Episode Fifty-Six: Powering The Next Paradigm In Insurance

The Future Of Insurance

Insurance is truly an intrinsic part of today's economic order. If insurance did not exist, someone would have to invent it.
Stephen Catlin, Founder and CEO, Convex
 

In this episode of the Power of Data Podcast, James Harrison, Head of Insurance UKI and Sam Tidswell-Norrish, International CMO at Dun & Bradstreet speak to industry heavyweights Stephen Catlin, Founder and CEO of Convex; Silvi Wompa Sinclair, Group Head of Portfolio Underwriting at Swiss Re; and James Kent, Global CEO at Willis Re on some of the most pressing issues currently facing the insurance sector including key trends impacting the industry. They explore how enhanced data capabilities are playing a key role in the central corporate strategy of leading insurers from the way they understand their customers to product innovation and why looking at talent and diversity differently is needed to support the next paradigm for insurance.

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The Power of Data Podcast

Episode 56: Powering The Next Paradigm In Insurance

Guests: Stephen Catlin, Founder and CEO, Convex; Silvi Wompa Sinclair, Group Head of Portfolio Underwriting, Swiss Re and James Kent, Global CEO, Willis Re
Interviewer: James Harrison, Head of Insurance UKI, Dun & Bradstreet and Sam Tidswell-Norrish, International CMO, Dun & Bradstreet

Sam Tidswell-Norrish 00:00
Welcome back to The Power of Data Podcast. Today you're going to hear from some extraordinary leaders. Each have had colorful careers and will bring unique insights to the conversation today. And the title is demonstrative of our belief and intent of Dun and Bradstreet. It's our mission to help you the industry, power the next paradigm using data analytics, and ultimately, insights to power superior performance. I want to start with an excerpt from a book and it was actually a book I was given a couple years ago. The book starts like this: “The world as we know it today wouldn't work very well without insurance. If there was no insurance, you wouldn't be able to drive a car, you wouldn't be able to fly an airplane. You couldn't travel on a ship, nor could a ship carrying cargo, you couldn't attend a sporting event. In most countries, it would be impossible to obtain a mortgage on a house. Insurance is truly an intrinsic part of today's economic order. If insurance did not exist, someone would have to invent it.”

Today, we can't do much of that, when traveling less and in person events are out of the question, and subsequently an industry known to be built on relationships and trust has had to rethink many parts of his day to day business. It can be said that the pandemic highlights the huge reliance the industry has had on legacy ways of working. Large manned call centers and strain networks and a lack of devices enabled for home working wouldn't be things uncommon to this industry. The pandemic also highlighted across many industries, the fragility of operating models, and how operations could grind to a halt if a single business unit experience their trade complication of some sort. And that means the time for change is now unavoidable. The insurer’s that will lead in a post-COVID world or those that will use the impact of the pandemic as the opportunity to take action to embrace digital experiences. To embrace the understanding of their customers, to utilize automation and future proof their operating models by investing in data and digital technologies. Today I'm delighted to welcome a great plethora of guests, but the first guest we have today is someone who is as much a mentor and a friend as someone I have admired for many years. He's also the author of the book from which I just read. Stephen Catlin was the founder and CEO of Catlin, then sold to Excel to become Excel Catlin. And then on to Axa. Just recently, the last couple of years, Stephen got back together with former superstar colleagues to build a Greenfield insurer. A next generation insurer ready for the world today. So with no further ado, I am delighted to introduce Steven Catlin to you all today. Thank you Stephen.

