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A Candid Conversation with Paul Mang

Paul Mang is the general manager, analytics and data services, with Guidewire Software, Inc., one of the leading software companies serving the property and casualty business in the U.S. and worldwide. In this newly created position, Mang is responsible for helping Guidewire customers innovate and leverage the growing area of data analytics. Headquartered in Foster San Mateo, Calif., Guidewire serves a community of 350+ insurers in 40 countries.

Describe the path that led you to Guidewire.

Early on in my career, I spent some time in what I thought was going to be a short stint in consulting. That short stint ended up being 14 years at McKinsey & Co., where I led part of the insurance practice in North America and was exposed to all aspects of risk management, in both the property and casualty and life sectors.

A few years ago, I had an opportunity to be the global CEO of analytics at Aon; but recently an interesting opportunity arose at Guidewire. I joined Guidewire as the GM of a new business unit focused on analytics and data last year. 

What is the focus of your current role?

The focus of my current role is to take the new capabilities we have from the companies that recently came into the Guidewire fold, combine them with the formidable existing capabilities around data and analytics, and create a set of solutions that our insurance customers can use to make the most of the data and technology they have. One theme that I try to reinforce with our group is that we can help our customers make better decisions, whether it's around pricing or operations. We're in the better decision business.

What excites you most about working with data and analytics?

People make decisions with the heuristics that have inherent biases, and data and analytics help us overcome such challenges. Having the right data and analyzing it efficiently helps us make better decisions that impact customers. I believe data and analytics help our industry help insureds who are counting on us every day.

What do you think is the biggest data-related challenge for insurers today?

Enterprises are having trouble stitching their own data together, given the sheer volume they have--  this is even before taking external data, the Internet of Things, for example, into consideration. While we can now capture data better due to increased processing power and storage capacity, insurers can feel like they are swimming in data that cannot be easily leveraged to help their business. The biggest challenge for executives today is to make sense of the increasing volume of data, internal and external, to better serve their customers.

What can insurers do to address this challenge?

One thing insurers can do is to think about data itself as an asset. Carriers manage reasonably well their financial capital and are increasingly sophisticated in how they think about human capital--talent. But is there that type of attention to their data assets? Data are a different type of asset, and increasingly more valuable to all enterprises. Without an active data-as-an-asset focus, insurers won't fully be able to serve the needs of their customers today or their evolving needs in the future. 

What has changed in the data/analytics world over the last five to 10 years? And what should companies be doing to address these changes?

There's movement toward data and analytics being used for innovation. This can involve an open architecture approach--a mindset where carriers leverage data and analytics tools that are both internal and coming from outside the organization. The increasing intensity of partnering with data and analytics solution providers is a significant trend in this space. Insurers need a mindset that not everything has to be done internally. An ecosystem model for innovation is where this sector is heading. 

What do the next five years look like in the property and casualty insurance industry in regard to data and analytics?

We’ll be much more comfortable with different sets of data, particularly non-traditional data and behavioral data, that are enabled by the Internet of Things, telematics, and other sources.

We’ll also have more solutions to address the intangible assets that customers have on their balance sheets. These intangible assets are approximately 80% of the S&P 500 balance sheet, and over the next five years we as an industry will improve by having more products to insure intangible assets. One example is cyber insurance.

Lastly, the P&C insurance industry will create a series of products to address changes in how we are organized as a society. The clearest example is this shift from W2 employees to 1099. The industry has solutions for the sharing economy now, but these circumstances will become more common and evolve, creating a need for new solutions. The nature of work and technology-intensive business models are  changing the world around us, and the P&C insurance industry will keep up with new solutions to manage risk. 

Your team is doing some interesting work. What can you tell us about their latest projects? 

Guidewire Cyence Risk Analytics provides an analytical foundation to reinforce the fledgling but critical cyber insurance marketplace. And we see the need to actively improve the platform in response to the evolving cyber landscape. With the recent release of “Model 4”-- the fourth generation of model updates for Cyence for cyber risk management--the solution not only incorporates massive claim data and new data sources to improve model stability and accuracy, but also expands the parameters of risk evaluation with the addition of accumulation event modeling for ransomware. The ransomware event modeling is a significant enhancement as it explains the cyber liability and risk exposures associated with ransomware. 

Furthermore, we are applying the technology that powers our cyber solution--the data listening engine that collects and curates external data at petabyte scale--to the small business segment. By leveraging this data, we can help our customers identify unapparent risk factors, augment and even automate underwriting in the small business segment. So far, the small business solutions are available for workers’ compensation and cyber, and we are working to expand into other lines. 

Are insurers embracing the value of data and analytics from the top down and making the necessary changes? Have we reached a tipping point? 

Insurers are embracing the value of data and analytics. In fact, at the various P&C conferences, you often hear references to data as “the new oil.” It is now almost taken for granted that data are of value and foundational to business. 

I think insurers are recognizing this, but the big challenge is converting data into value. There's still more work to be done as an industry around where to go next, beyond recognizing that data and analytics are valuable. Our customers can do things faster now, but we know we'll get to a point where data and analytics get to this value realization--when we have new products, the cost structure is more efficient, and there will be new ways to address emerging client needs. We are very much in the early stages on this journey. 

Do you believe data and analytics are helping create a culture of innovation with insurers today?

The need for insurers to innovate and respond to changing customer needs is changing the way they think about data and analytics. I think it's the culture of innovation that's really a starting point, and then the data and analytics support reinforce it.

What advice do you have for today's insurance leaders?

The No. 1 priority should be to always efficiently fulfill your obligations to your current customers. However, as insurance leaders, we also need to think about the future and the evolving needs of customers given the technological and societal changes we are experiencing. We all have to think about those future needs and bring the formidable capabilities of our industry to help address emerging risk needs in society.

 


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