talk.360 with Nuno Vieira, Partner at Ernst & Young: Career in the insurance market and trends for the future of life risk underwriting

Luanna

Career in the insurance market and trends for the future of life risk underwriting

In this talk.360 our head of Product Luanna Eroles interviewed a market reference Nuno Vieira, partner of Ernst & Young (EY)!

 

Long term Director until becoming Partner at EY, Nuno has over 24 years of experience in the insurance market leading business transformation projects and, as an s.360 Underwriting Ambassador, he shared with us all about his personal trajectory – as well as debriefed some insights from a fresh market research publication developed by EY on trends for risk management and underwriting.

 

This rich chat will surely inspire more professionals to embrace innovation and learning as a life value, which is s.360 goal.

 

So, enjoy!

 

Well… Good morning everyone! We are here with an extension of our talk.360 series of Underwriting Ambassadors, with market enthusiasts, and today our special guest is Nuno Vieira. Thank you very much, Nuno, for accepting our invitation. Welcome!

 

Good morning, thank you Luanna. Well, nice to be here talking about insurance and underwriting transformation with you.

 

For everyone: Nuno is a partner at Ernest Young, responsible for the insurance area in Latin America. Wow… congratulations!

 

Thank you.

 

We had contact with some studies published by Ernest and Young on trends in life insurance management and underwriting and so we wanted to invite you here, today, to talk to us, s.360 team and our clients, in a project that brings together market experts in the area of life underwriting.

 

Perfect, thank you very much for the invitation.

 

So, let’s get started, Nuno? I wanted to hear a little bit about you, tell us a little bit of your history there with consulting until you entered the insurance market. How did Nuno’s journey begin?

 

For those who don’t know me, I’m Portuguese. I graduated in Portugal, I started working in Portugal and in my career, I started working in Consulting. By mere fate / luck I went to consult in insurance companies… and enjoyed working so much, that I focused my career on specialization in the insurance sector. In 2012, I came to Brazil for a personal and professional issue: my family decided to take a chance and come to Brazil.

 

So, coming here to Brazil with a fresh family, young children, how was this journey arriving there in Brazil?

 

I had a leader in Portugal who came to work in Brazil. I’ve been working with him for a long time. Then there was the challenge, on his part, to invite me to come to Brazil. I, enthusiastic, came to Brazil. It was a fluke, let’s say, because I liked Brazil so much that this change was natural, although the market in Portugal and in Europe and Brazil is very different. Although we speak the same language, cultural characteristics there are some differences that I had to get used to, including in the language.

 

I didn’t introduce it at first, Nuno, but actually, I live in Europe and I’m interviewing you here from Germany.

 

Oh how cool, how cool! So, you know those differences, right? So you know those differences.

 

Yes, I know. And today, how many years have you been in Brazil?

 

I am on a permanent basis since 2012. I arrived in Brazil in September 2012 with my family, so I’m almost 11 years old.

 

And today, what does Brazil mean to you?

 

I really enjoy being in Brazil. I like people a lot. I like the country a lot. Obviously, it is a country with its idiosyncrasies, but I really enjoy being here, particularly because of the people who make a difference to me and the Brazilians have a very welcoming way. I’ve always felt welcomed here in Brazil, so it’s basically my country. I have a Portuguese daughter, but she is more Brazilian than Portuguese. I have another Brazilian who was born here. Both with a São Paulo accent. So, even though my whole family, apart from my wife and daughters, live in Portugal, I now feel as Brazilian as Brazilians, so to speak.

 

That’s great. Then the heart found a home. Continuing here our journey, tell us a little bit about your work dynamics on a day-to-day basis, considering your leadership position.

 

Consulting for those who do not know, has a very own dynamic. We deal with various clients, with various subjects. I would say consultancy, particularly in the insurance industry where I have the opportunity to work has a very diverse and dynamic life. From my point of view, my day-to-day, happens a lot in 2 particular axes. Our customers and our people. So, I always have the challenge on one hand, to understand what the dynamics of our clients are. In what way they are, in what way we can help and with what capabilities we can help these clients in the most diverse aspects, be it strategy, operations, actuarial risk management, technology, in short, a panoply of things. I’m not an expert on most of them, then. I also have to worry a lot about people. That is, we have a team today of about 300 people dedicated to the insurance industry with several colleagues, and my goal is to coordinate and ensure that we have the most appropriate people and solutions to provide service to our customers. So, I would say that I don’t have one day like the other, Luanna, My day goes by a lot because of these schedules. How is it, in a way, that we ensure that we are delivering projects with quality, adding value with the client, but also in what way do we have a motivated team, a qualified team, trained to provide this service. So my day-to-day life, it goes on a lot, either coming into the office, working with our teams or having virtual meetings with clients, or going out and visiting those clients and discussing projects and opportunities. So, I would tell you that deep down, when I leave the house, and I leave happy every day, but I don’t have a day like the other.

