Underwriters can now go further with critical insight information

Risk analysis is changing and offering underwriters greater insights than ever before giving them an opportunity to move beyond just modernising and digitising quotes, according to Jason Verlen senior vice president Product Management at CCC Information Services.

Verlen said that underwriters can now supplement traditional methods, such as credit scores, to assess policyholder risk, during a fireside chat titled ‘Modern Tools for a Modern World: AI and Telematics Deliver Smarter Risk Analysis and Stronger Customer Loyalty’ at Intelligent Insurer’s Underwriting Innovation USA virtual event.

The accelerating rise of telematics, which has provided greater access to rich data points that are easily integrated into carrier systems, has allowed underwriters to take a deeper look at insights critical to assessing and predicting customer behaviour. It also means underwriters can now deliver an end-to-end experience for consumers.

Verlen explained that the increased use of technology in cars that has boosted the amount of connected vehicle data available, is also helping underwriters evolve their service.

This rich data pool enables a much greater level of personalisation for customers via technology such as GPS, mapping apps, sensors and damage recognition technology and other forms of information. He said it can and will be used by underwriters to provide a more personalised service because underwriters are now able to look at how people drive, not just who they are, and they can assess the specific vehicle by looking at its safety features and its condition among other key data.

High quality data will also help to solve any discrepancies or competing claims, making life easier for claims evaluation.

Verlen described this more informed process as a ‘360-degree view of risk’ because it provides a more in-depth picture of who and what is being insured.

“What we’re seeing is the accelerated adoption of digital processes and it doesn’t just pertain to claims, it pertains to underwriting as well,” Verlen said. “Mobility is way down because of the coronavirus, people are not commuting to work as much, this is quite clear from our numbers. And what you set rates with is changing, there’s COVID-19 and there’s also societal stressors and transformations, and there’s pressure to move away from historical rating factors, things like credit scores, demographics.

“There is a push to adopt a more modern rating. So what does that more modern rating look like? Well, how does this person actually drive? What kind of safety features are on the vehicle he is driving and how does that affect his likelihood for getting into accidents, the severity of those accidents and the cost of repairing that vehicle? And consumers from all over are expecting this shift.”

With easier access to connected car data and other pertinent information, underwriters can now get a better view of the driver and how they use their vehicle. This ultimately provides a better, more consistent customer experience than before.

The COVID-19 pandemic and the need to work from home may have accelerated increasing acceptance of technology, but Verlen emphasised that this shift to greater technology use had already started before the pandemic hit. He said that the changes in technology, as well as the change in attitudes toward that technology, are here to stay, even after the pandemic ends and more normal life resumes.

“For example, the Spanish flu pandemic of 1918-19 resulted in the increased use of the telephone, as people realised that they could use it to communicate with other people more safely,” Verlen said. “After the Spanish flu, did they stop using the telephone? No, they used it even more, as they were used to it.”

Verlen also pointed to a more recent example. During the recession of 2007-2008 many people took gig jobs, such as driving because there were no other jobs available. However, once the economy recovered, those kinds of jobs increased because people found that firstly they liked working in this way and they found it an easy way to make some extra money.

He said that the same thing is happening during the current crisis: “If you look at what's going on, people are interacting with these digital experiences every day. They’re buying groceries online or by phone that get delivered to their house. Banking is now an entirely digital experience. It’s quite amazing and these things are not going away.”

As a result of this, he expects that customers will demand the same kind of functionality and ease of use with their insurance – and seeking insurance quotes – as they are experiencing with the rest of their lives at the moment.

Asked what he thinks about future technology such as driverless cars, Verlen said that it was nonsense to think that these would bring in an accident-free driverless future. He said that the future would probably consist of a combination of driverless and manual cars all on the road at the same time.

To watch the full session  click here.