At the risk management company PartnerRe, diversity is a buzzword.
Executives talks about greater diversity in terms of better risk judgment and risk tolerance. But also, they talk about how this is important to competitors’ ability to deploy capital efficiently.
Daniel Simon, PartnerRe’s newly appointed chief operating officer, ran an insurance underwriting unit that was agnostic to boundaries of verticality and geography. Although it catered mainly to insurers operating in Latin America, there were opportunities there for multinationals with operations elsewhere. It also took on risk in Europe and the U.S.
Mr. Simon was deeply involved in shaping strategy and building teams that delivered excellent returns, and he led the implementation of multiple competitive enhancements, including new technology tools and new lines of business. The previous CEO believes that the following additional steps, which he described as broad-based, represent core elements of the company’s strategy for success.
Daniel Simon’s steps to success
1. Serving the client’s individual risk needs
To serve the individual risk needs of clients, PartnerRe has developed a database system called PartnerWare that does the work of listening to the risk preferences of its clients and clients’ managers. They do this using a model that leverages Machine Learning to quickly identify matches and segment risk exposures and determine appropriate pricing
2. Determine appropriate product lines
Using an end-to-end process, R&D units determine what product lines are appropriate for PartnerRe. Personal lines are a classic example. A PartnerWare database identifies homeowners risks, says how much premium is needed and answers the question: What can PartnerRe write in that line? The premium has to come from its underwriting team, a claims book, a data repository or an established reinsurance team to produce the data. But, what happens now is that the force of emotions goes away and everyone simply focuses on developing product that suits the customer profile.
3. Implement a dynamic pricing approach
Partners at the moment of understanding the new risk are known to buy insurance at extremely high cost. They do this hoping of getting an excellent price when risks get reinsured. Using PartnerWare and an underwriting expertise trained on generating premiums, PartnerRe’s underwriters implement a dynamic pricing approach. Considering alternatives, the Company will move to an unlimited capacity approach. When it needs to, the company will limit capacity, although this may be a temporary move.
4. Diverse workforce
PartnerRe has a strong people focus with 80 percent of the workforce based outside of North America. At PartnerRe, diversity matters because it recognizes that cultures have a strong impact on the risk profile of risk. For example a North American style may run into a cultural resistance to Europe’s cultural bias towards direct relationships. Then the risk team pares back capacity on assignments for individual risk preferences and amounts. It then talks to the client to gauge whether a price will be high or low.
5. Use technology to process information
For PartnerRe, technology is about controlling costs. PartnerWare is a process and a tool which runs through PartnerWare. The tool gathers and process the information from the pricing analysts. Otherwise the underwriters will overbuy. PartnerWare is also the pipeline to a product for Access Lines and Partners at the Moment of Understanding (PATI). Keybridge runs the program using machine learning to extract risk information from PartnerWare. Therefore this provides a constant intelligence feed to the underwriters.
Andrea Miteski, PhD and MD in the field of reinsurance. Long term senior insurance executive with specialization of reinsurance optimization.