 

So, I always run on the basis of what our customers and EY’s customers are, and everything that our people are. This is my day-to-day motto that maybe from a perspective of what Brazil was, today I have to worry / help other countries in Latin America, ranging from Mexico to Argentina. But the kind of things I do, regardless of the country, are always the same. Make sure we have the knowledge, we have the people and make sure we listen to our customers and understand what’s going on in the market.

 

Yes, it’s great. And right within that routine, what are the biggest challenges that you face or that you particularly face with your position? And home office was a challenge for you? We came out of the pandemic, we came out of a lot of changes, right? In recent times, what would you put as a day-to-day challenge?

 

Look, the main challenge is to efficiently serve customers and our people. Dealing sometimes, obviously, that we always work with people, deal with anxieties, worries, motivations. So, I would tell you that perhaps the biggest challenge is in the face of the world that is constantly changing, a world that increasingly the decision times are shorter, in which we have more and more technological advances. Here, the point, the day-to-day challenge is to ensure that we are keeping up with and leading these changes. Therefore, I would tell you that from the point of view of challenges of the insurance industry, this is the main challenge that I feel of having the ability to have the team, to promote a team that is in constant dialogue and monitoring the challenges of the insurance sector. Yes. Relatively all of these obvious changes that we’ve had in the last 3 years, we’ve had a very different way of working. We in consulting were used to leaving home and going straight to clients, to being with clients, to being in various meetings, all of a sudden, in March 2020, we were told “let’s all go home, let’s all go home.” I remember that I had gone to a meeting in Fortaleza on a Wednesday, a Tuesday or Wednesday and on Thursday I was going home not knowing very well how things were going to happen.

 

Clearly, the first 3 months for me personally, and I think all organizations, but for me personally, it was a huge challenge. It was a huge challenge. I spent 20 years of my life working in a form and suddenly I was told that this way of working was no longer valid. We had to look for other ways. At first, it was very complicated. That is, with all the demands of meetings that we had. Between internal meetings between you remember the virtual meetings we had, the whole webinars, this whole panoply of things?

 

Having to deliver projects I found myself, working much harder than I worked previously. And then those 3 months passed. I think that, in a way, me and everyone has started to adapt, it’s not the human being to have a huge capacity to adapt. We started to adapt, to do remote work… I mean, we had 2 years pretty much working, working remotely, having a personal life and a professional life that sometimes kind of blended together, but we adapted. I had to make changes to my own routine until I knew how to separate well what was the work environment from the personal environment.

 

And after those 2 years, I had to adapt to something else, which is hybrid work. I mean, we’re here talking. You’re in Germany, I’m in São Paulo, in Brazil, we’re discussing, we’re talking, we’re talking, but I’m in the office today and I’m going to have a set of face-to-face meetings in a little while and all of a sudden it’s back to virtual again. So it’s a challenge that we’re also working on.

 

So, I would tell you that clearly home office was a challenge, working in hybrid is a challenge, but I also think it’s the future. That is, we have to know how to take advantage of the best that both of these situations give us. So we have to adapt. So I think there are more advantages than disadvantages of working in a hybrid way, as long as we adapt. But I would tell you that yes, it was and is a challenge.

 

Ok…Well, and as I said at the beginning of the interview, we had contact with a very interesting study produced there by your EY team, so we would like to open this wheel to talk together about trends in the underwriting market. Come on! What methodology do you use to produce this type of study?

 

Look, here at EY we have a lot of the characteristics of Taking studies to the market, bringing knowledge, bringing insights, bringing benchmarks, bringing good practices. So, we identify in the scope of our planning, we identify a lot what are global trends, by being in constant contact with EY Global. In the sense of realizing what it is that is happening in the world. So that for us is vital.

