This week our Spøtlight is on Cenk Tabakoğlu, CEO of Lumnion, which develops AI-based pricing platforms for the non-life insurance industry. We find out more about the company’s end-to-end platform, its ML algorithms, and its plans to expand across Europe.
Hi Cenk, could you tell us a little about yourself, and your career prior to Lumnion?
I have worked in finance in various companies for about 20 years. Prior to joining the founding team of Lumnion, I was the CEO of a medium-sized insurance company for 5 years. In short, I am one of the people who moved into entrepreneurship after many years working in large corporations.
We are three partners in Lumnion, all three of us have held good positions in corporate companies for many years. We established Lumnion with the desire to do business globally and compete with big companies globally.
Please introduce us to Lumnion, and tell us how your AI-based pricing platform supports customers.
Lumnion develops state-of-the-art AI-based pricing platforms for the Non-Life Insurance Industry in order to prevent the loss of time and money caused by not so accurate risk price modeling with existing systems, cumbersome modeling processes, and inability to use Blackbox machine learning algorithms in the pricing process.
Lumnion is the only end-to-end platform that companies can:
- automate data preparation
- model risks with the use of all widely available ML Algorithms with the same data set
- bring transparency into all ML Algorithms’ results
- manage street pricing real-time/seamless
- move from risk-based pricing to behavioural pricing with the use of external data, where Lumnion provides the non-insurance data, to get the 360 view of the customer.
Unlike our competitors, Lumnion’s platform allows the use of all widely accepted Machine Learning Algorithms including XG Boost, Random Forest, Decision Tree as well as GLM and GAM for risk modelling. In our open platform, we allow actuaries to model risk in all algorithms and compare them side by side with the same data set.
Lumnion has developed its own methodology to make results of the black box machine learning algortihms transparent, so that they become operationally usable. If required, the results of any of the ML algortihms are converted into base price and coefficients like GLM models actuaries are used to work with.
Lumnion’s platform also carries an advisory module, which helps actuaries choose which variables and interactions should be used in models, with the use of Machine Learning.
Lumnion’s pricing platform allows companies to optimize pricing on a personal level with the use of external data, getting 360 view of the customer. As part of the optimization modelling phase, with its unique working model, Lumnion is able to provide external data for all of the EU countries without falling under the scrutinity of personal data protection regulations.
With its integrated Rule & Rating Engine, Lumnion allows for seamless time to market for any commercial price decision.
Lumnion is the only company that has an end-to-end platform using AI and ML extensively for risk pricing, commercial pricing and behavioral optimization in a single platform.
Adopting the usage-based Saas revenue model, Lumnion offers a more affordable service compared to competitors.
Lumnion has proven use cases in obtaining more precise and better results in the pricing of Non-life products. Motor insurance, household insurance, third-party liability products, health, and any product with big data are in the scope of Lumnion’s platform. Lumnion can provide 3% and 5% Loss ratio improvement for the products priced through the platform.
Can you go into a bit more detail behind the ML technology that powers your key products, Bee, Cheetah, Dolphin and Octopus?
Lumnion’s platform enables automating the data preparation process to cut down on manual work for actuaries and IT resource in the company so that each can focus on other more important tasks. Modelling, using the same data set with all widely accepted ML Algorithms such as XGBoost, Random Forest and Decision Trees on top of GLM, provides more accurate risk measurement and selection. Lumnion’s platform also allows for real-time price management of the products in an omni-channel way with its embedded rule and pricing engine. There is no more a need to manually maintain tables of rules at the core IT systems. Changes in pricing and any rule defined gets reflected into street instantly.
Lumnion has had a really exciting 12-months – what are some of your company highlights from the last year?
Lumnion has completed the Seed funding, became partners with Insurtech Hub Munich and Insurlab Germany, the 2 biggest hubs, and has opened offices in Germany (Köln & Munich) for its expansion into the European Market.
For faster expansion, as part of its go to market strategy, Lumnion has signed agreements with various insurance and reinsurance companies, core system providers, pricing consultancy companies, and cloud technology companies for strategic alliances, integrating its pricing platform into their offerings.
What about the next 12-months? Any key targets you can share?
We are currently at the stage of entering the German insurance market and want to scale our operations throughout Europe, using Germany as a base.
The next step is German-speaking countries, then other countries of continental Europe such as Belgium, Netherlands. We already have a customer in Portugal, with that experience, we might enter the Western Europe market with an office in Madrid. Then we plan to go to Gulf region and then the US market. We aim to be in at least 25 countries in 5 years.
What do you think your market will look like in 10-years? What are the coming opportunities and threats?
The industry is on the verge of a seismic, tech-driven shift. Technology is redefining supply chains.
With machine learning and artificial intelligence, the industry will move from its current state of “detect and repair” to “predict and prevent,” transforming every aspect of the industry in the process. The pace of change will be faster as the players of the industry become more adept at using advanced technologies to enhance decision making and productivity, lower costs, and optimize the customer experience.
In 2030, underwriting will not be the same as we know it today for most personal and small-business products across life and property and casualty insurance. As most of the underwriting is automated and supported by a combination of machine and deep learning models, the process of underwriting is reduced to a few seconds.
So, how you react to the technologic developments will define the industry’s future.
Finally, how do you foster a culture of innovation at Lumnion?
We believe that often the best source of innovation is actually within the company itself – the employees and the most successful companies are the ones who capitalize on this asset and create a culture of innovation, using employee suggestions.
We give importance to flexibility as we believe transforming ideas into groundbreaking results comes with flexibility. Being open to new ideas, especially as an executive, is essential for fostering a culture of innovation. We try to reward smart risk takers and try to hire the best and diversified team members. We give importance to our team’s education and support them.