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Guidewire enhances data science capabilities with Cyence purchase | Canadian Insurance
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Guidewire enhances data science capabilities with Cyence purchase

The technology provider is touting Cyence’s ability to research 21st century risks

Guidewire Software Inc. has entered into an agreement to purchase Cyence Inc., a data science and risk analytics company that specializes in finding current data to support the underwriting of new risks such as cyber.

Cyence collects data from both public and proprietary sources to provide information to insurers and brokers that can provide a more precise way to model new kinds of risks, according to Eugene Lee, vice president of data and analytics at Guidewire Software.

Cyence processes “about a petabyte of data a month and they have applied machine learning to that collection process in order to detect relevant signals,” Lee told Canadian Insurance Top Broker in an interview.

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That content is then fed “into insurance-specific risk models that would then be…used within an underwriting or pricing process,” he added.

Cyence also gives brokers, insurers and their customers a common way to define the needs involved in those newer risks.

“Everybody might have a different definition [of a new risk] but because of the approach that Cyence has taken, they have a number of existing frameworks to help brokers define and sell those risks,” explained Lee.

This is especially helpful when brokers have to approach multiple insurers in order to properly cover a substantial amount of risk on behalf of one client, he added.

Cyence’s research capabilities and the type of data it finds is a part of the approach to “assessing 21st century risks,” said Lee.

“If you’re trying to insure a vehicle, you would have millions of losses historically and you’ll know the frequency and potential severity of future claims but in a new area where past history doesn’t predict future losses…like cyber or new kinds of risks where you don’t have a lot of loss history, you need these external data sources,” Lee explained.

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Lee also touted Cyence’s ability to research speculative types of risks, such as those that face small businesses. Past actuarial history can help with assessing the coverage required for small businesses but their risks can change rapidly and insurers can leverage Cyence’s data in the area in conjunction with their historical data, he said.

The addition of Cyence to Guidewire is “a natural extension” for the tech provider, according to Lee. “We’re starting to move from core operational functions to offer insurers the kinds of insights they need to design and underwrite and assess the products in their portfolio so more of the front end of the business and product strategy,” he said.

The deal is worth approximately US$275 million and is expected to close early in Guidewire’s second fiscal quarter.

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