Risk assessment is deeply tied to the function of insurance. This past year has revealed many opportunities for the insurance industry to weigh risk in new ways.
The data and tools used for assessing risk have long relied on industry standards, deployed uniformly across insurers. Looking ahead, carriers are beginning to heed the call to unveil bigger-picture, creative ideas for more accurately assessing risk through a combination of talent, technology and testing.
WaterStreet Company offers cloud-based P&C Policy Administration Software with an advanced API to help connect insurers to a greater variety of third-party risk assessment data.
3 Risk Assessment Trends to Watch in 2023
1. Underwriting Talent
McKinsey & Company has noted one-quarter of the P&C insurance industry’s most experienced professionals are soon retiring in key geographies. Underwriters are chiefly tasked with accurately assessing risk and are a cornerstone to this industry.
Expect many shifts to occur in the insurance workforce as carriers tailor and test new products. Administrators, underwriters and product developers will aim to connect with customers in new ways, aiming to provide irresistible benefits and loyalty rewards.
It’s important for insurers to keep an open dialogue with employees tasked with client-facing responsibilities and to hear the thoughts and concerns happening from the ground up during transitional phases. The tools to improve risk assessment are only as good as the people using them.
2. Unstructured Big Data
Insurance companies today are realizing changes in market landscapes. Risks associated with climate disasters and the COVID-19 pandemic have revealed gaps in coverage, causing policyholders to lose trust in this industry and pressuring government assistance.
Data that has not traditionally been applied, such as precision geolocation data and self-inspection data, has allowed insurance companies to carve out new risk pools. Standard risk assessment for home insurance has relied on zip codes while companies such as HazardHub can instead offer precise data on the history of a location down to mere feet for identifying hazards, such as the burn perimeter of wildfires.
“HazardHub knows the where, how, what and why of every hazard, not just wildfires. The only thing that we cannot tell you is when. The insurers that use us suffer very few wildfire losses. They also know how to appropriately price.”
– John C. Siegman, Founder of HazardHub
WaterStreet Company solutions integrate with HazardHub, allowing our insurers seamless access to this third-party data.
3. Implementation of AI
Artificial Intelligence (AI) has opened the door for smarter, faster and more accurate decision making. This technology is compared to human capabilities, but in reality serves to assist many areas of the insurance industry where even the most experienced talent would not be able to apply new, massive amounts of data on the job, including in risk assessment.
As data is added to your P&C solutions for managing policies, claims, billing and more, the applications of this data are far reaching and not always structured in an understandable way. Unstructured data could be images, video, audio, written text and more that does not fit into the insurer’s existing data.
AI is currently being rolled out in the financial industry to identify fraud and better weigh the risks on loans to individuals based on behavior that goes beyond credit scores. Capgemini, an international technology consulting firm, has described alternative data sources such as social media posts, GPS data, online purchases data, mobile data and bill payment data as used by next generation risk assessment in banking.
WaterStreet Company & Risk Assessment
Legacy software systems are bootstrapped from accessing cloud-based advancements in risk assessment. Without a unified P&C insurance solution, insurers are unable to bring the variety of Big Data together for enhancing risk assessment.
Fast data sharing is made possible by WaterStreet Company’s advanced API, connecting insurers to any number of third-party solutions.
Reach out to WaterStreet Company today to request a consultation and demo of our solutions.