Stephen Catlin 02:30
Sam, thank you so much for the very kind introduction and I'm very glad to be here. The question that has been posed to me is what was it like first time around? And this is where I show my age, which isn't the end of 1984 as opposed to the formation of Convex, which happened in May last year. Is it the same, is it different? Well, the first thing you'd say is when we started Catlin back in 84, I had literally just turned 30, which shows you how mad I was in doing something like that at that stage. And we started with two people. And we had £25,000 paid up capital. And that was it. We had Lloyd syndicate, and frankly no network, no relationships. And certainly no track record. And absolutely working on a shoestring. So much of what we did was blank sheet of paper and gut instinct. What is still the same today in my view is personal relationships, trust, experience, and consistency. Now, I've always believed in those concepts right from the get-go. And as we formed Convex last year, we found that in fact, those qualities, if you deemed them to be qualities jumped across as if we'd never sold Catlin to Excel. And therefore we had a massive head start this time around, helped by the fact that we had paid up capital of start-up of $1.7 billion, which is slightly different to £25,000. We started I think, with 16 people, we're now 275 people on board, with another 50 to come on board, before the end of the year. To put that in context, we still are less than 100 people at the stage of 911. We have this most massive opportunity in front of us. And we're very blessed. I think Paul Brown, my colleague, whom I've worked with now for 35 years, we both say to you look, we thought through carefully the carrier cycle, we wondered whether we were premature, but it transpired we weren't which is great. But nobody, absolutely nobody could have dreamt up COVID-19 when it happened, and it certainly wasn't our business planning or model. And we find ourselves purely by luck, absolutely inundated with opportunity and where the real luck is free of any meaningful exposure hundred accounts from COVID-19, because we only started writing at one-one. On the reinsurance side, we're probably six feet under weight for our size, and therefore the insurance cost whatever that might be, is considerably less.

Now. What are the opportunities? What are the differences between then and now? Well, clearly we've got more resource. We've got distribution, we’ve got relationships, we've built up trust. And the thing about it is – I say this to so many people, you can't buy experience off the top shelf of a supermarket. Nor can you buy trust, you have to earn them. And any way you earn them is by consistency and hard work. And we've been extremely blessed to bring across from our old firm into the new firm, some of those qualities.

The other benefit we have, frankly, is we starting with a clean balance sheet. No legacy process, no legacy of claims, and the real opportunity to be the insurance company of the future. Now easy to say, a lot more difficult to do. Everybody talks about the digital world, which is important and a great opportunity, but it actually starts with the collection of data. And one of the challenges we found as a management team is to persuade our colleagues in the firm that collecting data just for your single person for your function doesn't work, because you have to collect data, which can be used for all functions at the same time. Otherwise, you get four or five versions of the truth, which is the position most carriers are in at the moment. So we have the opportunity to address that issue up front, which we're doing. And then to concentrate on how can we best digitally approach the opportunities and using algorithms and AI to have better modeling, better risk analysis, better risk management, better risk aggregation, which indeed leads to better and fairer pricing for our clients. But at the same time, allowing us to be clear that we have an adequate return on capital for our shareholders over a five-year period.

Now change has to happen. And these embrace change in the marketplace, whatever size or shape they are, carrier or broker are the ones that will win. The ones that are not prepared to change won't embrace change will be the losers, and the losers will come to the forefront quickly. We've got maybe a minimum two years, maybe a maximum of five years to get there as an industry. We have to be relevant. We have to give value to our clients. We're not as relevant as we were 30 years ago, which deeply upsets me, we've fallen behind, partly because we haven't explained what we do, and the limitations we have. And indeed, most importantly, the value proposition of insurance. Now I had no idea that Sam was going to quote from the book, but I think that stands today, and I think it stood when we started 35 years ago.

James Harrison 07:25
Steven, thank you very much that was really interesting to understand, your plans to ensure the future as well as how important the collection of data is becoming relevant in the insurance industry. My name is James Harrison and I'm the new head of insurance with Dun and Bradstreet in the UK and Ireland. Previous to D&B, I held roles at both Accenture and Deloitte focusing on digital strategy for insurance and reinsurance clients. After I started my career in Lloyds mark as a broker. Today, I'll be hosting this panel as was great pleasure that I'll be joined by Silvi Wompa Sinclair, Group Head of Portfolio Underwriting at Swiss Re, James Kent, Global CEO at Willis Re, and of course Steven Catlin from Convex.

