Insurers’ struggle with lack of data continues – Templar

The rising scale of emerging and changing risks are leaving underwriters unable to rely on historic data to price risks and structure new products that better mirror their clients’ exposures.

Paul Templar CEO of Vipr told Emerging Risks that access to data has become a key weapon in the ability of underwriters to meet the changing risk dynamics and demands of clients across the world.

As Europe, and the US suffered heatwaves, Asia recorded record temperatures and wildfires left tens of thousands of people forced to evacuate homes and hotels, there were also a string of cyber-attacks, including one of the Norwegian government and another in the UK health services, which had many highlighting the rising scale of risks face by insurers and their clients.

Templar said the new risk environment posed real challenges for underwriters.

“Data has always been a problem for the market,” he explains. “With over 40% of the London market business arriving via delegated authority agreement insurers have long had an issue whereby the risks they have assumed are not really analyse and understood anything up to 90 days after they have been incepted.

“The London market has been working hard to look at how it can access data faster, and not only access that data but also analyse it to enable them to make better underwriting and pricing decisions.”

While the move from coverholders and MGAs providing risk information via excel spreadsheet to the digital movement of data is ongoing, Templer said there is still a long way to go.

“Underwriters are getting  bordereau 30 days after the risk has been closed and it can sit in the insurer’s inbox for a period of time. It can be 90 days before the insurer examines the data at which point it is far too late to act on any issues which are highlighted.”

“Underwriters need real time data if they are to deliver the benefits. There are efforts to move to a more digital system, but it will be a tough job. It will not happen overnight.

“Having said that, the landscape is better than ever and after a series of failed initiatives in the London market in the past we have a real chance to get it right.”

Templar added that the changing risk environment made the issue of data ever more pressing.

“The industry has long relied on historical data from past events and claims to understand risks, create products and price them.

“With new risks such as cyber there is not a great dela of historical data and like natural perils the scale and severity of exposures is increasing.

“It leaves underwriters having to move from reacting to the data on claims and exposures to a position whereby they now need to predict the way in which risks and exposures will develop if they are to create the products to meet their clients’ needs.

“It creates a demand for data from different sources than past claims and events. The data may well be out there but the industry needs to find more efficient ways to access that data and turn it into something which is fit for purpose.”

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