clearer, with improved operational efficiency. The benefit to us is a richness of data that gives much greater risk insight, and this intimacy with the data helps us refine our underwriting perspective.

The increasing availability of aggregation platforms for geodetic and climate data has allowed the surfacing and open discussion of climate-driven risk, and appropriate pricing.

QBE has made several investments in this space: Jupiter Intelligence is a world-leading climate risk model, and Tensorflight allows the mass feature-extraction of commercial and residential buildings to ensure total insured values are accurate.

A lot of fascinating work is being done with these platforms to better utilise the huge amount of data available. For example, Tensorflight, through the application of AI, generates interesting measures on risks (such as number of floors, type of façade, type of roof, type of construction, etc.) without the need to be on site. Accumulating big data (and developing the ability to do something meaningful with it) will make a significant difference in the years to come.

At the same time, the ethical side of big data – specifically regarding machine learning and AI – is starting to surface. As we drive innovation forward, there need to be safeguards in place to ensure that data is used appropriately, and that machine learning and trained models are transparent and operated appropriately.

It’s often thought that innovation means new technology, but it’s our belief that we can innovate with a lot of things that were invented years ago. We don’t have to wait until the new blockchain arrives. The reinsurance market can learn a lot from pre-existing data – data that is sometimes overlooked throughout the chain from the customer to their insurer, and then the reinsurer. But it’s all there if we want to use it.

QBE Re is renowned for strong technical underwriting, market expertise and flexibility. It’s why our business has grown so well in recent years. The world is changing and so are we, which is why every team member is encouraged to think innovatively.

If we achieve an open mindset at all levels, adoption of new ideas and tools comes more easily – and this is where innovation can build a better product for our customers.

Ibi El Moghraby is chief operating officer at QBE Re

Piet Haers is general manager, Europe at QBE Re