Data tech improvements could stem underwriting losses

Better command of data, in a variety of ways, could go a long way to reducing underwriting losses in the wake of a bad 2022 for U.S. property and casualty carriers, said an underwriting solutions executive at data analytics company Verisk.

Carriers had a $26.9 billion net underwriting loss in 2022, more than six times the $3.8 billion underwriting loss for 2021, according to data compiled by Verisk and the American Property Casualty Insurance Association. Last year’s underwriting loss was the largest since 2011.

Neil Spector, president of underwriting solutions at Verisk.

In auto insurance, incorrect data can be an issue, according to Neil Spector, president of underwriting solutions at Verisk. The biggest reasons for incorrect auto data include undisclosed drivers, like new drivers in a family that should have been added to the policy, misreported mileage because policyholders are now driving more since they’re going to work in person again, and incorrect addresses on vehicle registrations.

“Insurance companies can look at their policies and say which ones are most likely not correct, and then we can highlight those so that they can reach out to their customers and make sure they have the most accurate information,” Spector said. “When they do that, a lot of times that will increase the premium because they’ll get the right risks, and the pricing can help with auto profitability.”

For property insurance, the problem may be a lack of “insurance to value” (ITV) information, which is how much insurance a policyholder needs to recover from an event that would be claimed. This can be found with the help of data and analytics services, according to Spector. Analysis of a carrier’s book of business can yield updated ITVs.

Spector pointed to a few other insurtech functions that could harness data to improve underwriting and prevent losses, such as telematics, aerial imagery, and automation of claims. In fact, aerial imagery can tie into claims automation.

“From the sky you can determine a lot of exterior characteristics about a home,” he said. “This can be particularly beneficial when there’s a hurricane because if you have an image of a neighborhood before the storm, it can give insurers the ability to get claims checks out even without being on site to evaluate the home.”

Aerial imagery also can have an impact before a loss claim. “A lot of people don’t know what kind of roof they’ve got or how many square feet their home is,” Spector said. “They get these questions from an agent or an insurance company and they don’t even know where to start. A lot of that data can be gotten from an aerial image.”

The near-universality of carrier apps that can be used to make claims helps with automation as well, Spector observed, and is enabled when data and analytics are put into digital insurance products and their apps.