An excerpt from our latest eBook: click here to download the full version.
Last year’s record insured losses, $144 billion globally according to Swiss Re, have proven to be a catalyst for reinvigorating P&C insurers’ focus on driving efficiencies in the commercial underwriting process—ideally for minimal cost and disruption.
One of the key issues emerging is a gap between the wealth of information that is now abundant and insurers’ ability to process all that information—there’s both a deficiency in speed to information and the ability to harness its value. This deluge of data, in particular natural hazard risk data, is hindering the performance of property underwriters. But it doesn’t have to.
Here are three ways to speed the quote process, while enhancing accuracy:1. Superior Data Access: Improve speed & efficiency
Data directly integrated into the underwriting workflow is a key ingredient to speeding the decision-making process. In fact, insurance industry technologists maintain “the difference between a modernized insurer and one stuck in the last century is the ability to procure the right data at the right time,” according to PropertyCasualty360. That’s why Application Programming Interface (API) technology is becoming critical for system speed and agility.
56% of carriers state that “superior data access can directly lead to profitable underwriting. -FirstBest
At SpatialKey, we’ve found APIs are critical to the framework of our data partner ecosystem, and we’ve built them to accommodate a wide variety of data sources and formats. Likewise, many of our insurers connect to us via API in an effort to integrate expert data into their underwriting workflows. Having a single API affords them the ability to deploy data from multiple experts into production—with little overhead and lower long-term maintenance.
External (or “third-party”) data is quickly becoming a key competitive differentiator in providing underwriters with added precision in risk selection, assessment, and pricing decisions. Expert natural hazard risk and event data providers like Ambiental, HazardHub, IHS Markit, JBA, KatRisk, Location, Inc., RedZone, Swiss Re, and others, are leveraging the latest scientific methods to help insurers quantify and assess risk with more precision. This produces data that property underwriters can trust for informed and confident risk selection, leading to significant improvements in loss ratios.
Take flood risk for example. FEMA data has historically provided an essential baseline for carriers who underwrite personal or commercial flood risk. But, according to a 2017 report, only 42 percent of FEMA's maps "adequately identified the level of flood risk." As a trend, we’re seeing our U.S. insurers supplement FEMA data with other expert flood data, such as KatRisk, whose models are fast becoming a trusted resource for U.S. flood risk. For more on this topic, download our full guide.
3. Modern Underwriting Solution: Bring speed & accuracy together on one platform
One of the trends emerging from 2017’s devastating losses, is a renewed focus on data and analytics as catalyst for more refined underwriting. And, while we’ve established data quality as a key ingredient, data alone has little value. A modern underwriting solution complements data with robust analytics, enabling insurers to quickly assess risk on a more granular level. Insurers are taking note of this with a recent A.M. Best survey of carriers revealing that “underwriting systems” is one of the four key areas where insurers believe they need to make the greatest technology improvements. For more on this topic, download our full guide.
If your organization experienced an underwriting loss in 2017, or you feel added pressure to show progress to shareholders, steps can be taken now to modernize your underwriting technology. Download our full guide, “3 Key ingredients for speeding the quote process,” for valuable best practices you can put in place to improve your speed and quality of decisions.