We just heard about Stephens background in the industry. So before we start the conversation, let's take a few moments to hear about background roles or other two panelists, Silvi and James?

Silvi Wompa Sinclair 08:25
Absolutely. Thank you very much, James. So Hello, everyone. Good afternoon. Good evening. Good morning. I have spent the last 15 years in the world of insurance after a start at McKinsey, I have tried many different sides of insurance, everything from life and pensions through broking to London market underwriting and now reinsurance at Swiss Re. I’ve also tried many different parts of the value chain from sales through underwriting through to claims and my passion is about connecting the dots and especially firing up this value chain with technology.

James Harrison 09:04
Thank you and James.

James Kent 09:06
Good morning. Good afternoon, everyone. Great to be here and enjoyed that little intro Stephen. I'm very glad that while this is a digital and technology focused discussion, you didn't miss the point about trust and experience and underwriting and the items that really are critical to the business in conjunction with technology. My background is I took over as global CEO of Willis Re at the end of 2017. Before that, I was leading our North American business based in New York between 2010 and 2017. And before that, I led our Bermuda operation for the previous seven years before that. So have really spent the last two decades in what I would call the major reinsurance markets being the US, Bermuda and now back into London.

James Harrison 09:47
Great, thank you. So let's start our discussion then and James it would be great to start with yourself. As you know the insurance industry’s digital capability is evolving. The Lloyds market as we see it, more and more placements have been utilized on the PPL platform. And we're seeing a drive from customer sectors for the need to manage policies digitally. How have you adopted your corporate strategies to meet this change with the rise of digital and data, and do you think the industry has been proactive enough?

James Kent 10:13
I'll take those questions in reverse order and talk about the industry to start with. And the first thing I'll do is put a statistic out there in terms of the industry investment, and it can be looked at in two ways. You know, over $20 billion has been invested in insure tech companies since 2012. And many hundreds of billions have been invested when you widen that net for all digital investments. So the industry is investing, but what we need to establish what do we mean by investment. And for some companies, it's purely speculative with potential exits, whereas others are investments for partnerships and supporting relative technology needs. I think that has been an interesting aspect in how the insure-tech businesses developed, where, you know, I think there was a perception at the beginning that insure-tech companies were coming in to compete and trying to build insurance infrastructure themselves. And what that has morphed in is much more into the partnerships. In terms of those numbers that I spoke about, it's still less than 50% of what banks are investing, and I think the view that insurance is more complex than banking as a proxy, no, we're not investing enough. But given the trajectory of the spend, there's no question that the industry has woken up, and that every insurance and reinsurance company, and for that matter, the brokers has digital on our minds, and we're investing heavily.

I do think it's important to separate from investment in advanced analytics, which has been going on for decades, then insure tech is just one nuance of that development. So you know, in summary, yes, yes, the digital investment is there, James. It's continuing at speed. And I think we will continue to see that the trick, of course, to avoid the old scenario where you have 99 pieces of good data, and it can be negated by one piece of bad data. And that comes back to Stephens point about the understanding of risk and the point about trust and expertise. And then just on the second point about ourselves with a digital platform, the way we look at technology as a reinsurance brokers we have three options. We can buy, we can borrow, or we can build. And historically, the insurance and reinsurance broking business has a horrible track record of building. But there is no question that being part of the broader Willis towers Watson is extremely helpful to us because part of part of Willis Towers Watson is a technology firm. I have a huge believer that ultimately the industry will get to a single digital platform to trade on, a bit like the stock market and the commodity markets do. But I think that is going to take an awful lot of cooperation. You mentioned the PPL platform, that's shown the way but I should stress the PPL platform only operates for Lloyds and not a global platform. And we operate in a global business and the goal has to be a single global platform for digital trading.

