Joan Zerkovich

SVP, Operations, AAIS

Supernova Award Category: 

Data-Driven Digital Networks (DDNs) and Business Models

The Organization: 

AAIS serves the property casualty insurance industry providing ‘best in class’ insurance forms, rules and loss costs. AAIS is the only national not-for-profit advisory organization governed by its member insurance companies. For decades, AAIS has been a licensed statistical agent in 51 jurisdictions for all P&C lines, collecting data that helps Members meet regulatory statistical reporting responsibilities, serving as an intermediary between carriers and insurance regulators. Transaction data also supports loss cost development and ratemaking activities. After 80 years, AAIS remains committed to evolving with changes in the insurance industry and delivering true value to Members, regulators, and the industry as a whole.

 

The Problem: 

Generally, the current process of regulatory reporting for insurance agencies presents many challenges: 

  1. No immediate value to carriers in compliance process
  2. Frictions and high cost to share data
  3. Costly time-consuming manual processes for carriers to produce data for reports in response to regulator ask
  4. Carriers do not trust reporting agencies or regulators to protect their data. Therefore, they only share the strictest minimum required datasets with AAIS and regulators.
  5. Regulators can not be assured that the data they are receiving is error-free and hasn’t be tampered with.
  6. Regulators, because they don’t have access to enough data, request adhoc reports to their market participants. AAIS, because it doesn’t have access to enough data, can’t provide higher-value to regulators or carriers (e.g., competitive analysis).
The Solution: 

The opportunity to improve this process was huge. IBM worked with AAIS to create a process to automate the consent to & sharing of insurance data. This soultion is called "openIDL" (Open Insurance Data Link). Some of its benefits inclulde:

  1. Data Ownership: Carriers do not give away their data but instead provide consent to AAIS and regulators to access their data for specific purposes only. Each entity still owns its own data.
  2. Real Time Compliance: Regulators get answers faster. Improved cost and time spent reporting for carriers (ease and speed of producing reports). Transactional data reported in near real time (instead of batch) with little involvement from carrier (automation).
  3. Trust: Parties are accountable for data quality and data usage. Regulators have higher confidence level in data they receive. Because they now have access to more data, fewer adhoc report asks are made to market participants.
The Results: 

openIDL (open Insurance Data Link) is an open blockchain network that streamlines regulatory reporting and provides new insights for insurers, while enhancing timeliness, accuracy, and value for regulators. openIDL is the first open blockchain platform that enables the efficient, secure, and permissioned-based collection and sharing of statistical data.

This solution is unique in that it involves the sharing of data through multiple types of nodes. The current architecture allows data to be held on either a single-tenant (multi-cloud) node (solely owned & operated by an insurance carrier) or shared on a multi-tenant node (owned & operated by AAIS). The purpose of the multi-tenant node is to allow smaller carriers to easily share data without the financial or technological burden. 

See the below press release for more information: https://aaisonline.com/aais-collaborates-with-ibm-to-transform-insurance...

Metrics: 
  1. Decreased cycle time, allowing carriers to spend less on reporting and audits.

    • Semi-automated sharing of transactional data

    • Semi-automated report creation

    • $300k yearly cost savings per carrier for market conduct exams (estimate based on 25% cost reduction)

    • Audits become a “non-event”

  2. Access to new rate analytics and insights, allowing carriers to improve risk management, underwriting, and pricing.

    • Private permissioned sharing of 1X and 2X data

  3. Blockchain allows for the faster and more frequent introduction of new insurance products in market.

    • Regulators have real time access to trusted, more detailed, and up-to-date data

    • Increased confidence in data allows for increased confidence in new products

The Technology: 

Hyperledger Fabric blockchain technolgy: A shared ledger technology that allows participants in a business network to transact assets where everyone has control, but no one is in-control.  It provides a single point of truth.

    Disruptive Factor: 

    This solution is unique in that it involves the sharing of data through multiple types of nodes. The current architecture allows data to be held on either a single-tenant (multi-cloud) node (solely owned & operated by an insurance carrier) or shared on a multi-tenant node (owned & operated by AAIS). The purpose of the multi-tenant node is to allow smaller carriers to easily share data without the financial or technological burden. 

    See the below press release for more information: https://aaisonline.com/aais-collaborates-with-ibm-to-transform-insurance...

    Shining Moment: 

    This solution is multi-cloud, in that companies who use IBM Cloud, Amazon Web Services, Microsoft Azure, etc. can participate in this blockchain network. Data will flow to mulltiple nodes regardless of the underlying cloud technology.

    About Your Organization

    Since its inception in 1936, AAIS has built a reputation for product innovation, quality advisory solutions, and top-shelf service. We are proud of our longstanding commitment to our Members…and to the insurance industry.