Ethical AI includes explaining how models work

by Sarah Si

AI first made its way to the industry in late 2022, according to SCOR group chief data and analytics officer Sofia Kyriakopoulou, where it “created a lot of excitement”.

However, Ms Kyriakopoulou also said, “The struggle was always scalability. The previous models were simply very laborious to train or to annotate. It really took an effort … to make them work. And then it was very expensive to [scale them up] so they could cover the line of business or a certain region, but it was very hard to go beyond.”

Generative AI models then came pretrained, she said.

“They worked very well with unstructured data and insurance,” she said, leading to the creation of proxies.

This year, the insurance industry then moved to shaping strategies, creating foundations and building the right frameworks around what could be called “responsible AI”, according to Ms Kyriakopoulou.

“As we move ahead, we are going to [see some] players getting all the benefits. But the technology is also still evolving, right? And we see incredible improvements of versions that come out,” she said.

An example, Ms Kyriakopoulou said, includes extracting elements and summaries from electronic health records that would allow underwriters to “consider more data points that they would have previously considered”.

Role of the regulator

According to Swiss Re CUO Specialty Anne Lohbeck, using AI to extract elements and summaries entails the ever-evolving legal, ESG and sanctions scope would need to be “reflected in a near real time manner in the underwriting process”.

In this case, Global Asia Insurance Partnership CEO John Maroney said, as the regulator would be “better informed in terms of what the risks [and] benefits would be”, they would be important in what reinsurers were allowed to do.

Responsible/ethical AI

Responsible or ethical AI can be “manifested”, Ms Kyriakopoulou said, as long as there is emphasis on the right framework and approach.

She said, “But how do you start the first steps of validating the performance, fine tuning and capturing all the artifacts we collect as we perform this process?”

When the model is deployed, she said, performance would need to be monitored for decay, so that necessary actions could be taken.

“Ultimately … emphasis [should be on] explaining to people how the models work. Explainability is now very much a tagline. We are using it [and] making the consciousness of the bias real. And I think the regulators are definitely driving this agenda,” Ms Kyriakopoulou said.

Cyber security

An area of risk for insurers is cyber security. “Any risk linked to data privacy and the use of sensitive data, we believe these are on top of regulators’ agendas,” S&P Global Ratings director, lead analyst WenWen Chen said.

However, SQREEM Technologies CEO and co-founder Ian Chapman-Banks also noted that regulations can never keep up with technology.

Mr Chapman-Banks said, “AI is probably going to make attempts at fraud more frequent and more complex and creative. But at the same time, (re)insurers and reinsurers will be using AI to improve fraud detection … there is certainly no doubt that criminals will be trying to keep ahead of both the regulators, the enforcers and the industry terms of using AI.”

Cyber risk should be higher priority

“Malfunctions, copyright violations, faulty advice and data bias introduced by AI are just a few of the dangers we and our clients will have to contend with as we put these new technologies to use. We will also hear about data … which all of us here work with on a daily basis and is crucial to the success of using any AI driven tools,” Ms Lohbeck said.

With AI and digitalisation, as well as use of, and access to, data on the rise, “cyber risks should be higher on our radar”, said Ms Lohbeck.

Believing that insurance data is magic

by Paul McNamara

Day three of this year’s SIRC ended with an Asian-centric panel discussion called ‘The devil is in the data: An essential element to revolutionise our industry’.

Moderated by Gallagher Re regional director, head of SEA Korea and Taiwan Hui Yen Tai, the panel included expert insights from Allianz Asia Pacific regional chief executive officer Anusha Thavarajah, Ping An P&C Insurance company of China ED, corporate and commercial division Derek Shi, Tokio Marine Holdings GM, head of global reinsurance Masaru Kikukawa and Verisk president, extreme event solutions Robert Newbold.

Ms Tai set the scene by posing the question, “What do we need for technology to work properly? That’s when we get to data.” She went on to stress the importance of capturing, managing and processing the data and asked, “Are we doing enough to get back to the basics of data management?”

Mr Kikukawa said, “Data is fundamental for any decision making, but data quality in the US is better than it is here in Asia.” Part of the reason for the difference is that the US often has standardised forms for P&C data collection, whereas in Asia it is far more ad hoc. While the quality of data capture in Asia is improving, it does take time and effort to see significant improvements.

Mr Shi said, “From the Chinese direct insurer perspective, we can’t talk about data without talking about AI. But a lot of the data is unstructured – and we are learning to use AI to structure the data and how we can derive important insights from it.”

Mr Newbold acknowledged that, “modelling has evolved a lot over the last 10 years. This allows us to collect much more granular data,” he said. He also indicated that the quality of data in Asia varied widely by country – with Japan and Australia near the top and China near the bottom.

Ms Thavarajah counselled remaining grounded. “The challenge is that we have all jumped into believing that data is the magic. But don’t forget ‘rubbish in, rubbish out’. Every day, every step of the way, we collect data constantly. We need to ensure that it is treated like gold,” she said.

