Swiss Re: A Pioneering insurance model
In 1861, 500 houses burned in the Swiss town of Glarus leaving 3,000 people homeless. Inadequate insurance compounded the catastrophe, sparking the creation of the Swiss Reinsurance Company of Zurich, now known as Swiss Re. Since then, Swiss Re has become one of the largest global wholesalers of reinsurance, with a mission to help make the world more resilient to disaster. Recognizing that resilience requires finding new business models, Swiss RE is transforming the insurance industry with digital technologies.
Exploring new business models
When Swiss Re started in 1863, the global population was approximately 1.2 billion. Today, the population has ballooned to more than 7 billion people, many of whom live in crowded urban centers. But although more people are living in physical proximity, personal interaction has taken a less intimate turn. People socialize, shop, and work remotely using mobile devices, and business contracts are more likely to be digital than paper-based. The changes are affecting all areas of life, including the insurance industry.
Although most of the company’s business is based on traditional reinsurance models, in recent years the firm has looked for ways to diversify its offerings. Reinsurance is sold to insurance companies to protect them from loss, and Swiss Re’s reinsurance business focuses on large contracts that renew annually. Swiss Re decided to explore a different approach and create a new microservices model based on small, single risks with a fully automated consumer journey. And because the company has a stake in the aviation industry and a strategic partnership with FlightStats and its parent company, FlightGlobal, that seemed like a good place to start. FlightStats, a leading global provider of flight data, could provide Swiss Re with real-time information on flight status, departures and arrivals, and more.
A small team in the Swiss Re Property and Casualty division began exploring options. “We checked if there was anything like our idea on the market,” says Gianni Biason, Head of Product Center, Aviation Reinsurance at Swiss Re. “There were a few local products but nothing that could be used on a worldwide basis.”
To collect flight insurance, passengers typically need to file a claim and wait for reimbursement. Swiss Re wanted to create a simpler process that could be offered by airlines, travel agents, and other partners as a value-added service. “We realized it could be the basis for the first fully automated insurance product, which was really interesting,” says Lukas Steinmann, Project Team Manager at Swiss Re. “We also saw an opportunity to show the market that we’re a company focused on knowledge and innovation.”
Turning to the cloud
The team asked Jürg Staub, Head of Technical Architecture for Property and Casualty at Swiss Re, for his recommendation. “They asked for a flexible solution that wasn’t hosted on-premises and that could be deployed globally,” says Staub. “And to stay close to business operations, they also wanted to enable a modern DevOps workflow that included continuous integration. These requirements led to a clear conclusion that the solution had to be based in the public cloud.”
Swiss Re issued a request for proposal (RFP) to multiple companies. “We investigated a lot of companies including IBM, local vendors, and Microsoft,” says Alan Wales, Senior Solution Architect, Property and Casualty at Swiss Re. “Microsoft came and gave us a presentation on Azure. It was exactly what where were looking for.”
Affordability and agility were both strong motives for choosing Azure’s platform-as-a-service (PaaS) offerings. “A high-transaction, low-margin business is new for our company, and we can’t invest thousands of dollars on a database server to support the venture,” says Staub. “Our on-premises solutions are expensive, and they’re good for complex, large deals, but they aren’t so good at handling fast transactions with low margins. We needed a very scalable, cost-effective PaaS environment, and that’s what Azure provided.”
Accelerating time-to-market
After Swiss Re created a working prototype, the next step was cloud implementation. The team used Visual Studio Team Services to work remotely with Codit, a Microsoft partner with deep expertise in cloud technologies. Every step from build to deployment is fully automated. The continuous integration pipeline deploys new features up to six times daily and bombards the system with more than 1 million API requests each day.
“We’re using Visual Team Services with Azure for continuous integration and deployment,” explains Wales. “We’re able to process millions of micro-insurance policies concurrently, so we’re quite confident going into production that our system can scale, and that it’s fast and accurate. All the tests run automatically, and we use real flights, quotes, orders, and claim handling, so we know the product is stable.”
The project took just eight months from concept to launch, including four months of development time. The PaaS platform—which includes Azure App Service, Azure API Management, and Azure SQL Database with elastic pool—speeds implementation for both Swiss Re and its customers. Wales says, “This is something brand new for Swiss Re, and we were able to get up and running very quickly, expose our APIs, and deliver a product that is very easy for others to consume and onboard.”
Simplified management is another important capability. “Azure SQL Database with elastic pool is a very convenient way to manage sharded or partitioned databases,” says Wales. “We have a lot of experience with Oracle, PostgreSQL, and other databases, and they can be hard to manage in a sharded way. But with elastic pool, it’s very simple to share databases across a resource set.”
In the company’s on-premises environment, project teams typically include specialized IT staff such as database analysts. But that changed with Azure. Wales says, “With Azure SQL Database, developers start and manage the service. Getting this kind of elastic, sharded environment working without Azure would have been very difficult.”
Platform for digital innovation
Swiss Re offers its delayed flight insurance service to any business that books flights, including airlines and travel agencies. The service integrates with existing websites so that a passenger can buy a ticket and purchase insurance at the same time. Then, the Swiss Re system monitors the flight with its partner FlightStats and automatically reimburses the passenger if it’s delayed. Most policies are settled within an hour of the flight landing. Swiss Re is working on more new features, including an integrated payment system and an enhanced pricing engine.
By launching a new service on Azure, Swiss Re gained a platform for ongoing innovation. “We’re creating a digital platform on Azure, and people see it as the foundation for a lot of new projects in the company,” says Wales. “We’ve identified multiple areas that are functionally similar across projects, and when you break down applications that way, you start seeing a tremendous amount of code reuse. With Visual Studio Team Services, we can share packages across all projects at Swiss Re—there’s nothing but an upside to this.”
Other projects are already underway. “We are getting more attention from other teams. Flight delay is one project, and an even bigger one has started in the IoT space,” says Staub. “With Azure, we can use the same platform and best practices, and I think what surprises people most is how far they can get in a very short time.”
Read more on the Microsoft Banking & Capital Markets and Insurance blogs.
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