Silvi Wompa Sinclair 12:54
Yes, I can maybe comment a little bit upon sort of what how I think Swiss Re has done things. So I think like many others, we have probably gone from tentative to determined in terms of data and analytics, we clearly started out with sort of servicing our primary clients with data and analytics solutions. I think now the realization is much stronger that this is equally important for the internal environment, and especially underwriting and coming back to what Stephen said about a single source of truth. I think that is now a true Holy Grail, rather than having four or five versions of the same thing. And so we're definitely moving much stronger towards a unified data and analytics strategy. And we're also putting people in place who's 100% job this is, it's no longer a sidekick if you will, but it's truly something that is taken seriously. Similar to the other speakers, I believe the industry has lagged behind embarrassingly so, especially compared to banking and asset management, which insurance is not very different from. Of course, it's speeding up but I think I also have a question mark in my head as to the exact effect because investing is one thing. And then the question is, what do you get from it? And where do we see the difference made in the products that go out into the market.

James Harrison 14:24
The inertia in underwriting systems and insurer workflows means that the adoption of new models and data can be very expensive and difficult to do so. Would you have any suggestion on how this can be solved?

Silvi Wompa Sinclair 14:35
Yeah, I mean, of course, it's expensive, and it's hard to do. But I think we're coming to a point where there's not a choice anymore, also underlined by COVID. And I think it's just one of those things that our industry has to do in order to move forward and stay relevant. So I think it's a bit of a biting the bullet and also looking at what slightly unnecessary things can then carts in order to afford this infrastructural change that absolutely needs to happen, an imperative for us as an industry to move forward.

James Harrison 15:09
faster and queue. Stephen, it'd be great to understand a bit more about the rise of digital and data and how you're applying that now, with your new role in with Convex?

Stephen Catlin 15:16
I would characterize this journey, I didn't know how that change can last, I'd love to tell you one year. But as I said, and Silvi is just as the same thing, it starts at with how you collect data, it really does. Just for any people that you to collect data and list it, but you have to win the hearts and minds. The mindset has to be addressed. And I think the industry as a whole, we haven't done that, once you've got good data on the operating side, you should save quite a substantial amount of money. And my God, we need to do that as an industry, the frictional costs are far too high. We all know that that is our fight to get them down. It's not just that it's also can we from this make better decisions more quickly, more fairly, in every part of what we do. Now James is fortunate he doesn't have to scratch his head every day about reserving. And I tell you that it's a real joy for him I would imagine. And in the next five years, without any doubt at all, as the character market unwinds, as COVID-19 unwinds, there's going to be a lot of pitch scratchy. Well, what do we have? What are the exposures of balance sheet? And what do we need to do to put it right, retrospectively, and prospectively?

James Harrison 16:29
James, you mentioned about inshore tech and the opportunities in insure-tech around partnerships. When I was focused on insure-tech in a previous role, I was starting to see how early stage businesses are really starting to use external data sources to what we call a high resolution view of their customer. And this is helping to provide strategic advantages for their partners, their insurers and their broker partners it was helping to form pricing. It is also helping to understand the types of products and services that could be offered or should be offered to their clients. With D&B we have the largest Data Cloud available for Corporation data 400 million records, that data is outdated, believe it 5 million times a day and curated from thousands of different data sources. So really, you know, we're working with any forward-thinking company on really leveraging that power of that data. That means that we can focus on building out that high resolution view of the customer, that leads to product innovation, it also helps us to understand better the pricing for some underwriting risks that inevitably lead to positive business results for insurers, as well as for brokers will they be able to understand more about their consumer base and offer more products basically. When it comes to looking at their individual business they do work with, we can look to understand the propensity for those guys to actually pay on time, or whether you should be looking at offering installments that's helping you understand your commercial arrangements as well with them. And then lastly, you know, we support that management, supporting the foundational stone to your digital acceleration. How ready do you think the market is to using external and non-traditional data sources? So the use of telematics, big data, sensory AI, to really paint that grand a picture of the customer?

