Improving the use of data and risk analysis: Verisk

It seems that each week another new company enters the sector, proclaiming that its services are the next big thing. Given how conservative insurance tends to be, the capacity of any one firm to make a dent in this industry must surely be limited.

But there are others with more of a history. One is Verisk Underwriting, from which Tom Payne, the managing director for the UK and Europe, joined Intelligent Insurer for an interview in the Re/insurance Lounge.

When Payne spoke with Intelligent Insurer in early November, he was closing in on two years with the firm, having joined as its head of UK and European operations in April 2019, rising to become managing director at the beginning of 2020. Previously, he worked for Lloyd’s Market Association as its market operations director and for Minova Insurance as its group IT director, following stints at Cooper Gay and Lloyd’s.

Payne graduated in 1997, and joined the insurance industry not long afterwards. But Verisk has a much-longer history. The company was originally founded in 1971 as a not-for-profit organisation called Insurance Services Office (ISO) with the remit of providing statistical information to member insurers. Nearly four decades later, it launched a initial public offering under its new name.

A long history

Verisk is, Payne acknowledged, a company with a deep history in data and analytics, and it is from this, he said, that the firm draws its strength.

“We have a huge quantity of data that can bring to life what the last 50 years has looked like for the insurance industry. That is coupled with data that’s broad, deep, and high quality. This sets Verisk apart from some of our competitors.

“It’s easy for a company to come forward and say it provides data and enrichment services. But it’s difficult, if not impossible, for anybody to say that they can provide those services in the way that we can, given how long we’ve been around.”

Digital transformation is one area that Verisk has been particularly vocal about this year. In April, it published an article on the subject, titled “ From the high street to the smartphone: How the insurance industry can keep pace with digital transformation and shifting customer demands”, that looked at what it called “the insurance industry transforming at breakneck speed”. Aaron Cole, vice president of European Operations at Verisk Claims, said that was being accelerated by the COVID-19 pandemic.

Payne acknowledged to the Re/insurance Lounge that the transformation is not being brought solely by the pandemic.

“It’s had an effect but there are a few other levers. For a start, there’s greater competition. We are seeing increasing numbers of insurtechs coming into the market. They trade on the ability to provide a very flexible and digitised solution or set of services to the consumer,” he said.

“There’s also an increasing focus from the regulator on treating customers well. All those things combined mean that insurers are having to think about how they service the needs of their clients, and of how they do that in a way that’s a more attractive or pleasant buying experience than was the case before.”

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Other projects

Verisk provides risk analysis models to its clients and is also working on other projects.

“Currently we’re looking at content sum assured and providing more information to the consumer when it comes to how much contents insurance is needed,” Payne said.

“From the underwriting side, we’re operating in a variety of different spaces. If you go to the claims side, the guys there are looking at things such as image analysis for motor claims in order to smooth the process and speed everything up. These are the things we’re doing to support our customers as they look to digitise their journeys.”

When it comes to improving processes, the question arises as to who benefits. Is it the insurer, the reinsurer, or the customer? Payne offered a nuanced take.

“To my mind it has to be the customer. It’s as simple as that. But that doesn’t mean it can’t be good for everyone in the value chain.

“We do a content sum insured model. An insurer can take that and from it build more accurate products for their customers. They can be more confident that they can provide a service or a quote to an end consumer that is more reflective of their needs.

“This removes the risk of being accused of either underinsuring a consumer or going the other way and overinsuring them and consequently charging them more than might have been the case otherwise. That’s a benefit to the consumer,” he explained.

On the regulatory side, said Payne, this shows that insurers are treating customers well by fulfilling their duty to ensure they are looking after their best interests.

“You can look at the reinsurer and say that they have better quality risks and a better price risk. So I think all sides benefit,” he concluded.

To view the full Re/insurance Lounge interview click here