Mark Brown and Rob Collinson of Willis Towers Watson explain how the company is focusing on smarter ways to meet insurers’ increasingly interconnected modelling needs
What do you mean by smarter methods?
Where we are aiming to bring real value to our clients is to use the depth of our insurance expertise to enable a cost-effective fusion of traditional modelling and developments in the enabling technologies, so they get more out of their investments in technology and software and are future-proofed for the next wave of regulatory and technological changes.
That of course means ensuring that our products continue to meet the existing demands of being fast and offering clients great usability, governance and audit features. It also means that supporting tools and teams purely for regulatory purposes is not enough. We design all of our products to contribute more broadly to a business, whether that is adding value through providing insight to support business decisions or reducing costs and risk through the streamlining of processes. Our smarter tools approach determines that we provide solutions with the systems integration capability, controls and flexibility to deal with the kind of challenges insurers face now and that can support a future development pathway.
Can you give an example of this approach in practice?
The approach applies to all of our products without exception. The most prominent illustration at the moment runs through what we’re doing on IFRS 17. Insurers are becoming much more aware of the challenges associated with this standard, which in many ways are more onerous than Solvency II. In particular, collaboration between actuaries, accountants and IT is key but, as always, real-world coordination and coherence is notoriously difficult.
To address this we have taken advantage of our integrated systems to combine elements of DataValidator, Unify, ResQ and RiskAgility FM to create a highly efficient solution for calculating the Contractual Service Margin (CSM) based on existing models and processes, including those that would have been implemented for Solvency II.
Through this approach, the CSM calculation framework can be implemented as part of our overall IFRS 17 reporting technical architecture and workflow. This offers a complete end-to-end solution that fully integrates with accounting systems and delivers automation, control and auditability ‘out of the box’, saving time and money and allowing experts to be deployed on higher value tasks and value. The building block design allows companies to integrate component parts with the systems they already have, adding further components at a later date if required.
Other examples of the “smarter” approach are reflected in our move to the cloud. This recognises the advantages for firms to focus more on their core businesses rather than extensive IT operations. An example of this is provided by the move of Igloo into software-as-a-service (SaaS) and usage-based pricing, offering the potential for greatly enhanced performance and reduced costs for both licensing and IT infrastructure and maintenance.
What is driving this approach?
Throughout Solvency II and now IFRS 17 the focus has been on “getting it done” to achieve compliance; this is not enough. Added to this, we think it’s essential to consider “value”, which can range from providing support for strategic decision-making through to being part of wider finance transformation, and which can have a bearing on factors such as organisational design and working methods, including how and where big data, automation and expert analysis are deployed.
This is not only evident in our approach to modelling and compliance solutions, based around Igloo, RiskAgility FM and Unify. Our pricing and reserving products, including Radar Live on the general insurance side, are also designed to support and encourage the innovation that enables process transformation.
What can we expect from Willis Towers Watson in the coming months?
Across our software suite we are continuing to expand the availability of cloud, flexible hosting and SaaS solutions and to develop ways in which strategic systems can be brought together more effectively using products such as Unify and Brovada One.
We are particularly excited about the further roll-out of Igloo Gen2 which, while retaining the backwards compatibility to earlier editions, represents the largest single leap in the power and functionality of Igloo since it was first launched. This performance boost will support models moving into more areas such as underwriting and pricing while also providing the opportunity for radically reduced costs of operation.