James Kent 18:14
As a general answer, James, I would say very ready, but it does vary tremendously by risk class and geography. I'm not saying this because Stephen and Silvi are on the call, we are dealing with two of the more sophisticated companies that operate in our industry. You know, Willis Re, we have about 1000 clients around the world. And you would be amazed at the variety, the range of sophistication in terms of those clients. And if I tell you that we have some clients in Florida that still receive premiums by cheques through the mail, it varies tremendously. So but as a rule, the industry is very much so and, you know, using third party data to help enrich decisions and populate the answer to questions no longer need to be asked is very powerful, because it's creating a much better customer experience. And I think it's very interesting, you know, again, listening to Stephen’s introduction, and talking to many other contexts that we have around the startups that are coming into our business, if you talk to them, their theme is very much around the expense issue that was mentioned earlier, and using technology to drive that, but also using technology to drive a much better customer experience. The biggest issue with this is a large part of this is around personal lines or residential type of risks. And the regulators are really watching this around the trust issue with new data sources. And when the regulator - you know, the regulators are a bane of both the underwriting and the broking side of the business, they're there to protect the customer, but they certainly create high hurdles there. So they are ensuring that all parties trust the same data sources and that the proper rules are followed. As a general rule, we find that customers are happy to have their third-party data used for They can see there's a direct and visible benefit to them. And that third-party days are also helps give a more objective view of risks. So that's a real, again, supporting the drive towards that. But in summary, I'd say that forward looking insurers are open not just to new types of data, but where appropriate opportunities to collect and stream that data from devices. that is much quicker than is possible with traditional techniques to support the real-time decisions. So, you know, again, it comes back to the quicker decisions, the more accurate the decisions, the more customer satisfaction and in theory, customer retention.

James Harrison 20:34
And Silvi, considering your background looking at group underwriting now for Swiss Re but previously, you know, you've taken roles at insure-tech’s as well. So it would be great to get your response to that question.

Silvi Wompa Sinclair 20:44
Yeah. So I actually disagree a little bit with James there. I mean, I think there's certainly interest and willingness to take these data sets into account. However, I think that the ability at the present time if I really generalize across the market, I think it's much smaller. And why am I saying that? It's because I see that I think there's a huge backlog of fixing the basics when it comes to internal data, because you have to kind of fix your internal data first and make sure that you can trust that again, have this single source of truth. And then once you have that basic in order, you can then augment that with external data. And frankly, I don't think that the industry is quite there yet. And I think something that complicates matters, the fact that many legacy systems are notoriously bad at dealing with external data. They struggle with the internal piece to begin with. So I think the ability is still lagging behind there, certainly enthusiasm and willingness to augment insights with non-traditional data. But it's a challenge on how to bring it on board both into the machines, but probably also a little bit into the humans and realizing that your skills as an underwriter can indeed be augmented by third-party data.

James Harrison 22:03
So it's sorting on the foundation first and then moving forward with some more interesting stuff. And Stephen at Convex are us now sort of looking at using it in non-traditional data sources to look at how you inform your view of the customer?

Stephen Catlin 22:15
It sounds like you'd like me to do a plug for Dun & Bradstreet, I think here…

James Harrison 22:20
I didn't ask, but if you go for it, that's fine with me.

Stephen Catlin 22:22
Silvi’s point, I completely agree using outside data is helpful. But finding a way of integrating that into your own data capture without polluting it has gonna be a key to the future. I mean, my ask of Dun & Bradstreet is makes certain that when you collect data, you are consistent how you do it, because otherwise you've got a moving goalpost. But this is work in progress, for every one of us.

James Kent 22:45
A couple, a couple of observations there. I think if you look at Convex and Swiss Re, they are writing not exclusively, but generally complex industrial risks. And that is a difficult part of the market. If you come down to the most basic area of the market, I would say motor or auto is the most straightforward. And that's where you are seeing technology companies actually in there, using automated underwriting to support decisions. I think the area that is actually most behind because I do think that the complex PNC business is getting there. If you look at the life business, and we sometimes forget that life is 50% of the insurance worldwide, that part of the business is miles behind where the PNC world is, and the opportunity for technology to get into the life well to support the underwriting there, it's going to be needed and dynamic pricing can be used to increase profitability, which is going to be especially important in the current low rate environment. And I don't think it's a coincidence that the life business is generally a direct, non-brokered industry, that's the area that lags most is not a surprise.

