Risk managers can use data to ease renewal process

SAN DIEGO – Access to detailed data on risks they are underwriting can help insurers price exposures more accurately and leads to better risk management outcomes for buyers, experts say.

In a nuanced market where some property policyholders continue to see rate increases, a data-driven submission can drive greater stability in pricing and capacity, brokers, insurers and risk professionals said during interviews and panel discussions at Riskworld, the Risk & Insurance Management Society Inc. conference held last week.

Analytics tools help policyholders quantify risk exposures and understand the tradeoffs between risk retention and risk transfer based on market pricing, said Joe Peiser, New York-based CEO of commercial risk at Aon PLC.

A food industry client decided to purchase broader coverage at a higher price because the total cost of risk would be lower. “The fact that we were able to demonstrate that quantitatively made a big difference in their decision,” Mr. Peiser said.

Real-time data from usage- or behavior-based commercial coverage ensures that policyholders pay only for what they use and affects risk management outcomes, said Mo Tooker, head of commercial lines at The Hartford Financial Services Group Inc.

For example, data shared with Hartford indicated a company’s driver had driven to Florida, Mr. Tooker said.

“They had no idea, but we could see it in our data that he had taken a company vehicle to Florida. Is that a discount? No. But is it saving them in the long term? Absolutely,” from the risk management standpoint, he said.

Buyers often view data as being important from a premium perspective, but high-quality data helps clients better understand their company risk profile, said Michael Rouse, New York-based U.S. property practice leader at Marsh LLC.

“It’s really important for any client to understand how their data is going to be interpreted by the market and are they being provided the right information that truly reflects what the risk is,” he said.

Regardless of what the market does, “the fundamentals of what we do have been changed,” said Martha Bane, Glendale, California-based senior managing director of the North America property practice at Arthur J. Gallagher & Co.

Having a data-driven approach differentiates buyers because it produces more certainty, Ms. Bane said. “Having less unknowns will always improve the outcome,” she said.

Chelley Schaper, Denver-based executive vice president, P&C head of national accounts, at CAC Specialty, said the brokerage’s data visualization dashboard can pinpoint which information will significantly affect a policyholder’s property insurance submission.

For example, it has uncovered inaccurate geocoding of properties in catastrophe models, she said.

“In one case, they had a retail client of ours with a location in the middle of the Mississippi River. We were able to notify the underwriter that it was a different location, give them longitude and latitude, impacting the client’s flood coverage significantly,” Ms. Schaper said.

Construction, occupancy, protection and exposure data, and secondary characteristics, have become a standard “need to have” versus a “nice to have,” said Blake Giannisis, New York-based North American property practice leader at Hub International Ltd.

Business interruption and contingent business interruption values continue to be scrutinized, Mr. Giannisis said. “Those analytics are a lot more complicated than just physical damage valuations, and you need time to commission a particular study. We’re seeing a lot of clients start to do that,” he said.

Policyholders should demonstrate that their values and exposures are identified clearly and that any issues are being addressed, said Michele Sansone, president and chief underwriting officer of property at Axa XL, a unit of Axa SA.

In a transitional market where insurers often are understaffed, data quality and integrity of submissions are critical, said Mike Prindle, Atlanta-based senior vice president and head of complex property at CAC Specialty.

Delivering a submission that underwriters know they don’t have to do a lot of work with and that can be imported easily into their system saves them time, he said.

If there are gaps in data, underwriters have no choice but to “default to a worst-case scenario,” and be more conservative whether that’s in price, mindset, deductibles, or terms and conditions, said Catherine Miller, senior vice president, head of property U.S. and Canada, at Berkshire Hathaway Specialty Insurance Co. in New York.

Data quality reduces uncertainty in the exposure, Ms. Miller said during a panel discussion.

The more comprehensive and accurate data is, the better able insurers are to adequately underwrite and manage that exposure, said Richard Montminy, New York-based group head of property risks at Beazley PLC.

“Having the most complete amount of data is ideal. Do we get that? No. That’s the challenge,” he said.