 

Taking into account what happens in the world and working with our customers on a day-to-day basis, we identify a lot of what are trends, which is. in Latin America and what is in Brazil, because not all markets, not all countries behave equally, right?

 

So we have to understand what it is that trend is that is global, but also local issues. And then we plan to do all these studies and to add what is knowledge and capacity to create value for the market. How do we do this methodology?

 

Taking into account what global trends are, actively listening to our customers, we understand a little bit what the trends are and what is happening at the local level. Then we do a whole set of quantitative and qualitative research. What is quantitative research? In the case of the study, and speaking directly from the underwriting trends study, we decided that, even though you and I, Luanna, work in the insurance industry. We have a vision that is relatively separate, which is that we know, which is that what we see in our daily lives. We don’t have the ability to see the whole. And so, this study was born out of one thing that we saw the global trends taking into account this analysis that we saw from the global point of view, taking into account the local trends that we heard. We were living in a time of pandemic and we decided to complement all of these trends as well by listening to those who are insurance customers.

 

And understanding from the customer side… We went to interview more than 1000 people, virtually, by phone and the like. We decided to question our customers. No, sorry: insurance customers. Saying, what has changed for you? What has changed for you in taking out insurance? What do you think is important about this pandemic issue? So, with the intention of global trends, local trends, to listen to our customers, to observe what is happening and to listen to the insurance customers, we decided and saw that there was a set of themes regarding life insurance.

 

We also saw for others, more specifically in life insurance, we saw that in the perspective there was a change in the customer profile, the purchase profile, the purchase of life insurance. So, I would tell you that specifically to that, in relation to this study, was the way we used it, but that is the same in all the studies that we do. I can anticipate that soon we are launching a study also for the insurance market. of what are the trends and insights of the CEOs of insurance companies in some Latin American countries for the coming years. And that will, which we believe will happen in the market. So it’s always understanding the global dynamics, understanding the local dynamics, interviewing, consolidating, reflecting and publishing. I would tell you that’s how we traditionally do it at EY.

 

Well, very good to hear from this upcoming study. Then you let us know that I’ll want to read it!

 

I will let you know, no doubt!

 

Getting into data here, we know, we were talking a little bit about the pandemic, COVID. This has greatly boosted a demand for the supply of life insurance. This has accelerated some trends in the way insurers market offers, underwrite risks. That impacted the market in a few ways, right? So before we get to the tip, what are the trends, what are the industry growth numbers that you’ve collected. in this latest study? Can you share a bit here?

 

 

Giving a little context, what have we identified in the pandemic? When we interviewed life insurance customers, a lot of people started talking, there was a perspective. In Brazil it was the same as the world. EY surveyed 7 or 8 countries, between developed and emerging countries, about consumer behavior. And what we identified, perhaps a change that was very relevant in Brazil, is that the client began to pay much more attention to having additional protection in case something happens in his life. The pandemic has accelerated that. We all know families or ourselves have experienced the loss of loved ones. And that raised a lot of the question of opportunity. When we went to see this in the numbers, what we saw in particular were spectacular growth from the point of view of consumption. Whether in Group Life, Individual Life, or Serious Diseases, grew absurdly in the pandemic period in Brazil. All grew above 2 digits. That is, the Group Life grew about 12%, the Individual Life more than 25%. It’s grown 36% in the last year. Serious Illnesses grew by more than 2 digits, between 15 and 20%.

 

We saw that there was a clear correspondence between what the consumer was telling us and what was happening from a demand standpoint in the insurance industry. This increase in demand, Luanna, brings us a set of things that the insurance industry has to do. You have to prepare for this surge in demand and issues like adverse selection, but clearly there has been an explosion in growth of life insurance in Brazil.

 

Yes. Well, with this opportunity also many insurers see the need to find there the maturity of underwriting for digital channels and be able to take advantage of this wave. Although they also have the pros and cons, but presents as an opportunity in the market.
I know that in your study as well, EY put together a framework to talk about underwriting maturity, which ranks a little bit there the levels that insurers are at. Can you explain a little bit of the framework you put together for us?