James Harrison 23:50
You know, completely agree with life. When I was looking at using external data sources in a previous role. The focus for me was very much on the SME market. It just felt like that was a huge opportunity and traditionally has been underserved. And you know, you've looked at some reports they're not many can take a £45,000 hit to their book of business and the that was back in three years ago. So I can imagine now with Coronavirus is even worse, and now even more important.

Looking at customer understanding then so if we'll be able to provide a high resolution view of that consumer that leads to product innovation, or it should do. And for those of us that have worked on the call or associated with the Lloyds market, I think it's very clear that it's an incredibly dynamic market with the people, the framework and the risk appetite to ensure you know, anything from the phrases from spacecrafts dimming vases, isn't it and everything in between. So when it comes to the subject matter of risk, I don't think innovation has ever really been a problem for the market. However, apart from the likes of insurance, linked securities and parametric products being event driven policies, especially insurance, and like other sub sectors in insurance as well, they tend to be loss indemnity driven and that's been the case for a very long time. Stephen, I’d be keen to get your thoughts on this, could you see through enhanced data analytics, the start of a new suite of different types of products in the market that vary in terms of the way they are structured?

Stephen Catlin 25:11
Well, the short answer to that is yes, it is a very complex question. I forget who said it in this call, but somebody said about the banks, or what they were doing? Well, the bank and some stock markets, their data capture is actually much more narrow, narrow than we are. And to James's point, you know, motor is an easy data capture, actually post aligns property is not bad life isn't that difficult? Honestly, the data capture is pretty similar. When you get into a complex where switches what James was talking about earlier on, then you get challenged, the collection of data is more complex. Have we cracked that nut? No, none of us have. I think we can, where the Lloyds can do not as an entirely different issue. I mean, they have unfortunately couldn't solve the situation where they've got consumed with the past with a very high expense ratio. And as far as I can see, James, you may disagree on this, I can't see them investing as a society that much money significantly into the future of complex, which has always been part of Lloyd's history. I'm wishing they would have been thinking more laterally.

James Harrison 26:16
James, is there anything you wanted to add to Stephen's comments?

James Kent 26:19
No argument at all about the more obvious opportunities in terms of the question beyond that, around product innovation, we see it most needed around the complex risks, cyber climate related risks, non-damage bi and intellectual property, which are all areas that are grossly under insured and essentially retained by governments or by the individuals and not by the industry. So we spoke about the life industry and I agree with Stephen, it's not as complex as the commercial PNC business, and increasing their use of data and analytics will help improve pricing techniques, digital sales, because it is really a personal lines type of product. And the underwriting process, making it less invasive, time consuming, and all that leads to greater efficiency and lower expenses. So I broadly agree with Stephen there that the more complex end of the business, it is hugely expensive for underwriting companies to undertake. And as a consequence, it sounds like unplugging the broker here, but that's where the broker market comes in, where we're supporting so many of our clients through the technology and expertise that we have and the data that we have.

Stephen Catlin 28:47
We have to think as clients as well, in terms of this debate. And as you probably know, I'm chairman of the steering group on the pandemic. And one of the issues here is governance, I say that plural, and client’s plural, and countries plural, don't really look at risk holistically. The actual buyer tends to buy from fear of the loss, or it’s a debt driven decision, or regulatory decision. You don’t wake up and say, I'm going to buy myself insurance policy. It's not how it works. And for the record, there were some quite thoughtful pandemic policies out there giving the coverage people want today. But guess what, two, three years ago, no client would pay the price for the product. Today, just about everybody buy it. And I do think as we look at this, there's an educated thing with clubs and governments about just in the five year risk doesn't do it, or the 10 year, or 15 year, or even the 25 year. I mean, getting a politician to convert beyond five years is quite difficult. At 10 years, their losing interest, 15 years, their dozing off, and a 25 year return, they're snoring. They've just lost it. So we've got that issue today.

