Underwriting accuracy and quality are on frontline in insurance ‘data war’

More and more insurers are planning to boost underwriting accuracy through the smarter use of data. With plenty of innovations to consider, Intelligent Insurer spoke to Simon Perry, insurance sales director UK&I at Precisely, about why improving access to quality external data is the new frontline for insurers. Perry will be speaking in the webinar ‘Harness External Data for Underwriting: Operationalise Data to Increase Profitability and Drive Value for Customers', on July 8, 2020.

Question: What are the current drivers for using more external data in underwriting?

Simon Perry (SP): Commercial property re/insurers are under a lot of pressure from unexpected COVID-19 payouts to the wider global economic turmoil. Businesses in the market are looking closely at elements they can control, such as underwriting.

The webinar panel will be discussing what insurers are doing to ensure they have all the information they need to accurately, responsively and competitively price property premiums.

Q: How is the use of data for underwriting changing?

SP: Some in the market will tell you that it wasn’t that long ago that postcodes were a bigger determinant for property insurance premiums than anything else. Insurers are moving away from that and have also been using the ‘COPE’ criteria (construction, occupancy, protection and exposure).

Today people are looking beyond that methodology. We’ll be discussing what kind of things insurers are looking for as well as whether the data is current and if it is, how they keep it current.

Another key question is how much confidence people have in this data, although that suggests a level of subjectivity. Ultimately, to get the best premiums and write the most profitable premiums they need an objective measure of confidence.

Q: Where does the data come from?

SP: Insurers can consolidate multiple datasets from their own internal data, from broker data and from third party sources. The panel will be discussing how actively they do this and why it matters.

For commercial or industrial property insurance a lot of insurers use more than one dataset to try and build an accurate picture. So another important issue is whether they use modelled data, which can be derived from aerial flight or satellite imagery, to supplement their existing data. This can help to determine roof type more accurately, for example, when data isn’t available.

We’ll also be talking about using machine learning and artificial intelligence, among other innovations, to improve the quality of underwriting data.

Q: Why is ‘location intelligence’ important for harnessing external data?

SP: How insurers look at a roof is a good example. If you’re an insurer you’re not just interested in the roof in terms of its type of construction. You also want to understand what condition the roof is in and, in a residential example, what the construction is underneath the tiles. These are the kind of things an insurance assessor would do during a physical inspection. But physical visits are very expensive and today there are various sources of data that can deliver some of that information directly from a data source or indirectly through satellite image analysis.

Q: How does Precisely drive data confidence and quality?

SP: We’re a data provider and we curate the data that we get from third party sources. We combine different sources of data that are both publicly available and third party paid for data. We normalise that data and validate it.

We provide a curated service around the data. We can either give it directly to insurers, which have their own data science team to analyse the data and incorporate it into their business process, or we can do the analysis for them. The process is designed to give insurers more confidence in their data by ensuring accuracy and consistency.

Last year Precisely rebranded from Pitney Bowes Software and Data, so we already work with a number of high-profile firms in the insurance industry.

Q: What are you hoping listeners will be able to take forward from the upcoming webinar?

SP: Senior people in the insurance sector, including a chief underwriting officer at a large Lloyd’s syndicate, have told me that a lot of insurers realise that they are now in a data war with competitors. So to write really competitive premiums and maximise profit, they need sources of data that can help differentiate them from their competition. And to do that they need to have more than one source of data without asking the client a huge number of questions.

By looking at multiple sets of data, commercial insurers are trying to build a superset of data that is more than the sum of its parts in terms of the confidence in the quality of that data.

Simon Perry will be taking part in our webinar ‘Harness External Data for Underwriting: Operationalise Data to Increase Profitability and Drive Value for Customers’ on Wednesday July 8 at 11am ET/4pm BST.

He will be joined by:

Kassie Bryan, head solutions P&C Americas, Swiss Re

Megan McConnell, chief underwriting officer, Hiscox

Adrian Sweeney, chief underwriting officer, RSA

Moderator: Wyn Jenkins, managing editor, Intelligent Insurer

Click here to register now for this complimentary webinar