High-quality information is the risk manager’s friend in need as it helps them to analyse potential loss more effectively
It started out as a central database that would eliminate much of the vast amount of manual work required to deal with AIG’s biggest and most far-flung clients with hundreds of different operations around the world. However, nowadays, the firm’s Bangalore-based data repository has become a treasure trove of information that enables risk to be digested, processed, modelled and managed on companies’ behalf.
Day and night, about 300 highly trained engineers and other specialists pore over data that has been accumulated over many years throughout AIG, seeking nuggets of information that will help them understand the exposures that clients may face, often unsuspectingly.
“AIG employs a full range of risk- modelling tools to test their efficacy,” explains chief executive Alex John from Bangalore. “AIG works with its partners and colleagues to explore changing risks. These are called non-modelled perils [and, for example, related to] nuclear devastation or acts of terrorism, such as a five-tonne bomb going off in Philadelphia. AIG aims to add value by trying to make insurance as risk-free as possible.”
A benefit for everyone
The results often fall straight to the bottom line. For instance, by analysing a plethora of meteorological and other data, the centre of excellence identified that several of the key suppliers of a global automotive group were vulnerable to flooding.
Should they be affected by sustained heavy rainfall that caused a river to burst its banks, the manufacturer would likely be forced to reduce production.
“At first, we thought the centre of excellence would be a benefit to us but it soon became clear it is also a benefit to our clients, particularly the ones vulnerable to supply chain exposures,” explains Sami Sayegh, who is responsible in the EMEA region for AIG’s large limits in property.
“Now, almost all of AIG’s corporate data goes to Bangalore, even for companies that we don’t insure. The data that the Bangalore team produces is powerful – it means the firm can conduct a much more thorough analysis of loss potential.”
In the painstaking task of identifying vulnerabilities in supply chain, the boffins at Bangalore are proving their worth daily. More developments are planned. “We’re working on a proprietary tool for global property,” says John. “It recognises that, although every region does its insurance business differently, this particular platform will enable underwriters to look at all these regional differences through the same lens. This is launching soon.”
That sounds like something worth waiting for.