Data and reinsurance pricing

Mr Shi said, “How we use data in insurance is a bit of a shifting paradigm. The availability and the cost of using internet-of-things data has become much more common practice, and this is changing the way we see insurance as a product. This allows us to reassess risk on a dynamic basis. We are only starting to look to see how this is feeds through into reinsurance pricing.”

Mr Kikukawa said, “There are so many ways we can use the data from a property risk perspective -but providing better quality data to the reinsurer means that there is a direct benefit from a pricing and a terms-andconditions point of view.”

He went on to highlight the ways in which the data can also be used for portfolio optimisation. “There is a big cost, but there is a huge reward,” he said.

The question was raised over whether the source of much of this data was being effectively incentivised to make sure that it was of the best possible quality.

Mr Newbold said, “There is a staggering amount of time still spent today trying to convert data into a useable format. We do think that there is a premium that can be calculated on better data. Better data leads to a better technical price.”

Ms Thavarajah said, “The reality, from a direct insurer perspective, is that the most important factor is the customer. We must use data – but it doesn’t have to be complete. We can interpolate the data we have to predict what is going to happen – to predict what the customer is going to do. Our team is trained to deal with that appropriately,” she said.

Collective insurance solutions for a collective problem

The (re)insurance industry has been working on finding solutions to the climate crisis for the past decade, with varying degrees of success. MSCI’s Mr Sylvain Vanston spoke to Asia Insurance Review about the many risks associated with climate change and biodiversity, as well as possible solutions.

by Ahmad Zaki

ESG has been a heavy topic of discussion around the world, with many governments attempting to solve the climate crisis. However, MSCI executive director of climate and biodiversity investment research Sylvain Vanston believes that there has been no gamechanging piece of regulation yet introduced in the insurance industry. “Instead, we’ve seen some impactful initiatives from individual insurers and coalitions of insurers that had a significant impact on how climate change is being tackled,” he said.

The first of these coalitions was the Net Zero Insurance Alliance (NZIA), which, according to Mr Vanston, disbanded under significant political pressure due to allegations of antitrust concerns. Recently, the alliance was superseded by the Forum for Insurance Transition to Net Zero (FIT), which is helmed by the United Nations Environment Programme Finance Initiative (UNEP FI) and includes noninsurers within its ranks, such as brokers and policymakers.

“The idea is that within the format of a forum, it will be less prone to attacks from policymakers on antitrust guidelines and rules. And importantly it doesn’t come with a need to set a target,” he said, calling the FIT the ‘spiritual successor’ to the NZIA.

While it is too early to say how successful this new forum will be, Mr Vanston hopes this is where conversations, engagements and solutions for the climate transition will come from.

An uninsurable world

Last year, US insurer State Farm declared several parts of California ‘uninsurable’ from the seasonal wildfires and stopped selling new policies to homeowners in affected regions. In March this year, the insurer discontinued coverage to 72,000 homes.

“This came as a shock, because in such cases, government-regulated mechanisms might have to step in, and there are very different solidarity regimes across different markets,” said Mr Vanston. “But what we know is that society cannot survive without insurance. At some point when the population is left to own their devices to shield against risks and when those risks become more acute and frequent, the population, home owners, some businesses cannot cope.”

In order to combat the higher risks and costs of Nat CAT, insurers must necessarily raise premiums, but there might come a point where the risk is just too expensive to insure against, as happened in parts of California. “The future of insurance is probably going to involve a lot more public-private conversations about how far does the market cover risks and how far should state-funded regimes cover some of the excess risks,” he said.

There is only so much an individual insurer or asset manager will be able to accomplish when it comes to sustainability, he said. “You can have your own ambitions, but at some point, because the problems that we’re tackling when it comes to the climate and the biodiversity crises are so large, so much broader than any individual insurer or investor, and in fact, so much bigger than any individual industry, they require collective solutions.”

However, he thinks that insurers might be wary of coming together once again under a high-commitment umbrella, due to the distressing experience of the NZIA. More open organisations and frameworks, such as the FIT and TNFD, would be good ways to move forward as an industry.

“Eventually, collective solutions will hit commercials. Insurers are, after all, commercially minded organisations, with a need to remain competitive,” he said. “At some point, if you restrain yourself significantly in some markets or lines of business, if you raise your premiums too high, if you price yourself out of the market, then you’re going to lose. Collective problems require collective solutions, together with policymakers.”

The real value of reinsurance meetings

As the (re)insurance conference season for 2024 starts, Asia Insurance Review spoke to Asian Re’s Mr Anil Sant and First Policy Insurance Brokers’ Mr Hari Radhakrishnan about what the conferences offer and how participants can make the best of the available opportunity.

by Anoop Khanna

There are some who think that physical conferences have become passé. There is also an argument that conference attendance by so many people leads to an increased carbon footprint of companies and should be cut down from an environmental standpoint.

