Risk Modelling in Insurance: Providing flexible solutions for insurers
Insurers need flexible solutions to measure value, manage risk and safeguard solvency. We asked Joel Fox and Stephen Hollands how Willis Towers Watson is helping insurers achieve those goals.
Measuring and managing risk has always involved intensive calculations that can stretch insurers’ minds and technology capability. Now, increasingly frequent and tight reporting deadlines are driving organisations to look for more efficient ways to manage the peaks and troughs in compute demand.
“Shorter reporting timelines are pushing insurers to do more in less time,” says Joel Fox, Director and Global Life Financial Modelling and Reporting Leader at Willis Towers Watson. “For example, Solvency II solo entity Quantitative Reporting Templates, which came into force at the beginning of 2016, currently gives insurers just eight weeks after the period close to do reporting for which the equivalent was previously done in four to six months. That timeframe will reduce over the next few years and by 2019, businesses will have just five weeks to produce those reports. Many insurers are able to satisfy the eight-week requirement, but very few are saying that they’re in a position to deliver the long-term requirement of five weeks.”
Insurance companies are now looking for efficient ways to ensure they have the resources to respond to these requirements, says Fox. “If an insurer needs to return their numbers in a tenth of the time it previously took, they need a grid with ten times the number of cores. In addition, producing those reports every quarter means short bursts of high activity for a few weeks, followed by a lot of downtime until the next period closes. Maintaining an in-house grid of the size required starts to cost significant amounts of money, with much of that capacity sitting idle most of the time. At the same time, insurers face downward pressure on the operational costs of satisfying these reporting requirements. These factors are driving them to look for other options around how and where they can do this computing, and the cloud is coming to the fore.”
Hundreds of insurance companies around the world use Willis Towers Watson’s MoSes and RiskAgility Financial Modeller actuarial projection systems, and the company saw that it could help them to automate scheduling in the cloud. “About 40-50% of those clients have built up and maintain their own on-premise high-performance computing grids, and in the past year we’ve seen more clients looking at cloud solutions either to add extra capacity to existing on-premise solutions or as an alternative to setting up new on-premise grids” says Stephen Hollands, SaaS and vGrid Global Product Leader at Willis Towers Watson. “But while insurers recognise the cost savings that Microsoft Azure’s consumption-model pricing can deliver, their IT functions often don’t have the toolset in place to turn the resources on and off again in an automated way. As more insurers look to the cloud, many are looking for partners who can solve the problem for them.”
Willis Towers Watson worked with Microsoft’s Big Compute team to capitalise on the capability of Microsoft Azure Batch to do scheduling in the cloud, and developed its vGrid software to enable clients to benefit from the cloud without having to set up their own Microsoft Azure framework. “Clients can have their data, their model and their environment on their office PC and then send calculations direct from RiskAgility Financial Modeller to Microsoft Azure,” explains Hollands. “Our service then builds a grid of the size required, runs the calculations, returns results and closes down the grid as it finishes all the tasks. That leaves insurers with a minimal footprint in Microsoft Azure, for the calculation period only.”
As the challenge of doing more for less intensifies over the coming years, the company is focused on delivering not just the capacity, but also the added value insurers are looking for. “A lot of our clients are looking for a holistic service,” concludes Hollands. “They’re looking for value-adds in terms of scalability, and visibility in terms of cost. RiskAgility Financial Modeller, vGrid and Microsoft Azure give them that scalability and visibility so they can manage seasonal workloads, growth and new projects. Many are reaping the rewards of optimising their workloads and gaining greater insights while managing down their costs.”
Find out more by downloading Microsoft’s Perspectives on Insurance Risk Modelling