 

 

What we saw were 2 things: there was an increase in the explosion of the purchase of life insurance in Brazil and there was also a different form of hiring. That is, although today life insurance is sold in the banking  channel, broker channel, affinities and other channels, what we saw is that, regardless of the channel, there were different forms of contracting by customers. We weren’t on a day-to-day basis like we were 3 or 4 years ago, so there was a whole form of hiring. And then, taking into account this form of contracting and the dynamics of hiring, the underwriting, the ability for us to select clients, they change. We have to have 2 essential things: first, a much more agile process, that is, with the way that people who are hiring insurance differently, increasingly, having the digital question, the time and the answer, it is fundamental and you can not do it very manually as we had there in the past. So we have to have more and more automation and more responsiveness. On the other hand, given the increased demand, we have to have sophistication in the way we underwrite. That is, the ability to better select the risk, understand the impacts of certain risk factors.

 

We have to put that at a price. Because in the insurance industry you now sell a policy to pay for an event that is uncertain in the future. So the better the underwriting capacity the better, obviously, the results of the insurance companies. So, we defined a framework of underwriting capacity, of underwriting maturity, divided by these 2 items: automation and sophistication of the underwriting process, And we defined there 4 levels: there is a level, which I would say is more basic, very much still a rudimentary phase in the way we underwrite, where our process is less agile and if it fosters more routine work on the part of underwriters, that they are the ones in the fund who select the risk, and that in the insurers there is a limited capacity, isn’t there? We don’t have, unfortunately we don’t have the ability to have 100, 200, 300 underwriters. We have some underwriters by insurers. So we couldn’t be burdening these people with them doing routine activities on the one hand and on the other hand, giving them the ability to do more sophisticated analyses. So, the basics that we saw is that the underwriter’s time was very dedicated to everything that is routine activities, versus another much more advanced level, where we saw that some companies have a very agile, very fast way of hiring, taking advantage of the underwriters’ ability to dedicate themselves to the business and effectively risk analysis.

 

So, we saw that between that level that is basic, there are levels that we would say in the stage of development at the competitive level. But there is here what leadership is, at heart. And what is underwriting leadership? It is us, our underwriter being focused on essential activities. That is, not wasting time on routine activities, and solving day-to-day problems, but rather being focused on really how is the elaboration and sophistication of my underwriting. It’s me using systems and algorithms that help me select the risk.

 

So, what we think is that here there is still a space to do, of more and more drinking of intelligence, automation, to support this limited capacity that we today have of underwriters and that we will continue to have, right? For all companies you have to have maximum efficiency. And then, we built this framework that positions companies between: a basic stage; a stage 2, which would be developing; a level 3, which is competitive; And that level 4, which is leadership, which is the maximum efficiency where I’m very efficient underwriting but, I’m also very smart underwriting risk to the insurer. And we’re talking about the heart of the insurance business, which is the ability that I have to select risks.

 

So we positioned and made that degree of maturity. We have here a framework that allows us to position insurers in this framework. In the quadrants.

 

Yes, thanks for the explanation. Well, as a tip for today’s insurers who want to implement these new underwriting acceleration processes, what are the general characteristics of these acceleration programs that you have been following in your studies abroad?

 

 

We have seen a lot particularly abroad, not saying that there is something developed in Brazil and that there is, but we see a lot of this movement more abroad, Luana. First: the topic of risk assessment, what we call online/digital and real-time. That is, I get a certain risk, a certain person who has a set of risks to underwrite and I have a very quick ability, at the moment, to face a set of questions, give a quote to that person and close a deal, in which I already have the ability to study the risk. So that’s an initial capability that we see very, very relevant. A second is that we know that in the risks related to life and even to understand if there are pre-existences. I’m sorry if I’m going to get into some more technical topics, I know the point of the conversation is not that but an essential point is that we know that in life insurance sometimes we are required to do detailed medical examinations. And today, maybe if insurers have a huge capacity for risk analysis and intelligence to measure, maybe I don’t have the need to do detailed medical examinations. I only do it in certain cases where I can have a standard and analyze that standard, which is an efficiency gain for the insurers themselves.

