The role of technology in insurance has expanded exponentially as insurers apply it in areas like claims, operations and customer liaison. Until recently, however, few had used it to help clients deal proactively with reputational risk.
As we’ll see, the winner of our February award for innovation in insurance – global insurer Beazley – has done just that: harnessing solutions like artificial intelligence (AI) and machine-learning to help clients better manage reputational risk.
But before looking at Beazley’s entry, we’ll outline why your firm should consider entering the annual Efma-Accenture Innovation in Insurance Awards, which recognise the world’s most innovative projects and ideas that are transforming the industry, and which offer insurers and insurtechs a forum for sharing best practices.
The awards programme is a genuinely global contest – as our previous blog shows. What’s become clear over the award’s history is how much participants value the many aspects that entering this contest brings.
For a start, taking part shows the insurance world that these are internationally recognised innovators – firms that are pushing the boundaries of what’s possible in the insurance space – and that alone garners recognition and interest from colleagues and industry peers.
Additionally, participants get to meet other industry innovators at networking events (for now those are mainly online), where they can inspire creativity and boldness in others – and where they can be inspired. And lastly, taking part ensures they can benchmark their innovations against those of other insurers.
There are seven categories in which firms can compete, and you can read more about these at the online submission page. Each entry will be assessed using three criteria: originality; its strategic capacity to generate a long-term competitive edge and return on investment; and its adaptability for use in other markets and countries. Submissions can be made until April 2, with the winners announced at a virtual ceremony on June 3.
Using tech to mitigate reputational risk
Beazley’s innovation particularly impressed us because it looks at an aspect of business that so many companies are exposed to, but the potential negative impact of which is seldom fully acknowledged. As Beazley puts it, reputational risk is particularly acute for public-facing companies, with bad news able to reach wide audiences in mere minutes.
To mitigate the risk to reputation – which it describes as “the intangible asset companies cannot afford to lose” – Beazley developed its Reputational Risk insurance offering for consumer facing companies. In the event of a reputational crisis, its all-risks product offers insurance for loss of profits and crisis consultancy. In that way, firms are covered for so-called known-unknowns as well as unknown-unknowns.
George Beattie, Beazley’s Head of Incubation Underwriting, highlights two key aspects that differentiate the firm’s Reputational Risk product.
First, it combines reputational signals intelligence via the firm’s partner, Polecat Intelligence, using AI and machine-learning to generate information about emerging reputational threats for companies and their brands in real-time, with policyholders able to access that information via an online portal.
“This means that the solution can be viewed as a proactive risk management solution as opposed to a purely reactive insurance product,” he says.
A formula-driven approach
The second is that it provides business interruption pay-outs in a streamlined way. A simple formula calculates the loss incurred by using historical revenues multiplied by a calculated growth rate, with a pre-agreed profit margin applied to the revenue delta to determine the loss payable. This ensures Beazley can pay losses faster and gives policyholders liquidity in a crisis.
Combining a formulaic approach to determine revenue losses with other pre-agreed metrics ensures “a rapid, mutual understanding of how and when the policy will pay for loss of profit because of a reputational crisis event,” Beattie says.
Winning the February award further cements the company’s position as a market leader for innovation, says Beattie, and is great recognition for the teams that worked on enhancing and developing the product. It also makes its Reputational Risk product more visible, which means “we get increased opportunities to solve for companies exposed to reputational risks”.
Our congratulations to Beazley for winning February’s contest. Look out for our next blog where we’ll highlight March’s winner.