Everyone has the same prices? - Competitive pressure from comparison portals is forcing insurers to come up with innovative solutions for pricing and underwriting. With the Data Hub of our Accelerator alumnus Fusionbase and the Analytics Platform from SAS has become the Gothaer Insurance set the goal of automating the capture of pricing characteristics to write more business faster at attractive prices.
The initial situation
Competitive pressure from comparison portals, digitization or new market participants is steadily increasing in the insurance industry, forcing insurers to improve their pricing, risk modeling and underwriting. The basis for this is data and the ability to derive profitable insights or recommendations for action from this data. Previous methods based mainly on internal data such as claims are no longer sufficient to offer market-leading products and services. Insurers such as Gothaer Versicherung are therefore increasingly focusing on enriching their data with external data to develop new products and improve existing ones. However, working with external data is particularly costly because it is published in non-machine-readable formats from different sources with individual license terms. To make matters worse, the external data must be combined with customer data, processed and analyzed. Specifically, Gothaer Versicherung was faced with the challenge of quickly and automatically capturing rating characteristics for commercial insurance and integrating them into the existing underwriting process.
The solution
The automated capture or dark processing of commercial insurance quotes requires, among other things, master data, financial ratios, and risk class classification. Fusionbase extracts these data points for each company from public and commercial data sources and merges them. Fusionbase is a spin-off of the Technical University of Munich and specializes in making data from external sources accessible in a machine-readable form. With Fusionbase Data Hub's proprietary technology, these and over 20,000 other data points are available with just a few clicks. Via an integration, this data can be connected to SAS' analytics platform in just a few steps to perform further analyses.
Gothaer Versicherung has been using the SAS platform for some time and is now able to enrich its internal data with external data from Fusionbase. In this specific case, Gothaer Versicherung enriches its inventory data, which is already linked on the SAS platform, with master data, financial ratios and other data points from Fusionbase. Based on this data, Gothaer is able to develop an AI-powered model that automatically pre-fills a quote with the required pricing characteristics using only the policyholder's name.
The innovation
Risk modeling and testing are core elements of the insurance business in which innovations have a very high leverage and a correspondingly high level of investment. This means that a correspondingly high degree of innovation is necessary to create significant added value. In the pilot, the participants were able to show that certain features could be captured automatically (dark processing) for more than 80 % of the offers. In addition to the high degree of automation, it could be demonstrated that the data quality of risk-relevant characteristics could be improved in 11 % of the cases for existing customers and that cases of fraud could be detected at an early stage.
These results were made possible by new data points that Fusionbase extracts from public registries, directories and corporate websites using artificial intelligence. These are in turn merged with existing data using AI-based models on the SAS Analytics platform. The level of innovation is also evident in the speed with which these results were achieved. In less than 8 weeks, Gothaer Insurance was able to access, enrich and analyze its inventory data with the above results.
"The Accelerator Program of InsurLab Germany was a great benefit for us! InsurLab brought us together as Fusionbase with the right people, including Dr. Matthias Land from Gothaer, Robert Ruf and David Weik from SAS. Together, we have automated the capture of rate characteristics in commercial insurance. In our opinion, we have created a 'triple win' here!"
Kevin Goßling, Co-Founder and CEO of Fusionbase
With the AI-based Data Hub for external data from Fusionbase and the analytics platform from SAS, Gothaer is able to solve precisely this problem. In this specific case, the insurer enriches already linked policy data on the SAS platform with master data, financial ratios and other data points from Fusionbase. This solution makes it possible to process more applications faster and improve the customer experience by simplifying the application process.
The history of cooperation
The collaboration partners Dr. Matthias Land, Head of Mathematics at Gothaer Allgemeine Versicherung, Robert Ruf and David Weik from SAS, and Kevin Goßling from Fusionbase got to know each other through the InsurLab Accelerator program. As a participant in Accelerator Batch#22, Fusionbase was able to convince both SAS and Gothaer to mentor and collaborate with them. During the six-month program, various use cases were identified, validated, and then the solution described above was piloted.
The outlook
The winners of the insureNXT Innovators Award 2023, including Kevin Goßling (3rd from left), who represented the cooperation of Fusionbase, Gothaer and SAS on stage.
Together with Fusionbase and SAS, Gothaer Insurance intends to integrate the described solution into the existing underwriting process for commercial lines in the medium term. In parallel, further potential for data enrichment within Gothaer's product portfolio will be identified and validated.
In addition to the collaboration between Gothaer, SAS and Fusionbase will enter into a technology and distribution partnership to help financial service providers implement data-driven business models.
In any case, the cooperation between the three companies has been very well received in the insurance industry so far. This is also evidenced by the Award with the insureNXT Innovators Award 2023which was won by Fusionbase, Gothaer and SAS in the "Business Transformation" category.