 

Then, eventually, I was able to give a third point where we see this transformation. It’s this: look, I can give a quote, I can protect my client, but for some topics that today I could not identify, I can give that, which is I give, basically, a predetermined time for a certain coverage. What do I mean? Look, for x time I don’t cover you this risk, but from that moment on, I’ll cover you the risk, so I can give you an answer. I can at least partially protect my insured, but then ahead, with time going on, I can give all the coverages. And how do I manage to give these coverages? I can and I’m more efficient. I can probably give lower coverage values, I can be more flexible by giving these coverage issues and I eventually also have the ability to narrow down some risks that I think are very relevant risks. So in a way, it gives me more efficiency and the ability to give the best price, the ability to extend coverage to people who need it. So, I would say what we see in this leadership position, is that it gives the insurer an ability to select better, faster, with flexibility in coverage. And by being efficient and selecting better, I can be more competitive and have a better price for my policyholders.

 

Very good. Well, looking at the general characteristics, you know, of the programs out there, if we were to transfer to a practical issue here, to the insurance company, right? In the national market, talking there a little of product. Which investments, then, are trending? Where perhaps we could say that an insurer should invest more today, within the new underwriting tools, the new possibilities that we have… or from a 3-year-old perspective, I think you talk about the study, right? What is the level of investment planned there? What are the categories that have been receiving the most investment and will continue to receive investment from insurers?

 

The biggest investment in the industry will be in e-underwriting with automated analysis tools.

 

 

What we see, Luanna, is that whatever is related to me underwriting faster and better is what will get the most investment. And what does that mean? There are several themes here. Perhaps, the first theme is how we can underwrite in an increasingly automated and intelligent way. That is, anything that is technologies that allow us to make an accelerated uw and with less risk will win investments. So, tools that enable this are the first investment focus that we saw in insurance companies. The second type of investments, are all the data and, basically, all the processes that this tool allows us to be used. What do I mean by that? We have a tool, but we have to arm that tool with data. Basically, we can work that this tool has the possibility to work with very advanced data and also that allows a digitalization.

 

That is, I enter the data in a digital way and I do not have to be here with paper, spending time of the insurers, but through almost a self-service to the customer or the broker, in a very agile way, be filling out the data set. And I have an ability to generate a response right there. So, everything that is digital, everything that is data-related… And we know that, obviously, an insurer records and guarantees, in the background, the accuracy of the information based on the records, everything that has data, everything that has records and history of claims, will be the focus of investment.

 

And finally, issues of accelerated underwriting, right? At the bottom of my process, as I said, and some themes that are very much in trend and may not appear for now as the main focus, but it is all those mechanisms that we are talking about that revolve around what is called wellness. Let’s say, that is, what are basically devices or what are supports to ensure that I am having more data, and that guarantees me a prevention in accidents. For example, the smartwatches that ensure that they measure my pulse, that see that I am doing gym and the like and that give in the background … There is a very strong correlation between what is the practice of healthy habits with what is the life of people, is not it? So, all this we see later a large investment in these points. But, what I would tell you is fundamental is this: I need to have a tool that gives me the possibility to guarantee real time a underwriting with intelligence.

 

This is the essential focus that we saw within investment. And a second theme, which linked to this solution, to this technology, this tool, is the ability to feed with data, with data accuracy, with records and with digital capabilities. Because we are seeing that increasingly, self-service and digitalization are essential factors of competitiveness.

 

Yes, we call this here at Samplemed products with a data-driven philosophy. Because many people or the insurers make their own products, but sometimes if it is a product that does not have, does not keep the data interpretable, this can bar a little bit the use … There when we go to talk about Big Data and Predictive Models it is important to have this sensitivity to be able to have the vision also later, when choosing the tools.

 

Absolutely! I think, the question of choice is that everyone is going to have to have a tool, right? It seems obvious to me. Here, the main thing is: how do I have a tool already prepared to receive the data? That is an essential first point. How come I have a tool. You have to have an ability to analyze pathologies, medical records… I have to have a tool prepared for all these situations. If I don’t, the tool serves me no good. If anything, it will speed up the process a little bit. But it’s the name of the intelligence.

 

So, I fully agree with you, Luanna, on the characteristics that we need to have in a solution that allows us to integrate the data very well, but more than integrating the data, it is within the tool itself that I have the ability to deal with one, with an intelligence. And when we’re talking about the issue of life insurance, maybe underwriters know the subject well. We have a variety, we have thousands of pathologies that influence the probability of death of a particular insured. So, this has to be in the tool for us to know how to calculate and know how to decide what it is that we want, if we are going to ask for a medical examination or not, if we give a quote right away. If we, if a certain client is within the risk profile, or if we choose certain coverages and others will not do. If the tool does not have within it all this medical record of little use to us the tool. It sounds simple but it’s very complex.

