Reserving transformation programme for a major international insurance group

A major international insurance group chose Dynamo as the consulting and technology provider for the transformation of their reserving processes across multiple regions.

Like many insurers, our client had a mix of legacy systems, a history of business acquisitions and a challenging book to reserve. As a result, the reserving process had become complex, time consuming and fragmented, with disproportionate actuarial time devoted to data preparation, model setup and “turning the handle” on reporting. As well as elevated pressure on reserving teams and heightened operational risk, this situation left limited time for the sorts of ad hoc analyses that are needed in an increasingly complex world.

Our client took a strategic view in leveraging technology to transform the status quo, with the key objectives of efficiency, better information and tighter governance. We were approached to participate in RFI and RFP processes alongside other vendors, and were subsequently chosen to build a Proof of Concept (PoC), which demonstrated our capacity to deliver the reserving process for selected products in a robust and well governed platform.

A collaborative scoping phase determined the high-level technical requirements and project plan before the build commenced in earnest. With Psicle the chosen technology platform for data preparation, reserve setting, diagnostics and reporting, Dynamo undertook the build in collaboration with our client’s project team. This allowed for concurrent upskilling of the project team in the use of the software, while additional training was provided to BAU actuarial teams in preparation for testing, acceptance and go-live.

The project sequencing allowed for go-live of large parts of the book relatively early in the transformation project, bringing forward many of the benefits of the new process even while development continued on the remaining models. Some of these benefits were immediately clear – the rich results dataset allowed for rapid ad hoc analysis in response to COVID-19, for example. The load on the reserving team was significantly reduced, and the consistent approaches built into a single platform reduced learning curves and enabled greater flex in the team.

Other benefits continue to emerge. With the necessary wiring now in place, a push towards “top-down”-style reserving, aided by advanced diagnostics, is underway. There are also many upstream and downstream processes which are candidates for inclusion in the platform, with similar benefits to granularity, speed and governance anticipated.

Reflecting on the project, success depended on the client’s willingness to standardise and rationalise. Critically, Psicle’s flexibility allowed us to balance this against the practical needs of actuarial teams to appropriately reserve for and report on complex products. Also crucial to success was the engagement of the client’s project team with the wider business, as was their mix of skills, determination and open mindset.