Tower Insurance finding answers – and profits – in data

Published on the 15/12/2020 | Written by Heather Wright


Tower Insurance_Auckland Uni data project

Joins forces with University of Auckland in data partnership…

New Zealand’s Tower Insurance has joined forces with the University of Auckland to address real-world industry needs and bolster its data and digital push – a push that apparently is already paying big dividends for the Kiwi insurer.

The academia-business world collaboration, facilitated by the University’s not-for-profit Uniservices arm, will see University of Auckland students using Tower data to ‘develop solutions for technical problems, but also attempt to quantify what the solutions to such problems might imply for Tower’s operations’, says Sebastian Link, director of the Data Science Programme at the University of Auckland.

First cab off the rank will be analysis of fire trends in New Zealand residential property, with a view to providing more tailored pricing for customers, geocoding residential locations in the Pacific Island and optimising insurance survey design.

“This will lay the groundwork for the data-driven future of the insurance industry and open up opportunities for the next generation of data scientists.”

Miles Fordyce, Tower Insurance head of data and customer platforms, says that will enable Tower to understand risk in more detail and provide customers with a bespoke experience with a price and offering that suits their needs.

“Long term these pieces of work will be extended with a focus on making data available to customers, helping to increase education around risks like climate change and severe weather,” Fordyce says.

The insurer reported strong financials last month citing its investment in digital and data as driving forces in helping the company to a 23 percent increase in profit, excluding large events, while growing gross premiums by eight percent and increasing customer numbers by 11 percent.

Blair Turnbull, Tower CEO, says the digital and data strategy is ‘laying the groundwork to fundamentally transform how we deliver insurance in New Zealand and the Pacific’.

“We have a significant amount of data and we’re investing in innovations that will help customers understand risk, create safer driving habits and get customers to see insurance as a valued part of their life,” Turnbull says.

The two organisations are talking up the deal, promising big things not just for Tower, but for the wider insurance landscape – and for New Zealand’s future pool of data scientists.

Turnbull says by working together, Tower and the University of Auckland will be able to ‘make better use of data to engage in joint research activities and come up with better outcomes for New Zealanders and improve customer experiences’.

“As well as streamlining processes in areas of importance for Tower today, the collaboration will lay the groundwork for the data-driven future of the New Zealand insurance industry. It will also open up opportunities for the next generation of data scientists,” Uniservices says.

Greg Murison, Uniservices executive director for strategic growth, says Tower has accumulated ‘a trove of data’ over the years and is proactively engaged in finding ways to make the most of this resource for its customers.

“Our joint research activities will leverage data and digital resources to make the process of buying insurance easier and faster for customers.

“In the long run, the relationship between Tower staff and academics will foster the development of the next generation of data science tools in an effort to get the most out of insurance data,” says Murison.

Fordyce says insurance has a significant, but historically understated set of opportunities for digital and data science students.

“The practical application of their research and skills in solving complex business problems is something we are very excited about and hope that we can open doors towards future careers in the industry,” he says.

The data heavy insurance sector has long sought to maximise the value of that data and extract insights, with the rise of insurtech putting increased pressure on traditional insurers.

Turnbull says data can be used to do more than just help customers when they want to claim, with Tower keen to harness it to help customers avoid accidents in the first place.

On the digitisation side, Turnbull says digitisation is enabling Tower to reach customers in new ways.

“As the result of our simplified online processes, two-thirds of new business is now coming through online channels and close to half of all claims are being logged online,” he says.

The company launched a fully online sales and service portal, MyTower, less than a year ago, with more than 50,000 of Tower’s 300,000 customers now registered.

“Digital and data also allows us to reduce our operating ratios, by giving us the tools and insights we need to manage our claims expenses closely. Tower improved its loss ratio from 48 percent to 46 percent in FY20 which demonstrates our ability to grow the business while managing claims effectively and without a significant increase in our cost base.”

 

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