Other parts of this series:
In order to avoid claim leakages and underpricing, property underwriting can be improved by focusing on these seven key areas.
In my last post, I explained why the state of property underwriting leaves something to be desired and how it’s time for carriers to rethink how it’s done.
Let’s take a closer look at the seven areas of focus that can help carriers modernize their insurance location management capabilities:
- Data precision / cleansing
Address records are not always identical across companies or even internal systems. Carriers need to use a modern geo-location solution that can cleanse addresses and provide accurate geo-coding of parcels and buildings (not just street addresses), and that has very high fill rates and accuracy.
- Hierarchical data organization
Property insurers need location information that is available at many different levels. Depending on the requirement, carriers need a part of the data or aggregations of it. In order to achieve this, property underwriters should develop a hierarchical structure that organizes location information by group, parcel, building, and sub-building.
- Geospatial data organization
When dealing with a large building with multiple addresses assigned to it, geospatial data organization can not only provide the master data management (MDM) for locations, but it can link geo-location data by using big data to support multiple, individual data sets. The advantage of this setup is that it supports the high-powered geospatial analytics needed by underwriters, actuaries and enterprise risk managers.
- Analytical consistency
One of the complexities of property models is that they are mostly one-offs and independent. By aligning all models to the same data sets, they can be streamlined with the workflow and integrated into the process. Analytical consistency also helps ensure that all models are generating the same output and enables better usage and compliance with models.
- Geospatial analytics simplification / visualization
Underwriting information overload is a key concern for property underwriters and management. Workflow visualization layers can design fit-for-purpose solutions that combine analytics, insight and alerts to draw underwriting attention to critical data elements. This type of structure is vital for improving property underwriting but works best when it is supported by an MDM data store.
- Fit-for-purpose processing capabilities
One of the other main advantages of an MDM approach to location is that it limits the processing needs on the policy platform. Carriers can decide what the specific needs are for the policy platform and the MDM location, but the breakdown usually follows a basic pattern. The policy platform is the single source of truth for active policies; it contains the list of insured locations; it will only maintain minimal location details; and the rating may be here or separate. The location MDM is the single source of truth for all data; it holds internal and external data; location data persists even if the policy is no longer active; it’s linked to the policy and claims to provide details; and it may support separate rating.
- Future-proofing emerging data sets
An MDM data structure future-proofs the organization against new data sets that are derived from drones, satellites, sensors, cell phones and social media. New data sets can be tested against internal data structures and, if desired, can quickly replace or add new data sets. When done correctly, models and workflows will not be impacted by similar data set replacements.
Utilizing these seven key ideas will help carriers enhance their underwriting and prepare for the future of property insurance.
If you have questions or feedback about how to modernize property underwriting, please contact me here.