While catastrophe modeling can help property insurers to quantify risk, Big Data can rid the entire industry of its latency and revolutionize its relationship with insureds.
“Insurance is capital rich and data poor, and moving toward data abundance,” said Paul VanderMarck, chief products officer at catastrophe modeling company RMS, in a keynote address at Advisen’s June 4 Property Insights Conference.
The proliferation of new imaging platforms, including drones, promises not only to cut the cost of claims inspections, but provide carriers with up-to-the-minute information.
Unlike in other industries, insurers often work with data that is six months old, VanderMarck said. Half interact with their customers once a year or less.
“In a world where there is dynamic data on what’s insured,” through the Internet of Things, for example, he said, “what opportunities does that create for insurers to interact with insureds and help manage that risk?”
Companies such as GE and Michelin are putting sensors in products to track data on performance, servicing and other issues, he said.
“They’re building services, not just products, for customers,” he said. “They’re delivering a complete solution.”
New developments in modeling, meanwhile, can extend the reach of coverage.
US flood risk is the “new frontier for modeling,” VanderMarck said. “It is one of the hardest perils to model,” and so much of the risk is uninsured.
Generally speaking, though, risk is moving from “fixed assets to networks. Most supply chain risk is uninsured because it’s hard to quantify.
“And cyber is probably the least insured risk,” he added.
RMS is currently working to understand how a cyber attack could impact industries differently to assist in calculating the cost of coverage across a range of sectors.
“The availability of new data makes it an exciting time to be in this industry,” VanderMarck said.
