Enterprise Risk Management Technology Guide 2022 :: Milliman: Innovative solutions for insurers

Milliman: Innovative solutions for insurers

Why should insurers choose Milliman for their technology needs?

Patricia RenziThe past few years have seen the entire world deal with financial, political, environmental, and social instability on top of personal and business disruption due to a global health crisis. The resiliency of individuals, businesses and institutions has been remarkable, but these challenges have identified some opportunities for the insurance industry to enhance the risks they insure and the rigour with which they assess them.

As leaders in the insurance industry, Milliman has been at the forefront of driving both insurance and technology solutions to fill the gaps. Our mix of insurance and technology innovators, coupled with our commitment to partnering on innovation is what allows us to deliver market leading solutions. The investment we have made to re-platform our entire technology suite to be cloud-native allows our clients to innovate, scale, and adapt quickly by leveraging the technology rather than people.

Has Milliman made any noteworthy improvements to its technology solutions in the past year?

A significant focus for us over the past year has been to expand our change management tooling. Several years ago, we implemented a robust change management platform on top of the actuarial and risk engines. Over the past year, we have expanded that to include managing change associated with data, reporting, assumptions, and configuration. This is critical to support the pace of business change our clients are experiencing.

Having the tools to allow for collaborative working across a number of projects with the ability to track, merge, and resolve conflicts around the entire technology and data suite is critical to moving fast, combined with the necessary governance and control framework in place. It is challenging for organisations to think about how to assess new risks, define new products, and look at new markets. Our technology platform allows the actuarial and risk teams to move fast with confidence.

How has Milliman helped insurers with their technology challenges in the past year?

In addition to providing innovations around emerging risks such as talent management, climate, and cyber, our tools have also allowed clients to assess new markets and new product lines due to our commitment to stay current with regulations and product innovation. Two examples of this are: providing clients with the ability to evaluate capital structures in new jurisdictions, such as Bermuda; and, expanding our support for the Pension Risk Transfer (Bulk Purchase Annuity) markets.

Milliman’s strong global leadership in insurance solutions, paired with innovative and modern technology expertise, delivers both the ideas for innovation and the tools to quickly iterate those ideas to an optimal solution.

Has Covid-19 influenced approaches to risk modelling? How do you expect risk modelling to change over the next five years?

As mentioned above, the pandemic led to significant disruptions in so many areas and this identified the need to be more comprehensive in how we measure and monitor in our modelling and risk management processes. At the start of the pandemic, the concerns were around the impact on risks we already manage carefully, such as mortality and financial market shocks.  However, we now realise that there is broader fallout, such as “the great resignation” and supply chain breakdowns.

The understanding of the dependencies between financial, insurance, political, environment, and operational risks has become so visible we must modify methodologies to better capture the intricacies of these systems. The more interconnected nature of things means that tipping points and nonlinear behaviours are significant. These are missed in traditional modelling approaches and are becoming necessary considerations in order for firms to gain actionable insights from their modelling.

How are your insurance clients’ stress and scenario testing practices evolving?

We are seeing clients focusing on more regular stress and scenario testing, and focusing less on single stress evaluations other than for validation. The interest in weekly or daily updates based on changes in the financial markets are becoming a focus of more clients as well.

Our cloud-native platform provides the infrastructure on demand to allow for a quick turnaround of more frequent and more complex analysis. Firms are increasingly focused on scenarios with rich and multi-variate structures, which yield real insights into the business rather than a purely mathematical output – insight and foresight are key outcomes from these exercises. The narrative is equally as important as the numbers.