Within terms of persuading our client base, we are adding value to your personal circumstances. And we haven't done that very well. And we also have to be honest, as an industry about what we can and what we cannot do. And James and I are looking pandemic, it's abundantly clear, there is no solution ever going to be provided entirely by the insurance industry. Why? Because our capital is so far less than the aggregation of exposure, all we can do is mitigate the government's risk, and maybe help them with distribution or risk management and risk control. The same applies to cyber, you could easily have a cyber loss for the same financial consequences of pandemic, I'm hoping people will actually now really take that to heart. And you mentioned climate risk earlier on. I mean, climate risk you didn't know was going, but it feels like it's catching up pretty damn quickly to the other two. As an industry, we're never ever going to be able to meet the entire need, because we don't have the capital to do it. And if we did have the capital to do it, nobody would buy the product would be too expensive to justify the return on capital we have to give to our shareholder. So there's a separate part of the debate. We're not isolationist here, we're part of a world and its economy.

James Harrison 31:11
Yes, absolutely, thank you, Stephen. It'd be now great to talk about market dynamics, especially when we have two seasoned Lloyd’s players here. So as data capabilities improve across the market, that's gonna provide some advantages for your traditional base, whether you're an insurer or broker, and it could mean that using that insight, you could actually start to expand your traditional services, and then move into other areas. Are we going to see an expansion of services from the insurers and brokers? And is that going to fundamentally change the way the market operates with itself? And the interactions between the broker and underwriter? James, you touched on it before about the value of the broker so it would be good to go to you first on this one as well.

James Kent 31:51
Yeah. So what is our number one goal in terms of serving our clients? It is to support the making the best decisions that they can. And technology is a facilitator for that, but it is only one facilitator and insurers are in the same boat, you know, they want to help their clients make the best decision they can. So innovative use of data will definitely unlock technological potential, but it needs to be the right data use in the right way to support a business model that goes back to all the things that Stephen spoke about, which is underwriting trust, willingness to pay, you know, all those features matter supported by technology. So our core offering might change, but there's no question that when I look back to 2016, when Willis and Towers Watson came together, the big change there for us as legacy Willis was partnering with a company that had consulting and technology capabilities, particularly in supporting underwriting decisions that we didn't have ourselves. So I’ve described what we call reinsurance analytics, but we didn't have the underwriting analytics, or we had parts of them, but certainly not to this scale that the Towers Watson side of the business had. So you know, that better information technology has allowed us to give clients better advice to achieve their goals. And that's, that's been a good thing. And I only see that continuing to happen. And that includes, you know, the product development.

I think the other thing is, it's not just about profit, you know, a large part of what the insurance world does is around risk mitigation. And there is, you know, by leveraging data and analytics, it does allow insurers to know their policyholders much better, which allow them to offer better products. You know, a good example is going back to the life side where, you know, partnering with policyholders on their health and making better decisions, offering incentives around that, you know, that's not around profit that's around supporting your customers to a better lifestyle that leads to them being a better client for you. So, you know, I just see this all evolving in that way, James, with smarter and better data and technology.

James Harrison 33:53
And the other side of the fence then Stephen, it'd be great to get your perspective on that as well.

Stephen Catlin 33:57
Well, if you're having some doubt, I'm actually a fan of brokers when they add value, and the certain things that they we can't do, and they can also be perceived by the closet not having their it's in one basket, or they can actually offer different products. There should be a symbiotic relationship between client, broker, and underwriter because we all fulfill and should fulfill those roles, but being communicative with each other and being transparent with each other at the same time. And I think going back to the innovation question, if we start with basic premises, you listen to your client, you hear what he's frightened about, always concerned about, and then you develop a product to meet his perceived need. Now, if you think his perceived need is fundamentally wrong, you're just gonna have to say I'm sorry, I don't see the need. But if you understand the need, then we can be innovative, and try and work out how we can provide a product to him, which makes sense to his balance sheet, and at the same time, gives our balance sheet an adequate return on capital mean. James is in a slightly different position, in that he's an intermediary between the two parties and he has to earn his money through what he does an intermediary and part of is consultancy.

