Insurance and Reinsurance

Measuring Risk Exposure Using Probabilistic Analytics

From premium pricing to capital reserves allocation, Lumivero solutions help actuaries, underwriters, and other decision makers balance risk.

Whether you work at Swiss Re, a regional brokerage, a public agency, or self-insure through a captive insurer, anyone in the insurance and reinsurance sector knows that they face risks that were unheard of until recently. As an industry operating in ever-changing regulatory environments and volatile geopolitical economies, insurance bodies are exposed to a wide range of constantly-changing uncertainties that can negatively impact bottom lines and shareholder value.

With Lumivero’s software solutions, you can master your insurance pricing models and protect your firm by anticipating risks.

Drive Critical Decisions in Insurance and Reinsurance

The insurance industry is all about protecting against risk, but the challenge to improve risk assessment methods is ever-present. Insurers can make better decisions with clearer, more fact-based risk simulations with Lumivero analysis software tools. Make better decisions about pricing and structuring policies, maintaining capital reserves, working with third parties to write business, and assessing potential outcomes from various risk scenarios. Understanding customer perspectives is also crucial.

Anticipate External Drivers

Climate change is a major worry for insurers at all levels, with each year warmer and more volatile than the last. Coupled with a trend toward urbanization of coastal areas, the risks to property and human life will only increase. Cyber risk is and will continue to be a significant challenge for which the industry lacks historical data. This makes pricing cyber risk policies particularly difficult. Technological changes present another source of uncertainty, with private innovation proceeding at a pace that governments can’t match. This introduces gray areas for behavior that make it challenging to assign liability. With Lumivero's solutions, insurers can run simulations of different scenarios to determine the likely outcomes of different decisions, so they can choose the level of reinsurance most likely to produce a positive outcome.
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Pricing of Policies

Insurers must assess the risks posed by customers to file claims, and they need the most precise information possible to make that assessment. Lumivero software solutions use quantitative data from existing case studies to run simulations so insurers can forecast likely outcomes and price policies to more accurately reflect risk as measured by real information. Balance acceptable premiums with the client’s financial ability and appetite to retain risk, and against the insurer’s needs for appropriate reserves and profitability.
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Optimal Insurance Strategy

Determine optimal strategies for clients, including types and levels of coverages and appropriate deductible levels. Assess whether, when, and to what extent to use reinsurance for larger risk categories or industries. Lumivero tools allow you to automatically transcribe interviews with consumers being asked feedback questions and runs precise analyses to heighten the credibility of qualitative research. Our tools also take the guesswork out of planning by assessing risk and forecasting alternative options, giving insurers a clear picture of what consumers think and how to respond to customer and industry needs.
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Capital Reserves

Probabilistically forecast future insurance claims and losses in order to determine optimal reserves levels by using Monte Carlo simulation in @RISK to show all possible scenarios. Plus, with the ability to perform stress testing on high-impact, low-probability events, you can have all the information to make the best decision possible.
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Captive Insurance

Understand the probabilities of incurring losses and the operational risks of self-insuring with risk analysis software that takes uncertain variables into consideration. Additionally, our tools help you assess the risk of allowing a third party to write business on its license in “captive cell” scenarios.
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Everything You Need to Know 
to Elevate Your Research

How does Lumivero help those in insurance and reinsurance create impact with their data?

Whether you’re looking to anticipate external drivers, price policies or identify the most optimal strategy for clients + coverage Lumiver tools are here to help you. By utilizing quantitative data in risk analysis and running Monte Carlo simulations or utilizing tools to speed up transcription services we make it easy to develop a clear picture of the potential risks and client needs needed to make informed decisions.

How is insurance risk analysis beneficial?

Not only does risk analysis aid in protecting against risk, but it helps in improving future risk assessment. WIth fact-based risk simulations powered by Lumivero software, you can make more informed decisions around pricing and policies.

How does Lumivero help calculate currency volatility?

Lumivero provides a number of integrated and standalone tools to aid in risk analysis and decision-making. You can use them to mitigate exposure to commodity and currency volatility through an optimized options and futures strategy that accounts for uncertainty.

@RISK and DecisionTools Suite for Insurance & Reinsurance

A majority of leading companies and agencies in the insurance and reinsurance sector rely on @RISK and DecisionTools Suite software solutions to meet these challenges head-on, all from the familiar spreadsheet environment. @RISK and the DecisionTools Suite bring robust analytics such as Monte Carlo simulation, optimization, decision trees, sensitivity analysis, and predictive data analysis to Microsoft Excel. This enables users of all levels to contribute to better decision-making – with or without data, and with or without a statistics background.

Featured Case Studies

Scottsdale Insurance Company Utilizes @RISK to Choose Between Competing Opportunities

Scottsdale Insurance Company used Lumivero’s @RISK to portray how the insurer would decide which commercial property which would have a higher return on capital.

Deloitte Uses @RISK to Advise Clients on Risk-Heavy Insurance Partnerships

Global consultancy Deloitte uses @RISK to help insurers determine the risks that they may be exposed to when considering cell captive insurance policies.

@RISK Sizes Up a Stop-Loss Opportunity in Medical Reinsurance

@RISK is used to propose a method for evaluating reinsurance underwriting opportunities and mitigating the risks that accompany them.
View More Case Studies
“Using @RISK allows us to choose between competing opportunities. I find the graphical outputs to be the most useful feature. Being able to compose a picture showing the range of outcomes is critical to analyzing our complex models and is extremely useful in presenting to senior executives, who do not have financial backgrounds.”
Allan Smith
Financial Business Advisor, Scottsdale Insurance
“There’s no way the human brain can see the relationships among all these variables, all of which are probabilistic. That’s why Monte Carlo simulation is so necessary for this work... Lumivero’s products have really enhanced these optimizing methods for me, and helped me create a much more sophisticated product.”
Robert Danielsen
CEO, Cynametrix
"@RISK includes a very useful feature called the Compound function that combines the twin uncertainties of likelihood of loss and severity of loss in a single calculation. Without @RISK we would essentially have to make use of tens of thousands of rows to run our model. @RISK gives us access to many distributions that can’t be found in Excel, and also allows us to fit distributions to previous loss data easily."
Liran Blasbalg
Actuarial Analyst, Deloitte South Africa

Balance Risk

From premium pricing to capital reserves allocation, Lumivero solutions help actuaries, underwriters and other decision-makers balance risk with the clearest understanding possible of facts and potential outcomes.

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