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I.VW | Insights

Academic webinars for insurance companies

The I.VW Insight Modules for executives aim at translating fundamental research knowledge into practical impact for the management of insurance companies. Firms can pick and choose from the full range of I.VW research topics to develop customized executive programs. Each of the Insight Modules is rooted in rigorous insurance research projects that the faculty stands for in academia and practice.

Insight Modules for Executives

We create customized single- or multiple-day programs. Modules can be combined and booked for virtual or physical execution to assemble company-specific programs. The generic structure of each I.VW Insight Module is as follows:

  • 60-minute presentation: detailed exposition of a recent academic paper
  • 10-minute break
  • 50-minute breakout session on practical implications of academic insights
  • Format: physical or virtual
  • Language: English or German

Create a customized I.VW Insights program by selecting the best-fitting modules from the exposition below

1. The Relationship between Net Promoter Score NPS and Insurer’s Profitability

Contrary to theory-based arguments, but in line with prior results from other industries, we find strong evidence that customer satisfaction (CS) measured by the NPS positively affects insurer’s profitability. This positive effect is considerably large and remains, even when looking only at customers with claims in the past. Hence, a strong indication can be derived that CS is a relevant driver for profitability. Therefore, insurers are right when they consider CS as a major goal of their organization and make management’s compensation depend on their CS.

2. Willingness To Pay (WTP) and Life Insurance Pricing

In most industries, companies aim to increase producer rents by using the customer’s WTP. In contrast, insurance companies still base their pricing directly on the product costs. We investigate the pricing behaviour in different segments of the life insurance market by comparing market prices, actuarial fair pricing and the willingness to pay for various customer groups and product categories on a large data set. Based on this information, we discuss new techniques like dynamic pricing and innovative risk classification and analyse their market potential.

3. Consumers’ Perceptions and Purchasing Behavior of Sustainable Insurance Products

We show on an empirical basis for the insurance sector that the willingness to pay must be awakened through awareness or educational measures and is than comparably high as it is in other industries. Sustainable attributes substan-tially increase consumer’s purchase intention for insurance products, even at high premium levels. This effect can be explained by increased perceptions of product quality and brand equity. Additionally, pricing in line with average market prices can have negative consequences on the consumer’s purchasing intention.

4. Digital Monitoring and Risk Attitude towards On-Demand Insurance

As technology advances, on-demand insurance products are developed to cover risk in a short-term period. A reduced-period insurance contract grants policyholders the freedom to choose, in a very manner, when to be insured. Such contracts change the way the relevant risk is perceived. We run an experiment and show that individuals can become extremely risk-averse when short-term insurance is offered. Compared to traditional insurance contracts, the policyholder’s willingness to pay for such treaties is very high.

1. Insurance 2030: Quo Vadis?

This module highlights major trends and challenges the insurance industry faces with respect to the next 7 years. Among these are the interest rate environment, the changing customer behavior, and the role of insurance in a digital world. The list of trends and topics can be composed together with the client. The session is interactive: The relevance of the trends and the position of the own company with respect to the trends is analyzed in a live survey among participants and compared with other companies. The module is therefore especially suitable for strategic discussions at senior management and board level.

2. The Future of our Social Security System

The current social security system is a response to the socio-economic conditions of rapidly growing industrial societies. These conditions no longer exist in the 21st century. The digitalization of the economy and society is leading to global competition, unstable employment histories and further changes in the labor market and social value system. This module analyzes the consequences of this for the insurance sector in Switzerland and outlines possible adjustment for the public and private system. Five hypotheses are discussed in an interactive live survey with respect to relevance and positioning of the own company.

3. The Digital Insurance Landscape in 2030

Technology changes the insurance industry in all areas of value creation (processes, customer interaction, products / risks). In this module we discuss five major developments in insurance markets with respect to technology and digitalization with the time horizon 2030. Among these are artificial intelligence, autonomous driving, big data, blockchain, and cyber risks. Five hypotheses are discussed in an interactive survey with respect to relevance and positioning of the own company. The list of topics can be composed together with the client.

