AdvantageGo: Danger reinsurers ignore legacy tech issues in hard market

The current favourable conditions in the reinsurance market might tempt reinsurers to lose focus on updating their technology, according to Martin Olley, head of North America at AdvantageGo.

While observing that conditions had not been this optimal in the last three decades, Olley noted that "legacy applications" would not be updated and that underlying deficiencies could be concealed in a profitable environment.

“It's a three-decade high that we're at at this point in time, from a renewal rating pricing perspective, and terms and conditions are good in terms of the ability to align those contracts to the risk, and I think pricing is very much consequent to that and aligning very, very well,” said Olley, in a joint interview with Simon Fagg, head of (re)insurance technology solutions at AdvantageGo on The Insurer TV.

“I think, often, we've seen that with some of the incumbent carriers, in particular, there's a number of different legacy applications, which have over the years just sat there and gradually gathered dust,” he added.

“But they're ticking along, and they are just about producing what's necessary to keep the organisation going.”

Olley believed this could result in reinsurers struggling when such advantageous conditions come to an end.

“From a competitive advantage standpoint, as an organisation, you need to be thinking about what's your technology roadmap, what's going to get you to that next level that sets you apart,” urged Olley.

However, Olley remained hopeful that reinsurers understood the importance of investing in technology regardless of the market cycle.

“I think that carriers, regardless of the market position, actually realise that now and that it's not going to stay hard forever; so they need to position themselves, and I think technology is going to play a big role there. And similarly, what we've got can be utilised to get them through the next period,” Olley added.

Fagg did not foresee the hard market having too much of a prolonged effect on how reinsurers made use of technology.

In his view, the real pressure will come from the onward march of technology, which he argued would continue regardless of the cycles of the insurance market.

“I actually think there's a number of triggers, [for the advancement or reinsurer tech systems] that have happened over the last decade: we think about enablement through the cloud, the data digitisation piece. Gradually people have been pushed to get organisation around the different facets that are driving their business.”

“There has been a trigger now with key capabilities, such as artificial intelligence,” said Fagg.

Watch the full 12-minute interview with Simon Fagg and Martin Olley to learn more about:

  • The AdvantageGo workbench
  • The importance of getting the right data model
  • AdvantageGo’s natural language model