- Where Insurance & Technology Meet

Seeing the Invisible – Improving Aggregate Risk Exposure

Can you see the invisible?

This was the question  posed to attendees at the Webinar “Improving Aggregate Risk Exposure” on September 15, 2011.  With the assistance of improved technology and  advanced analytics, the presenters suggested that they are moving in that direction.

Sponsored by Pitney Bowes Business Insight (PBBI), and moderated by, the Webinar featured presentations which highlighted the need for new insight, discussed the available technology and approaches, and provided  data and case studies highlighting the results of the application of these techniques and tools.

Sean Russell, FCAS, Managing Director of Guy Carpenter summarized recent catastrophic events globally and locally, noting the rising costs to both insurers and reinsurers. While the events are inevitable, the impacts can be understood and planned for using increasingly sophisticated Catastrophe models from various software suppliers..

Russell noted that the need goes beyond just modelling however.  Insurers are able to gather massive amounts of information from their own data and external sources.  The challenge is to put these data into actionable format for underwriters and external sources.  To address this, Guy Carpenter & Company created i-aXs (pronounced eye-access), which was described in a Directions Magazine article as an online risk management platform which uses geospatial technologies to provide insurers with immediate access to exposure data, as well as customizable imaging, tracking, analysis and reporting tools to make better business decisions.

David Crozier, Senior Vice President – Operations for The Economical Insurance Group, noted that such applications go well beyond catastrophe management.  For example, mapping applications allow more sophisticated underwriting. allowing visualization of both commercial and personal exposures in a more holistic fashion.  This provides greater clarity in discussing risk appetite, and a higher level of consistency of decisions. The techniques are also significant in supporting claims activities, allow better fraud detection, and in risk and reinsurance management activities.

Bill Sinn, Strategic Marketing Director for PBBI summarized a five stage approach improving maturity of risk management.  these are:

1.  Data Integration – bringing together data stored in multiple locations

2. Data Quality – validating names, addresses, preferably at source of entry

3.  Data enrichment – appling additional data to the risk selection/underwriting process through geocoding

4. Data Analytics – using spatial analytics at the macro and micro level, enabled by the geocoding

5.  Actionable data – The final stage, where all data are applied to inform decisions

Sinn provided several case studies which demonstrated the value for customer,  as well as for underwriting and claims professionals.

James River Insurance is an Excess & Surplus carrier based in Richmond, VA.  The organization wanted to improve its underwriting practices, analyze potential catastrophe patterns and enhance its catastrophe management and claims response practices.  Commenting on the utilization of the approaches during a recent storm, Brian Haney, Chief Actuary for James River said:   “We were able to provide initial estimates of exposure and loss before the storm even hit the shore and then validate these through their on-site inspections.”

That’s a pretty good view of the invisible.  Copies of the slides from the presentation are available on the ‘What’s your Risk’ webinar page.