As the McKinsey report states, "external data is the fuel that can ignite the value of analytics." By leveraging advanced data and analytics, insurers can gain deeper insight into risks and energize the insurance lifecycle, from application profiles to risk selection and pricing. We are seeing companies at the forefront put a focus on incremental improvements, particularly in the areas of:

Risk Selection: Through access to internal data and integrating the right mix of external data, and then integrating that data seamlessly into the risk selection process, insurers can better screen applicants. With next-generation data and analytics an insurer can select good risks and avoid the risk they do not want to underwrite. Of course, the idea is not to eliminate losses completely, but to eliminate highly identifiable and highly probable losses.

Prefill: Another point of the customer journey that can be made significantly more efficient and effective using the right next-generation data is in the interview and screening process. Using traditional data systems, the screening and interview process can be cumbersome, but with next-generation data integration, you can match and prefill data for prospects and customers quickly and inexpensively. Minimizing the number of questions you need to ask a potential customer or client can dramatically help speed up and smooth the screening and sales process.

Pricing: With quick access to and integration of the right internal data, and cross analysis with a broad array of external data, insurers can more effectively make their case to regulators on pricing — and can more accurately and appropriately price policies to reflect the actual inherent risk. With most current systems, a property owner in a zip code with an F wildfire rating, perhaps a home in an urban area of that zip code, likely pays the same premium as a home that is actually in peril of a wildfire due to its proximity to forests/wild areas with dry brush within just feet of the home. If a customer lives in a significantly more fire-prone property, they should be paying more than those in a low-risk property.

Marketing: Marketing is really one of the almost untouched or greenfield areas that insurers have yet to apply advanced data and analytics. Being a leader in the application of next-generation data in marketing can really make a competitive difference, particularly for small and medium-sized insurers. Marketing should really be seen as the starting point of risk selection. If you're smarter and more targeted about who you market to, you are going to be able to produce stronger, less risky and more profitable leads.

It is important to remember that data is a living breathing thing. It is always evolving and growing.

John Seigman, the co-founder of Hazard Hub. (Courtesy photo)

Special Reports /

A new paradigm for property risk data & analytics

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