Gen Re’s Sciolla on Innovation

This article is part of our insurance innovators interview series.

Berto Sciolla, EVP and Manager of North American Treaty Reinsurance,Gen Re

Berto Sciolla, EVP and Manager of North American Treaty Reinsurance, Gen Re

Q1: In your view, what has been the greatest innovation in the P/C insurance industry in recent years? Explain.

Sciolla (Gen Re): At or near the top of my list for notable industry innovations would be predictive analytics because of the many uses and benefits. What had its roots in property-catastrophe insurance took hold in personal auto and is now being implemented for commercial lines.

We see innovative applications in underwriting, marketing and claims. Even some smaller-scale uses can reap significant benefits. One example is identifying claims for further medical or fraud analysis, or accounts for premium audits. One of our companies is developing predictive modeling applications in the workers compensation claim area that offer great potential. There is no limit really on where this area of innovation can take us.

Q4: Describe one or more ways in which your company encourages innovation. (Feel free to describe any elements of the culture or process.)

Sciolla (Gen Re): Over the past 24 months, we’ve embarked on two initiatives to ensure innovation and good decision-making at Gen Re. First, we’ve made an increased investment in the qualitative side of decision-making at Gen Re.

As risk takers, much of our knowledge comes from data, actuarial analysis and models. Yet, that’s only half of what it takes to make a decision or to forge a new path. We also need to acknowledge our subconscious, emotional and biased selves as we seek new opportunities and to be innovators.

For instance, we verify we understand our customer’s strategy and goals, informed by a variety of perspectives, before we begin to discuss possible alternatives and to design a response or product to meet their needs. We check ourselves against “listening to respond” versus “listening to understand the other person’s perspective.”

By addressing biases in our thinking and focusing on being disciplined about thinking, we are more apt to develop both innovative and successful solutions.

See related article, “Understanding the Human Element: Three Challenges.”

Secondly, we have conducted a “cultural” inventory of our company including a snapshot of our current culture and a description of our ideal culture, both as stated by our employees. We now are working to close the gaps between the current and ideal, which will strengthen Gen Re’s long-term effectiveness as an organization, including our ability to innovate appropriately.

Q5: What is the biggest obstacle to innovation within the insurance industry? Explain. What is your company doing (or what can the industry do) to overcome this obstacle?

Sciolla (Gen Re): Legacy systems are certainly one of the biggest roadblocks for innovation in our industry—and how they hamper our ability to compete with new threats and challenges. The cost is one problem, but it’s really the speed at which we can respond with insurance solutions. We might want to take advantage of technological innovations, but our infrastructure can get in the way.

We are making great progress on our own transformation with a major resource commitment. Not all companies can make that commitment.

Q6: Do you believe the next innovation to impact the P/C insurance industry will come from inside the industry or from an external innovator? Why?

Sciolla (Gen Re): One threat I see is the disruption in our industry from new players with a completely different perspective. Take Google starting to give auto insurance quotes. They can apply unique skills and experience, and most importantly, a unique lens on our industry.

“As risk takers, much of our knowledge comes from data, actuarial analysis and models. Yet, that’s only half of what it takes to make a decision or to forge a new path. We also need to acknowledge our subconscious, emotional and biased selves as we seek new opportunities and to be innovators.”

Berto Sciolla, Gen Re

These tech and other companies are not held back by our perceptions of how the insurance business has been operating or should operate.

What will Google mean to the agency system? Many insurers have agency relationships in their thinking, but not so for companies outside our industry.

Driverless cars are yet another example, with the potential to remake the auto insurance world.

We stay closely attuned to emerging issues for many reasons, but one is for insights to what disruptions might be coming our way. The sooner we see it on the horizon, the sooner we can prepare for it and help our clients do the same.

Q7: Describe your role in leading innovation at your company.

Sciolla (Gen Re): The insurance “pie” in North America has not grown much over the past 10 years. As the marketing leader for Gen Re’s Treaty business in North America, my role is to encourage finding “new new” opportunities to provide reinsurance.

As a direct writer, we are differentiated from our competitors by sharing our underwriting and claims expertise directly with our customers’ risk decision-makers. One of our greatest successes is with customers with whom we work to launch a new product, providing the expertise and reinsurance capacity they need when they are less familiar with exposures. Then over time they assume more of the risks themselves and increase their profitable income.

A cycle is created with the customer continually working with Gen Re to identify new risks to insure, and over time they assume them on their own.

Q10: Have you ever collaborated with market competitors to move an innovation forward? If so, why did collaboration make sense in this situation?

Sciolla (Gen Re): There are so many ways that we can innovate. It’s not just about product.

We offer a cyber insurance product for primary insurers, combined with reinsurance. Cyber insurance is not all that new by now, although not all insurers or reinsurers offer it. We took a unique approach of teaming up with a leader in the cyber insurance service space: Beazley. Gen Re and Beazley combined their strengths—pricing tools, policy forms development, breach response management and claims handling—into one product offering with reinsurance. For the insurer, all of that expertise is combined and available in one-stop shopping directly from us.

As the cyber exposures and insurance needs continue to evolve, that teamwork helps ensure we respond with the best product and service solutions.

(Editor’s Note: The cyber insurance is written on the paper of Gen Re’s customer—the primary insurer. Gen Re is the reinsurer and delivers product support, while Beazley provides breach response and claim services.)

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Berto Sciolla, EVP and Manager of North American Treaty Reinsurance,Gen Re