James Harrison 35:04
Brilliant. The last section we want to talk about was talent and diversity and how the market can support innovation as well. Insurance like other industries, has had a spotlight on its approach to diversity. You know, diversity of talent leads to a diversity of thought, which leads to positive business connotations. What are the business impacts that you're seeing from your approach to diversity? James, it would be great to get your perspective on this first.

James Kent 36:48
You know, I think as an industry, we lag and I put Willis Re there, you know, we are historically and diverse business. But I would say that is a generational issue. And when I look at our colleagues, up to 15 years of experience, they're incredibly diverse, in many measurements, whichever way you want to measure diversity, it's a pleasure to see. We have a generational issue above that, where putting it bluntly, were largely a bunch of middle-aged white men. And that's historically where the reinsurance broking business has been, particularly here in London. So it is a topic that resides on our Executive Committee. So the individuals that look after that, for us, it is part of our monthly executive management commitment to the business. And you just can't argue with the statistics that the more diverse businesses are more productive in many ways. And I should say that the broader Willis Towers Watson does a much better job than Willis Re, so I'm happy to call that out. You know, I think it also allows you to relate to your customers’ expectations, because customers are changing rapidly. I do think that the pandemic in some ways, is going to help accelerate diversity. And I will use working parents as an example. And we did one of the reasons we're not diverse in what I would call the top half of our business, in terms of experience is that a lot of women leave the business to become the primary childcarer, and we do a lousy job of retaining that and the ability or this this stigma that remote working is not possible, it has gone in many ways. And if that helps us to retain talent, then the pandemic, in that sense, will have been a very good thing for the industry.

James Harrison 38:19
Very interesting. Thank you. Silvi, let's go to you on this one.

Silvi Wompa Sinclair 38:22
You know, we're trying to build diversity, not just in terms of gender, but also background diversity of thought, socio economic, all of that. And, you know, a couple of observations, what do I see? So I think, because of diversity, we actually have more difficult conversations. But they're actually better because not everybody agrees upfront with what everybody else is saying, which is actually quite beautiful, it’s a bit more painful, but it's more beautiful. I think we're having a lot more healthy questions of why are we doing this? And what's the so what of what we're doing, as opposed to everybody just automatically accepting that this is the way we've always done things, and therefore we should continue. And we certainly have more multifaceted discussions, because people with different backgrounds look at the same thing but come to different conclusions. And just coming back briefly on the sort of the data analytics thing I think, as we have brought in more people with technological backgrounds, we actually can move to execution faster, because we're not just a bunch of economists or whatever, thinking about a grand scheme and then we kind of have to go to it to figure IT out. We can actually start creating stuff there and then in the discussion, which for me is extremely empowering and really good fun to work with. So not always easier, but a lot better.

James Harrison 39:43
Brilliant. And Stephen as well.

Stephen Catlin 39:45
I don't think tech can take away from the human relationship part. It can 40 learn from diversity, not just agenda, but a background of race, religion, whatever. You make better decisions and have a better name. And I'm a great believer in equal opportunity, particularly those who have a less fortunate upbringing. We have a duty of care to do that. It's not just the duty of care, you actually have a better business, if it's diverse, and there's absolutely no doubt about that in my mind whatsoever. And in this day, and age more fool any CEO who doesn't recognize that

James Harrison 40:29
Fantastic, thank you. I'd like to express my deepest thanks to the panelists, Steven, James and Silvi, your insights been absolutely fantastic. Thank you.

James Kent 40:36
Thank you.