4. Cyber Risk: Risk Management and Insurability

Using data on cyber losses we consider the potential market for cyber insurance and show a market failure when portfolios of cyber risk are constructed. This can be explained by the distinct properties of cyber risk, namely heavy tails, strong (tail) dependencies, high costs due to asymmetric information, and modelling risk. The results help to explain why many insurance companies are reluctant to offer cyber insurance on a broad scale. We discuss ways to overcome market failure. The session also provides an overview on cyber risk management and case study workshops.

1. Insurance Protection Gaps: Facts, Causes and the Implications for Building Resilience to Climate Change

An insurance protection gap measures the relation between protection needed and protection available. In 2019 the global protection gap for natural catastrophes was 76% – meaning that only 24% of actual losses were insured. The puzzling fact is that even in the most developed insurance markets in advanced economies the gap is still 65%. The objective of this module is to discuss the contribution of various demand and supply factors to impede global risk sharing and to evaluate the scope for public policy.

2. Insurability of Pandemic Risks

COVID-19 pandemic caused substantial business disruptions and economic losses in sectors that involve in-person interactions. These sectors have relied primarily on government, i.e., taxpayer, support to partially recover the business interruption losses. The participation of the insurance industry to building resilience to pandemic losses has been limited. This module will analyze the appropriate allocation of functions between the insurance industry, the financial market and the government in pandemic risk transfer in the form of public-private partnership to implement the intertemporal risk-sharing, including government backstops to insurance and reinsurance pools.

3. Private Equity Acquisitions in Insurance: Value Creation or Regulatory Arbitrage?

Private equity firms have been active in acquiring closed insurance books of life insurance companies and pension liabilities of corporate sponsors in Europe and the US during the last 10 years. Life insurance and pensions long-term businesses appear in odds with a typical strategy of private equity firms to improve the target’s efficiency and sell it after 3-5 years holding period. In this module, we explain the business model of private equity in insurance, discuss the sources of value creation and the particularities of the business models across markets in Europe and the US.

4. Too-Big-to-Fail: Evolution and effectiveness of the post 2008 regulatory reforms for banks and insurers

The global financial crisis in 2008 prompted a wave of new international regulatory initiatives led by G20 to end too-big-to fail. These reforms aim to address the risks associated with systemically important financial institutions (SIFIs). The “too-big-to-fail” (TBTF) problem arises when the threatened failure of a SIFI leaves public authorities with no option but to bail it out using public funds to avoid financial instability and economic damage. More than 10 years after the crisis, recent bank runs in the US and the collapse of Credit Suisse test the effectiveness of these reforms. This module will review the major policy developments and assess their impact on the financial system.

1. Would I Lie to You? How the Interaction with Chatbots Changes Honesty Norms

Dishonest behavior in insurance markets creates inefficiencies worth billions of dollars globally: either directly through undetected insurance fraud or through measures preventing or detecting fraud. At the same time, we observe a vast substitution of humans with automated and autonomous chat systems. In this module, we’re asking whether this development driven by technological innovation as well as efficiency and engagement goals can backfire in that dishonest behavior becomes more prevalent in an interaction with a machine as opposed to a human?

2. Big Brother is Watching You! Perceived Demand-Side Costs of Telematics Contracts

With the rise of new technologies, insurance companies increasingly use telematics devices to monitor policyholders and to condition premiums on overserved behavior. This is common, for example, in health or auto insurance. Given that technology costs are low, and that observed behavior is a good signal of the individual’s risk type, telematics contracts increase efficiency because they eliminate information asymmetries; however, at the expense of customer privacy loss. In this module, we look at these demand-side costs by eliciting the dollar-value individuals assign to their personal data.

