Munich Re sees new possibilities for managing risk in data & AI

Reinsurer Munich Re sees data analytics and artificial intelligence as key tools to open up new possibilities for managing and covering risk, and for supporting insurers across the entire value chain.

“At Munich Re, our goal is to pioneer digital solutions for the insurance industry,” said Doris Höpke, Member of the Board of Management. “So we have been investing heavily in data analytics and artificial intelligence, in order to support our clients with innovative methods and new products,” she explained in a statement ahead of the industry meeting in Baden-Baden.

Munich Re says it is focused on combining primary insurers’ portfolio data with external public sources, such as site geography, building construction, weather, or socio-economic status. By applying machine-learning principles, the company then looks to discover hidden loss drivers and respond with loss-prevention measures or by adjusting pricing.

“This means faster claims estimates and handling, and better pricing as a result of improved accuracy in risk assessment,” Hopke continued. “Not to mention better loss prevention in the first place.” In the area of motor insurance, for example, Munich Re helps cedants to manage their portfolios using its automated tool, ‘The Box’, which relies machine learning to predict expected damage.

By adding external data to the mix, the loss estimates increase further in accuracy and loss ratios can by measurably lowered, the company claims. Similarly, Munich Re’s data analytics initiative ‘AQUALYTIX’ combines insurer’s portfolio data with external sources to analyse water-mains damage.

Using machine learning, experts can identify the risk drivers for individual buildings, and predict the losses for the coming year accordingly. The reinsurer is also working to identify changes to the overall risk enironment caused by digital innovation using its annual TechTrend Radar, which began in 2015.

Source: Reinsurance News