Aon’s Reinsurance Solutions business has been upgrading its ReMetrica Ultimate edition to handle new challenges faced by the market, including IFRS 17, and the need for speed, says Paul Maitland, head of risk software
The Solvency II deadline is history. Have insurers now got their Solvency II practices embedded into the workflow or do you still see issues cropping up?
Solvency II is now part of companies’ ongoing processes. It isn’t like Y2K which was history once the date passed. What we see now is companies are using capital models more, as management get more comfortable with them. A lot of insurers in Lloyd’s, for example, are looking to improve their process as they use capital models for more decisions. It hasn’t been a Eureka moment, more an ongoing evolution.
ReMetrica Ultimate Edition was launched last year. How is it performing and helping clients?
Companies have been gradually migrating to ReMetrica Ultimate Edition in the last twelve months. For those that have, the benefits have been significant. One company automated all its manual workflow with this — they can now calculate the capital requirements across its international subsidiaries in four hours.
We have been upgrading the ReMetrica software. Version 7.2 was released in August last year and we have worked on several more new iterations since then as we flesh out the features. Version 7.3, for example, includes access rights so that different people in teams can see different parts of projects. We are continuing to build out features like these.
IFRS 17 is coming into force in less than three years. Are you seeing more requests for software and what kind of challenges are insurers facing?
IFRS 17 implementation is being driven by finance teams. Capital modelling teams have not been so involved to date. But it does have some significant implications for actuarial teams, especially those providing technical provisions and reserves. Right now the technical provisions output is relatively condensed. But IFRS 17 will increase the amount of data the actuarial team has to provide to the accounting team. It will certainly be at the cohort level and down to the policy level in some cases.
This means that there will be a huge increase in the amount of data that actuaries will need to calculate and provide the accounts teams. So the ability to automate the data is key for actuarial departments. At the same time the financial team needs an audit trail backing the data.
ReMetrica can handle different applications in the workflow and provide an audit trail in the calculations. We will provide the components for IFRS 17 in the 7.4 release due out in October or November. The automation offered by ReMetrica is vital.
It is also necessary for actuaries to be able to handle IFRS 17 changes likely to occur in the future. ReMetrica allows them to change things without having need of the system developers. Enabling actuaries to be able to do this without being reliant on developers is a real plus.
Are there any new technologies likely to make a difference for insurers in the near future?
GPU [graphics processing unit] technology is something I see really helping the insurance industry in the near future. We are working on this and see it as something that will make a difference to the speed of calculations.
Aon’s cloud-enabled enterprise risk product for life insurance, PathWise, is entirely based on GPU. We have the potential to leverage some of our GPU know-how for the non-life business as well. GPU is particularly applicable to catastrophe modelling where you have fat tails and need to do many simulations at a very granular level.
We see the use of GPU increasing. Indeed our forthcoming release of ReMetrica in the first quarter next year will be using GPU. It helps with speed, pure and simple. But there are also limitations to the GPU approach so it takes time to incorporate.
How can risk managers keep pace with disruptive technology?
In terms of risk management, the pace of innovation is reasonably high without being disruptive. There is more potential for disruption on pricing and underwriting rather than in risk management. Generally the risk management industry is doing well keeping up with technological change.