Configurability by design

By Aeneas Wiener, CTO, Cytora

Insurance companies tend to be quite different from one another, each focusing on a distinctive way to gain competitive advantage, driven by what their ideal customers need.

Some focus on large commercial risks, others focus on small commercial lines. Some distribute through broker intermediated markets, others directly. Some focus on narrow sector niches and others focus on broad national and international markets. All of these particularities are ultimately in the best interest of consumers, making sure each of them can access the risk coverage they need, distributed to them in the way that makes most sense for them.

The challenge insurance companies face is – in the context of digital transformation – how they can define and amplify their distinctiveness at the level of software which often has a standardising effect. Monolithic systems that have served the insurance industry across the last decade have tended to make insurance companies more similar to one another, not more different.

The configurability of software platforms determines the extent they can embody and reinforce the distinctive strategy of an insurer. Insurers that seek configurability as a foundational element in their software choices will be able to digitally transform and extend their unique advantages.  

Breadth of configurability

The Cytora platform enables insurers to accelerate their competitive differentiation and become more different from their competitors – not more similar.

We enable configurability by design, where everything is configurable from how a risk is specified, to the data fields captured from multiple data sources, to the multiplicative rules that are encoded to determine how the risk is evaluated and where the risk goes. It is also designed to increase data utilisation by both normalising and unifying data and by making it easy to integrate APIs to drive decisions.

This allows insurance companies to maximally configure the platform to their distinctive strategy and accelerate their competitive differentiation.

Insurance companies may, for example, decide to use certain external data sources to augment risk submissions to broaden the risk profile or to create derivative field values that come from multiple data sources, both internal and external.

They may encode combinational rules based on analysis and experience that determine how the attractiveness of new business and renewal risks are evaluated based on risk characteristics and segment performance in the in-force portfolio.

And they may decide to compete on where they put thresholds of risk complexity which determine the level of underwriting judgement they match to risk versus the efficiency benefits of straight through processing.

Whilst the Cytora platform embodies configurability by design on the aspects that lead to a better product and experience for the end customer, one area where we standardise what the software does is with machine learning ready data capture. Every data point that flows through Cytora, and every action that is taken with Cytora, is recorded in a machine learning optimised way, so that the data can fuel learning loops for the insurer. These learning loops often lead to double digit percentage point efficiency gains (via automation) and they can also enable data derived business rules that feed directly into computer assisted decision making.

By standardising data capture with machine learning in mind, Cytora enables the configurable aspects of our platform via empirical, data-driven, generation of business rules. 

Ease of configurability

In addition to the breadth of configurability, the Cytora platform makes it incredibly easy, quick and cost effective to make changes.

For a long time insurance companies have been inhibited by the high cost of change and reliance of third party providers to make changes on their behalf.

Through a low code interface, Cytora empowers business users to make rapid changes to how the end to end risk flow is configured, responding to changes in market dynamics and risk characteristics. This means that insurers can compete on how they interpret shifts in the market and rapidly update portfolio strategy and pricing.

When business users change rules in the Cytora system, they have full control. Additionally, all the data that flows through the Cytora platform intelligently assists users when they update business rules. This assistance comes via data-derived suggested rules that optimised a desired outcome (e.g. increase conversion rate, or increase profitability). The other way users are assisted when they change business rules in Cytora is using highly visual ‘what-if’ simulations that explore the historical effects of proposed changes based on empirical data.

The visibility and accessibility of the configuration platform also empowers multiple teams (underwriters, portfolio managers and actuaries) to integrate their skill sets and knowledge bases to create configurations that maximise the probability of achieving returns in different classes of business.

Accentuation of difference

The most desirable products are distinctly different and highly memorable. Insurance products are no exception. To best serve their customers, insurers therefore need to rely on software systems that are designed to accentuate their differences. To achieve this, insurers should insist on configurability by design.