Why do P&C insurance companies need property intelligence? That is what this series of blog posts has attempted to answer. First, we discussed how property intelligence can analyze risk, giving insurers a granular view of property condition and its contribution to overall risk. Next, we examined how a property intelligence platform can translate these risk analyses into risk scores, clarifying overall risk and accelerating underwriting processes. Both of these, however, mean very little without the third function of property intelligence: managing risk.
Risk management transforms property data into concrete policy action. Without this transformation, property intelligence would be little more than raw, unapplied data. While risk analyses and risk scores are valuable in their own way, it is risk management that realizes the full, transformative potential of property intelligence.
Risk management occurs when human underwriters integrate property intelligence into their existing workflows. Whereas risk analysis and risk scoring can theoretically be accomplished without human intervention, risk management is dependent on the participation of a living, breathing underwriter. Now, that does not mean that risk management rules out automation; the exact opposite is true. But any resulting automations are still the result of underwriter decision-making. As a function of property intelligence, risk management can be defined as any and all actions taken by insurance professionals in response to and in conjunction with property intelligence.
The advantages of risk management to P&C insurers are obvious. Risk management can improve the accuracy and efficiency of every insurance process, from quoting to loss control to claims. Equipped with all the tools of a robust property intelligence platform – including geospatial imagery, computer vision detections, risk scores, and more – insurance professionals can take immediate, strategic action throughout the policy lifecycle.
For example, an insurer might use risk management tools to reduce premium leakage. Using geospatial imagery, underwriters first get an instant, comprehensive view of every property in their book. Then they can use computer vision tools to determine which properties have been appropriately priced according to the presence of real risk drivers. In many cases, they will find that certain attributes have been ignored or missed entirely (real roof condition, for example, often eludes the detection of physical inspection teams). Given a new, fuller understanding of real property condition, underwriters can more accurately price risk, reducing the possibility of premium leakage. This process can then be automated for future efficiency, especially when using a property intelligence platform equipped with a customizable flagging engine.
There are many policy actions that can be the result of risk management. These include raising or lowering premiums, straight-through-processing for renewal, ordering (or foregoing) a physical inspection, and many more. However, perhaps the most exciting aspect of risk management is that it can allow insurers to fundamentally transform the way they do business. In short, property intelligence through risk management allows insurers to transition from Repair & Replace to Predict & Prevent. The former mindset focuses on reacting to losses and claims, whereas the latter empowers insurers to proactively respond to risk before losses even occur. The result is not just an improved loss ratio, but a stronger relationship between insurers and their customers.
A good example is an insurer writing policies in an area with a high risk of wildfire damage. A strong property intelligence platform – especially one that includes specific wildfire risk insights – can help these insurers to effectively manage wildfire risk, and even prevent future losses. First, the platform can analyze imagery for known risk drivers, such as tree overhang or insufficient defensible space, and even assign a specific wildfire score to each property. Underwriters can flag properties with a higher vulnerability to wildfire damage, taking note of specific risk drivers. Then, the agent can communicate with the insured to notify them of their property risk. If a policyholder takes action to mitigate risk, say by trimming some trees on their property, the insurer may lower the premium.
This interaction between underwriters, agents, policyholders, and insurers is a fulfillment of the promise of risk management. Future losses are avoided, premiums are lowered, and the relationship between insurer and insured is strengthened. With risk management, property intelligence approaches its full potential, creating tangible benefits for both insurers and policyholders. This process also helps insurers transition to Predict & Prevent, building a better insurance industry for all involved.