European Captive Forum 2023 - Executive summary

Lars opened the session, discussing the importance of good quality data and its effectiveness on the total cost of risk and business outcomes. The more accurate and complete the data provided, the better positioned the insurer will be to have conversations with you about the coverage options. If left overlooked, Lars explained that poor quality data could undermine cover certainty, and forces insurers and reinsurers to price in uncertainty. In this way, basing insurance coverage and pricing on inaccurate data, risks under or over-insurance,  and a potential lack of suitable coverage. 

Citing examples of the impact of data quality on the total cost of risk, Lars illustrated how poor quality data increased the frictional costs of complex risk transfer. Looking forward Maersk’s global head of risk management outlined how insurers are increasingly seeing proactive data management practices as being consistent with forward looking risk management. Superior data quality will lay foundations for better conversations about ongoing risk management priorities between insurer and insured.

Building on the importance of data management, Jose Corsino, CEO at Delonia Software spoke on the main challenges facing captive managers when working towards more effective data management. As a leader of a fellow insurtech, he admitted that spreadsheets are often our nemesis and can often hold disparate streams of data to support multiple processes.

In these situations, Jose recommended identifying problems and creating a set of rules as effective strategies require specific solutions for specific problems. Without these rules, organisations who undertake the process of updating and consolidating data into one suitable format ready for submission, find their submissions are often riddled with inaccuracies. Therefore, establishing which data points make the most difference and how they affect price is key to securing better insurance outcomes. Similarly, Jose stressed the need for collaboration between parent companies and their captive as a disjointed relationship makes data management extremely challenging when it doesn’t need to be. So, now we understand the challenges, what are the steps to implementing a data management framework into your captive?

Although it may seem daunting at first, Stefan and Jose shared the key areas to focus on as you build your framework, starting with consolidation. Consolidation, Stefan explained, is king and it is imperative that organisations get all their data correlated, and together in one place in order to establish what we refer to as a single source of truth. 

As much as possible, standardise the way asset and insurance-related information is captured across the business. With your data consolidated, the true power of decision-informing analytics can be unlocked.

Once you have this information assembled, a quality control and governance model must be integrated and supported by your key partners. Empower individuals to access and own data. Get buy-in by making it useful to them in decision-making and enable them to keep data up to date on an ongoing basis. 

In terms of where to start from an implementation perspective, you align scope to value, starting by prioritising the areas of biggest impact: e.g. reducing admin burden, increasing data completeness, validating data accuracy.

Santiago went on to talk about his experience in implementing data management for Pemex’s captive. After trying a lot of different things, his guiding principle is to start with mapping out your stakeholders - those that need your data -, understand their needs, and work backwards from there.

Building on this model, Santiago explained Pemex’s position, focusing on the single source of truth being financial statements. He explained that organisations should first define what data points they want e.g. original currency, claim no. and not to worry about format. Organisations that can find common grounds in each step and document what is in their financial statements will have better success building an effective framework.

Closing out the session, Lars Henneberg shared his personal journey of creating a strategic risk financing capability, and the critical role played by data management,  among other things, in the transformation he has led at Maersk.

For Lars and his team, risk retention, centralised data and strategic partnerships formed the basis of their transformation  pillars with a focus on connecting the market to a single source of truth for their data. He highlighted the importance of bringing your key partners to buy into the journey you are on, talking about his insurers and brokers. “Share your risk financing strategy with them, get them to understand your priorities, and make sure you understand how they use your data,” he concluded.