3. Will They Pay? The Impact of Contract Nonperformance Risk and Uncertainty on Insurance Demand

Public perception of insurance, fairly or not, is impacted by media coverage documenting cases of contract nonperformance – i.e., situations in which claims perceived as valid are not settled. Demand-side behavior is affected in a significant way by this. In this module, we look at the empirical evidence on the detrimental effects of perceived contract nonperformance risk on insurance demand and this differs between different types of insurance companies. A particular focus will be on a realistic setup, where probabilities for such events cannot be judged by the public.

4. The Value of the Golden Rule in Insurance: Mitigating Moral Hazard through Reciprocal Motives

The provision of most insurance products is rooted in the idea that a group of individuals mutually supports each other conditional on the realization of a predefined event. A core assumption for its functioning, however, is that insureds do not change their behavior once insured. The vast economic losses induced by moral hazard emphasize that this precondition is often violated in real markets. In this module, we look at non-standard ways to reduce moral hazard that exploit reciprocal motives of insureds, which can be embedded in the product design and used for framing claiming decisions of policyholders.

1. Does Natural Disaster Risk Impact Firms’ Cost of Capital?

In this module we look at the links between natural disaster risk and financial markets. In a deep dive, we focus on the link between (uninsured) extreme weather exposure and firms’ cost of equity. Based on an economic model, we derive two empirically testable conditions for a meteorological risk premium. We consider empirical evidence that points to a meteorological risk premium of 6.5% p.a. since the mid 1990s. This risk premium can neither be explained by standard asset pricing factors nor firm characteristics. Our results reveal how physical climate risk may be linked to firm value. We discuss implications of these results for insurance and natural disaster risk protection gaps.

2. New Business Models in the Insurance Industry

Digitization is reshaping the insurance industry at full throttle. Within less than half a decade, new entrants have introduced advanced technologies and innovative business models that are rapidly redefining the standards for insurance companies and brokers. This course considers business model innovation as a response for incumbents. Methodologies to develop new business models are combined with important strategic directions such as industry-transcending ecosystems that radically improve and facilitate a certain sphere of the customer’s life. Finally, we discuss major challenges for business model innovation in practice.

3. Data Analytics for Insurance Executives

The advent of data analytics and artificial intelligence (AI) is among the key developments that will shape the insurance industry in the years to come. This course introduces executives to data science. First, we consider basic types of data as well as general goals in data analytics. We then discuss the anatomy of statistical models including model specification, parameters, fitting/training and prediction. Finally, the potential of data analytics (and artificial intelligence) in different areas of the insurance business are highlighted using real-life examples.

4. Mitigating Climate Change and its Impact: The Responsibility and Role of the Insurance Industry

We first shed light on the responsibility of the insurance industry for climate change mitigation. Through its investment and underwriting decisions, the insurance sector can redirect major capital flows and thus exert influence across the entire economy. Second, we highlight how climate change hampers the insurers’ ability to fulfill their societal role of risk bearing. With the climate-driven increase in frequency and severity of atmospheric disasters, insurers will find it difficult to offer affordable coverage. Finally, we discuss Decentralized Insurance and Alternative Capital as remedies for global disaster risk protection gaps.

List of additional topics

  • Asset-Liability Management for Insurance Companies (Prof. Dr. Braun)
  • Introduction to Blockchain Technology (Prof. Dr. Braun)
  • The Economic Impact of Extreme Cyber Risk Scenarios (Prof. Dr. Eling)
  • The Impact of Digitalization on the Insurance Value Chain and the Insurability of Risks (Prof. Dr. Eling)
  • The Impact of Artificial Intelligence along the Insurance Value Chain and on the Insurability of Risk (Prof. Dr. Eling)
  • Run-off in the insurance market: Status quo and future relevance (Prof. Dr. Eling)
  • The Future of Long-Term Care in Switzerland (Prof. Dr. Eling)
  • Emerging Insurance Markets (Prof. Dr. Biener)
  • The Role of Economic Preferences and Beliefs in Insurance Decision Making (Prof. Dr. Biener)