Reinsurers strategy need a data to build underwriting transformation programs. Welcome to iLeads Insurance Market Minute, where we bring you the latest, most relevant news regarding the insurance market. Last week you were reading Firm Insurance Market Expected To Last Into Next Year. This week we’re bringing you:
Data, analytics and technology now “table stakes” in insurance*
Data, analytics, and technology have become table stakes in the global insurance industry. Without that essential trio, companies will find it difficult to differentiate themselves or even remain competitive in areas like product, pricing, risk management, claims adjusting, and client services. These are all areas that are enhanced with effective data, analytics, and technology.
Insurance organizations have long understood and engaged in data collection; it is a fundamental aspect of many industry processes, and the sophistication of how firms use data they collect has increased over time. What’s evolved more significantly in recent years, according to Janet Wesner (pictured above), head of analytics at Munich Re US, is the emergence of third-party data providers that can enrich the internal data collected by organizations, and the development of technology, analytics, and modeling tools that can enhance decision-making.
Common use-cases for analytics
Lots of insurance companies kick off their analytics journey in pricing segmentation. This is especially true for personal lines carriers who have access to end-consumer data containing many characteristics that can be directly correlated to risk, which can then help to price policies (e.g. personal auto) more accurately. The recent explosion of third-party data, lots of which have been generated through the increase in online and digital activity, can also help insurers with marketing.
These tools are also helping insurers to become more efficient in their claims operations. Wesner commented: “Oftentimes, the claims department is strapped for resources, but analytics can help insurers identify where to allocate and prioritize resources for claims management and so on. If we can use technology to determine – the complex claims that require attention from a senior claims adjuster, and the more standard claims – we believe that can bring huge benefits for insurers.”
Most commercial premium renewal rates rose in third quarter*
Commercial insurance premium renewal rate increases accelerated across nearly all major lines of business in the third quarter, according to a report Tuesday from Ivans Insurance Services, a division of Tampa, Florida-based Applied Systems Inc.
The exceptions were commercial auto, which saw a slowdown in the rate of increase, and workers compensation, the only line in which renewal rates remained in negative territory, Ivans said.
Business owners policy renewal rates rose 5.05%, up from the 4.59% increase in the second quarter; general liability rates rose 4.21%, up from 3.95%; commercial property rates rose 5.77%, up from 5.54%; umbrella rates rose 4.85%, up from 4.40%.
Commercial auto renewal rates rose 4.32% on average, down from 4.51% in the second quarter.
Workers compensation renewal rates stayed negative, but the rate of decrease lessened, with rates decreasing 1.40%, compared with the 1.74% decrease in the second quarter.
The third-quarter index results continue to show “we are operating in a hard market,” Kathy Hrach, vice president of product management at Ivans said in a statement.
Re/Insurers Need a Data Strategy to Build Underwriting Transformation Programs*
Years of low interest rates and burgeoning catastrophe losses have accelerated the hardening of the reinsurance market, as the January 2021 renewals clearly demonstrated, and moreover, the COVID-19 pandemic has worsened the “lower for longer” interest rate environment.
Considering suboptimal underwriting profitability, reinsurers must bolster underwriting performance and drive pricing improvements, but such an underwriting transformation programs require reinsurers to strengthen data and advanced analytics capabilities.
Regardless of systems, the underwriting organization’s fundamental intellectual property revolves around experience and human talent in understanding risk, as well as the data pertaining to risk itself. Underwriting talent is either grown and honed, or hired, but data should be immutable. Data forms the basis for catastrophe modeling, risk profiling, anomaly detection, reinsurance placement, and quantification of emerging risks.
Within any reinsurance company, an underwriting department looking to improve and upgrade data and analytics maturity has three main concerns:
Security is ongoing and essential. Reinsurers not only have to comply with necessary regulations like the EU’s General Data Protection Regulation (GDPR), but also, quite rightly, must be concerned about the security of systems, especially as more and more users switch to the cloud. In this instance, reinsurers need to be certain that the providers’ security is more than sufficient, and that in-house IT resources have the capacity to respond to the constant threat of hacking, ransomware, and malware.
Finding highly affordable leads to keep sales coming in
At iLeads, we have many great solutions for insurance agents at a low cost. If you’d like to see how we can help you bring in consistent sales for a great price, give us a call at (877) 245-3237!
We’re free and are taking phone-calls from 7AM to 5PM PST, Monday through Friday.
You can also schedule a call here.