 

Yes, it’s pretty complex. I also participate in the day to day of some projects… It’s pretty complex.

 

You, excuse the publicity, I think you can do it in a way, in a simple way, but what’s inside is pretty complex.

 

Yes, I was doing a review… I also work together on one of the things I didn’t say, right? In a team that is reviewing the taxonomy of life risks we have just arrived, it is already reaching 9000+ automatable rules. We have more than 2000 different pathologies that the system detects. And to catch up on all that, and treat data, and make the taxonomic list, multiple layers…

 

yes, it’s very complex, it’s a complexity, it’s a huge complexity, and all this to get to the end, in that thing that’s very simple: a client with certain characteristics came in and I’m going to generate a risk score for that client. Either I accept this client right away or I decide to do a set of actions and a set of proposals. This, in capacity of seconds. In having that decision, we’re talking in seconds. It seems easy when it comes to this data, but you have to have a calculation engine, a set of automatable rules to come out an answer in seconds that has an enormous complexity, that requires talking to doctors, that requires having all this knowledge and all this history, either through you, or by way of complementing with the history of the insurers. But, I would tell you one thing that seems so simple in reality. It has many thousands, many thousands of hours invested. Very, very great power to set these rules, a lot of data complement. But if there’s one thing every time we observe, it’s basically that it is, they’re all issues with medicine and based on evidence, based on the data, isn’t it? Which is the complement of what is a technical perspective, whether of a underwriter, or of forms of artificial intelligence, or of the question of data and medical knowledge that work together. So I would say it’s man and machine working together to be faster.

 

Well, then following the trends and also your suggestions, you have set up a cycle or a model of how you suggest that it is operationalization there of this appropriation of trends, How do you suggest that an insurer puts into practice a cycle of constant improvement?

 

Perfect, Luanna.

 

 

Look, what we observe is that it is a common cycle and that it has a feedback loop and that it will always be feeding back. What do we need? We need to first do what is the design of the experience. To put ourselves, more than doing it internally, to put ourselves on the side of our customers and our distributors, whatever they may be. That is, we need to make this drawing of the experience. We need to have an idea of the data that is needed to design this experience and to design this whole underwriting process, and then we need to have that in a solution that gives us all the intelligence and methodology from a process standpoint, so having that solution and having that tool, then there’s a constant feedback loop. We have the tool, the tool allows us to be fed back, with everything that is increasingly sophisticated data. Here it has an impact on financial models, on actuarial models. So there’s always this feedback loop between tool and data. And then, implement. Obviously, we have these tools and they have to be implemented in the underwriting process and in the tools that today insurers have for policy issuance in the fund to record everything that is the claim. So we take that tool, integrate it into the insurers’ system, and then it’s the innovation feedback. That is, always improving, always ensuring continuous improvement, always customer experience feedback, data, tools and continuous improvement. That’s what we see. In the specific case of Brazil, what do we imagine? More and more work on the design of the experience. This seems fundamental to us and to have a solution and a tool that allows us to imbibe this experience and this process at the service of our clients and our brokers and our distributors. That’s what we see.

 

Yes. Well, thank you so much for sharing with us then of your view of trends. I think it’s very inspiring and also gives us a little more certainty that we’re on the right track. So it was good to hear the conversation today. Surely I want to invite you again, when the next study you mentioned has published, okay? And well, I wanted to thank you, Nuno, for being here with us today, thank you for the words there, for the wisdom, Thank you there for the EY team also represented in the study, and we keep in touch.

 

Thank you very much, Luanna. It was a pleasure to be here talking about something I am passionate about and also to thank Samplemed. And, from what I see as well, congratulations to Samplemed for the work it is doing in all things underwriting transformation. I have seen your tool, I was very pleased, we did an event together here at EY, because I clearly believe that you have a differentiating tool, a differentiating solution in the underwriting world for the Brazilian market and for other markets.

 

So, I thank you very much and I thank the Samplemed team.

 

yes, thank you too, okay? Thank you very much and let’s talk, okay?

 

Let’s face it, it was a pleasure.

Good morning and good meetings!

Thanks, it was a pleasure, bye, bye!