Remember when Bill Murray woke up to a screeching alarm only to face the same day over and over again in the movie Groundhog Day? Are you stuck in that same cycle when it comes to underwriting—approaching it the same way as you’ve always been? It’s likely that your practices are “good enough,” so why make a change? Here’s why: Eventually, the lack of moving forward—into a new day—will hinder performance. You will lose a competitive edge by being stuck in the same mode and missing out on key data and analytics advancements to move your business forward.
Accuracy in risk assessment
In the movie, Bill Murray, who plays a weatherman, is able to accurately predict what will happen next. He can do this because he’s already lived the day before—he’s been there and is able to manipulate every situation to his benefit. How great would it be if this were true for insurers? Imagine having the power to know exactly when and where catastrophes will strike next (that would have been helpful during last year’s hurricane season). But the fact is, risk is the reason insurance exists. People need insurance because they can’t predict the future. Every day in the insurance business is a new day—a new risk. And, anything that can help you more accurately select and assess risk is good as gold.
And the good news is, you don’t have to wait for future advancements in underwriting, because the technology to streamline and enhance your property underwriting exists today. And, the hazard data and advanced analytics to select and assess risk with a new level of confidence and precision exist as well.
Expert hazard and event data is a key competitive differentiator
Expert (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 IHS Markit, HazardHub, 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 and JBA. In fact, JBA’s 5m Florida flood maps are the highest resolution available in the market today. To learn more about opportunities in the U.S. private flood market, click here.
Moral of the story
Like our friend Bill Murray, you can’t be “holed up” in good enough. You need a broader view to accurately assess and gain insights. It’s time to leverage InsurTech strategies like expert data and analytics to enhance your precision and quality of decisions. Because, let’s face it, data is useless if we can only see a shadow of it.
To learn more about SpatialKey's underwriting solution, reach out to Jon Sonnenschein directly at firstname.lastname@example.org. And, download our underwriting eBook for three key ways you can increase your underwriting efficiency.