For this Advisory Report, AAIS spoke with its President and CEO, Werner Kruck. He discussed the biggest market challenges and how to address them with data, a better approach to the “data problem,” how AAIS is supporting its Members, and his outlook on AAIS moving forward.
Biggest Challenges in the Market & Addressing Them with Data
According to Kruck, the biggest current challenges are inflation, the uncertainty of climate change, and the reinsurance market. He advocated that better data and data management are essential to address all three. “Before you can solve a problem, you’ve got to know its dimensions and quantify how big it is,” said Kruck. “You have to do that so that when you take action, you understand how you intend to impact the drivers as exhibited by the data. Then you need the data to see if you’re getting the results you want.” To tackle these issues, Kruck emphasized that ultimately, more customized data is needed.
A Better Approach to the “Data Problem”
Kruck does not believe the industry has a unified approach to aggregating data in order to understand and address some of the problems on a macro basis. “Typically, we as companies are using data to our specific ends, but not with a broader perspective of what our data can mean to assess things like climate change, or how we can save by mitigating or hardening our homes,” he explained. “So, I think the missing link in the question is, if you could effectively aggregate insurance data, would you get an insight into some of the ways that these trends are impacting us? And how as a society should we be looking to address them?” Kruck concludes that there needs to be a meaningful way to aggregate data, so it is safe for companies to use it responsibly for these wider issues.
AAIS… Stepping Up to Support Members
Foremost, AAIS has to be fundamentally current on policy forms, rates, and rules. “Inflation and changing loss characteristics are going to be reflected in the underlying rates, and companies have to be proactive,” Kruck advised. “Our rates, rules, and loss costs need to reflect that to support our companies.” On the forms side, Kruck feels pressure from an emerging issue. “We certainly are seeing a lot of evidence of the sophistication of attorneys in Florida,” he said. “Focusing on weaknesses and forms is something they've systematized and figured out how to do, and I think we're going to see a lot more of that outside of Florida.” To keep up with this, AAIS has to be on top of compliance issues and encourage its Members to move up to the latest forms.
Outlook on AAIS & the Insurance Industry
Overall, the outlook on AAIS is very positive. “We're owned by our Members and we're not-for-profit,” Kruck stated. “We exist because collectively, our Members believe that we can work together in some areas like policy, forms, rates, or rules, and make companies’ performances and the industry better.” Kruck doesn’t think AAIS’s work has to stop there. “My vision for AAIS is not only to deliver very strongly our historic mission, products and services, forms, rates and rules, but to look for areas where we can provide even more value to our Members.”
To view the full interview with Werner Kruck, please click the video above.