Notwithstanding such criticism, conferences still continue to witness ever greater participation and interest. More conferences are coming up in various markets apart from the premier events such as Monte Carlo, Baden-Baden or the Singapore Insurance and Reinsurance Conference.

There are also limits to the amount of business travel one can do. Further, the travel options between countries are at times restricted, so frequent meetings are not feasible or practical. This has the effect of having to rely on incomplete data or scanty information for efficient decision making.

The insurance and reinsurance business thrives on data and information and therefore conference participation became a valuable tool, to gather market information first hand, rather than rely on reports or mailers. Reputed organisations very often make attendance at reinsurance conferences a business requirement for their executives.

Set the tone and tenor

Speaking to Asia Insurance Review, First Policy Insurance Brokers regional director Hari Radhakrishnan said, “International reinsurance conferences have long been an essential element in the transaction of insurance and reinsurance business worldwide.

He said, “The conferences originated in a mostly analogue world in the last century, where communication was not as efficient as it is today. There was no Zoom or Skype to do virtual meetings. The mode of communication was largely through letters or faxes and ‘phone calls.”

Asian Re CEO Anil Sant said, “The global reinsurance conferences serve as a catalyst for dialogue, innovation and collaboration, highlighting the resilience and adaptability of the reinsurance industry in the face of uncertainty.

“As the reinsurance industry continues to evolve in response to shifting market dynamics and emerging risks, the insights and innovations shared at the global reinsurance conference undoubtedly shape the future of the sector.”

A thriving segment

There are many important aspects of a conference that can be overlooked. One is the timing. The conferences are not held in the peak of reinsurance renewal seasons.

Mr Radhakrishnan said, “The reinsurance conferences usually precede the renewal events, providing an important backdrop for setting the broader context and giving cues to the market.

“Will there be market hardening or softening? Will there be changes in capacity allocations? What kind of rate movements can be expected? One gets cues on these kinds of questions from conferences and gets to prepare for them. This is something that cannot be achieved in a digital setting.”

Mr Sant said, “The global conferences have played important role in development of reinsurance industry and will continue to do. They are the forums to discuss and address the challenges faced by the industry. Climate change, increasing frequency and severity of Nat CAT events, cyber risk, affordable reinsurance capacity, protection gap, long term sustainability, ageing populations, talent crunch and ESG considerations are aspects that merit much thought and discussion.

Apart from the appropriate timing, the reinsurance conferences also offer a neutral space for free-wheeling discussions unlike meeting in an office in a formal setting. These may not just be confined to working sessions, but also may extend to evening or late evening fellowship meetings and dinners. Important market developments and the thoughts of important thought leaders can be gathered in such settings, which can be a valuable input for future underwriting decisions.

“The reinsurance conferences provide an opportunity to discuss current issues. Capacity availability and price for the same is always current topic in view of the everchanging dynamics, networking opportunities and business deals,” said Mr Sant.

Musical chairs at Singapore Reinsurers’ Association

At the end of yesterday’s conference, former Singapoe Reinsurers’ Association (SRA) chair Marc Haushofer said a few words to close the conference and formally hand over the chair to Allianz Re’s Mr Kenrick Law.

by Ahmad Zaki

“Serving as the chair of the Singapore Reinsurers’ Association for the better part of the last decade has been one of my most rewarding chapters of my career. It involved a lot of time, but it was really rewarding,” Mr Haushofer said.

He has led SRA for close to two decades and was instrumental in creating the current version of SIRC as it exists today. He was, at the same time, quick to commend the entire SRA team on their hard work, stating that none of it would have been possible without their input.

“I have learned so much during those years, and I feel it’s a privilege that I was able to contribute to the incredible growth of the conference and also the growth of the industry. Together we went head on against challenges and celebrated milestones, each step taking us closer to our final goal,” he said.

“The connections formed here at the conference are the fruits of hard work by everyone from the organising committee, our dedicated speakers and of course, all of you who have attended.”

Mr Law then took the stage, thanking Mr Haushofer for his guidance, his passion and his drive. “I have learned a lot from this man over the past eight years,” he said. “Under your leadership, I have witnessed the transformation of the SRA in the last few years and the progress has been nothing short of remarkable. It’s been very inspiring for us, and I look forward to building on our shared vision and to continue to strengthen the reinsurance industry in Singapore and beyond.”

The dates of the 21st SIRC have also been announced – 3-6 November 2025. Mr Law added that he has already been thinking about the theme for next year: “It’s about adaptation into the future, how you actually can adjust yourself and emerge even a stronger person.”

Speaking to Asia Insurance Review, he also said: “Allianz Re is proud to join the global reinsurance community at the 20th SIRC in Singapore, as we work together to address the industry’s challenges directly. Under the theme ‘Revolutionize (Re)insurance!’, we’re excited to explore transformative ideas in climate resilience, digital innovation, and talent acquisition. By contributing our expertise, Allianz Re remains committed to driving sustainable growth and resilience for our clients and the industry at large.”