January 13th, 2010

(Re)Insurance Innovation: Committing to the Leading Edge, Part III: Get in the Game Early

Posted at 12:00 PM ET

mckeown_christopher_bioChris McKeown, CEO of Global Analytical and Specialty Practices

Those who invest in and prioritize research and development — and introduce new tools and ideas — benefit from more than just the prestige of being first. Early movers define the standard to which others will have to adapt later. They shape the development of innovation, and thus its evolution, as it moves from a radically new idea to an accepted marketplace practice. In possessing this control, they hold the upper hand over their competitors, which become weighted with the burdens of the catch-up clamor.

To see this dynamic in action, look to the proliferation of ERM. As this holistic approach to managing risk and capital became an-oft repeated mantra, the companies early to accept it became first to develop practical solutions that advanced the concept further. The experts of Guy Carpenter were able to use their experience and understanding of other models and early casualty versions — fraught with limitations and insufficient historical data — to create better solutions. This also contributed to Guy Carpenter’s development and subsequent advancement of MetaRisk, the company’s proprietary capital modeling platform. The maturation of ERM frameworks called for increasingly robust tools, with MetaRisk providing the resources necessary to understand the implications of different capital management decisions.

The push forward continues with the next evolution in modeling, for casualty risk. Over the last several years a globally intertwined business community and the inextricable tangle of carriers’ insurance supply chains induced a call for new solutions. In response, Guy Carpenter, along with Arium, Ltd., is creating a Casualty Cat model, which tracks primary and derived risks throughout a portfolio and identifies accumulated exposures.

Companies at the edge of innovation distinguish themselves through differentiation; they demonstrate their capacity to seek and find the most advanced means of solving evolving risk management problems. They can better channel resources toward the next new thing and carry the reputation of a history of insight and success as the established incumbents when competitors rush to make up for time wasted hesitating.

Click here to read Part I: Overview >>

Click here to read Part II: The Challenge of Innovation >>

Click here to read all Guy Carpenter articles about (re)insurance innovation >>

Click here to have this series delivered directly to you by e-mail >>

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