Digitalisation in captive insurance: creating more value with less effort through efficiency

Noria highlight the virtues of digitalisation in captive insurance.

Captive insurance has been described as the “last frontier in the race towards digitalisation of the insurance industry”. It’s a frontier ripe with possibility, but one that also comes with its own unique set of challenges to overcome.

While parallel industries are leaping ahead with automation and diving into the limitless possibilities of collaborative software, AI and machine learning, the unfortunate reality is that many captives are still attempting to run their operations with a combination of spreadsheets and email.

Hurdles to captive digitalisation

What is holding back captive digital transformation? According to Ronny Reppe, Noria Software CEO, there are four key hurdles:

  1. The diversity and complexity of the captive market means there is no easy fix or one-size-fits-all technical solution for digitalisation.
  2. Pricing models of technical solutions are typically set up to accommodate traditional insurers but are out of reach of captives.
  3. A lack of digitally-savvy talent or technical know-how at the executive-level, or among decision-makers in captives.
  4. An unwillingness to invest in the architecture required (starting with data) to begin the digitalisation journey.

Investing in digital transformation is not as frightening or challenging as it may seem, although the cost/benefit analysis is a lot tougher for a captive than in a commercial insurance company.

The benefits and gains of well-structured, coherent and comprehensive data storage in a well-suited insurance system go well beyond compliance reporting. A leading IT solution with superior data quality will ultimately enable a captive to provide more value to its stakeholders.

The benefits of digitalisation for captives

These hurdles can be overcome, but it takes a strong business case to convince a conservative executive who still believes a captive can be run using spreadsheets. Begin by listing the following benefits of digitalisation.

  1. Compliance and faster regulatory reporting

Like any insurance company, captives operate under strict compliance regulations that create a reporting burden if they attempt to manage them using inadequate or outdated tools, such as spreadsheets. The complexity of Solvency II reporting has triggered the need for better systems in order to be compliant.

Captives in Europe are audited every year with a 360o evaluation of their operation, including IT support, which can be extremely time-consuming without an effective system in place. Heineken’s captive insurer, for example, is saving 25 hours per month on audit work alone after moving all of its global insurance data into a single, integrated system. Reporting preparation that used to take two days now take only 18 minutes.

  1. Data and analytics

Investing in digitalisation means significantly improved visibility. There are several paths to data visualisation, but the best option in my opinion is to create personalised dashboards that show real-time data at a glance. The aim is to provide advanced self-service tools that ultimately make stakeholders’ jobs easier. These dashboards can be made even more powerful by leveraging real-time sensor data (connected insurance), allowing captives to become much more proactive in managing risk for their stakeholders, ultimately leading to fewer claims.

Converting data into practical and actionable business intelligence by measuring the right things, integrating data sources, investing in data analysis capabilities, creating visualisation tools, and linking the data to organisational targets, will help stakeholders make higher-quality strategic decisions, faster.

While businesses used to require complex analytical tools and data warehouses, modern business intelligence (BI) tools have changed the way insurance companies perform analytics, driven down costs and enabled more self-service analytics. In the past five years it has become cheaper and easier to get moving with advanced analytics.

  1. Stakeholder interaction

In captive insurance, a “stakeholder” is anybody who interacts with the captive. Stakeholders can be owners, companies within the group (Heineken refers to these as “OpCo’s”), or any claimants.

A lot of time is wasted in captive insurance simply answering stakeholder questions or searching for information that could be better accessed using a centralised system and self-service model. It’s therefore imperative to find different, efficient ways of interacting with stakeholders. Here are two ways for doing so:

  • Providing stakeholders with a dashboard for analytics where they can access live data.
  • Providing customers with a tool with which they can maintain their portfolio of insured assets (objects).

Noria provided Heineken with a tool where they can see all assets across all locations, change building, equipment and stock value, or add and remove assets. Before they had this method of digital communication, Heineken’s stakeholders maintained their data in a time-consuming and unstructured way by phone and email. Now, both the OpComs and the captive save time and benefit from greatly increased visibility of insurance data.

Investing in better digital tools for interacting with stakeholders will help captives move faster, find cost savings, automate routine tasks, drive efficiency, provide better data and a create better user experience (UX) on both sides.

Getting started

For captives, there’s a lot more to gain with a good IT system than improved compliance. Digital transformation will make a captive more efficient, and help them provide a lot more value to stakeholders with tried and tested digital tools.

Learn more

Join Noria and Captive Review for a webinar 8 June at 15.00 CET  “Data Analytics for Captive Insurers”. Click here to register.


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