Driving for change

Q.2
2014
Insights for property and auto insurers
Drivi
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at
big c ics data o
hal
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and b lenges — rs
ig op
portu
nities
INSIDE:
Evolution of homeowners
data and analytics
New fire protection classes to
benefit insurers and communities
The role of building codes in reducing
natural disaster property losses
Contents
3 From Neil’s desk
4
Driving for change: Telematics data offers big challenges —
4
and big opportunities
7
Evolution of homeowners data and analytics
12Understanding the risk: New fire protection classes
to benefit insurers and communities
15 The role of building codes in reducing natural disaster
property losses
18 Q1 2014 catastrophe review
18 Fire protection by the numbers
19 Changes in reconstruction costs by state
20Motor Vehicle Report Services improve risk selection and
reduce fraud
7
20RISK:check Renewal enhanced with Driver Discovery service
20Verisk is adding property slope and site access to
360Value prefill
21Verisk Insurance Solutions Client Summit 2014:
Must-see underwriting sessions
22 Verisk conferences
23 Introducing Alan Tinney, Sales Director, Auto
24 Verisk web seminars
24 In the news
12
2
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Follow us on Twitter
@VeriskUW
Follow us on Google+ at
www.verisk.com/uwplus
From Neil’s desk
How will rich telematics data drive the future of usage-based insurance
(UBI) programs? How has homeowners underwriting evolved over the
years? Do effective building codes really reduce losses from natural
disasters? We answer those questions and more in this issue of Visualize.
Read “Driving for Change: Telematics Data Offers Big Challenges —
and Big Opportunities” to understand the evolution of UBI programs and how auto
insurers can capitalize on telematics. Our article on the “Evolution of Homeowners
Data and Analytics” explores how advancements in data and analytics are changing
the competitive landscape for insurers. And learn about the latest updates to our fire
protection classes and how they better reflect actual loss experience.
In the Industry Reflections section, you’ll learn why communities with effective and
well-enforced building codes experience lower property losses from natural disasters.
We’re pleased that the Wharton Risk Management and Decision Processes Center used
our building code ratings to examine and quantify the codes’ role in mitigating property
damage from hail.
Our Visualizations section gives you the latest updates on catastrophe claims and insured
losses and provides key statistics on community fire protection.
It’s still not too late to attend the Verisk Insurance Solutions Client Summit, May 18 to 20.
You’ll hear from experts on topics such as telematics, aerial imagery, combating fraud,
and digital technology.
Be sure to download our Visualize app on your iPad. You can also view an interactive
PDF that’s compatible with all mobile devices. You’ll never be too far from valuable
commentary on auto and homeowners underwriting.
Enjoy the issue.
Q.2
2014
Insights for property and auto insurers
A publication of
Verisk Insurance Solutions – Underwriting
Neil Spector, President
Editor
Barbara Sohn
Senior Manager, Marketing Communications
Graphic Design
John Pinsky
Senior Art Director
Anne Benkovitz
Art Director
Digital Design
Tony Monserrate
Web Designer
Keight Bergmann
App Designer
Editorial Board
John Cantwell
Vice President, Verisk Underwriting
Steve Lekas
Vice President, Verisk Underwriting
Jim Levendusky
Manager, Verisk Underwriting
Michael Gannon
Manager, Verisk Underwriting
For additional information or to submit
a letter to our upcoming Letters to
the Editor section, send e-mail to
visualizeeditor@verisk.com.
To read Visualize online and sign
up for your electronic version, visit
www.verisk.com/visualize.
Neil Spector
President
Verisk Insurance Solutions – Underwriting
545 Washington Boulevard
Jersey City, NJ 07310-1686
1-855-859-8775
www.verisk.com/underwriting
Go to www.verisk.com/visualize to download the
Verisk Visualize app or an interactive PDF that’s
compatible with all mobile devices.
© Insurance Services Office, Inc. 2014. ISO, the ISO logo, BCEGS, Driving DNA,
GeoMetric, ISO Risk Analyzer, LOCATION, Safety Scoring, Verisk Analytics, the Verisk
Analytics logo, and 360Value are registered trademarks and PPC, Verisk, Verisk
Climate, Verisk Insurance Solutions, and the Verisk Insurance Solutions logo are
trademarks of Insurance Services Office, Inc. Property Claim Services and PCS are
registered trademarks of ISO Services, Inc. AIR Worldwide, the AIR Worldwide logo,
and Touchstone are registered trademarks of AIR Worldwide Corporation. Xactware is
a registered trademark and Property InSight is a trademark of Xactware Solutions, Inc.
RISK:check is a registered trademark of Quality Planning Corporation. All other
product or corporate names are trademarks or registered trademarks of their
respective companies.
Visualize | Q2 2014
3
Driving for change
Telematics data offers big challenges —
and big opportunities
By Asaf Tamir, Head of Telematics Innovation, Verisk Telematics
The auto insurance industry as we know it is going through its
third revolution. Following the direct insurance and credit rating
revolutions, telematics data is now driving the usage-based
insurance (UBI) revolution. Rich data from telematics devices has
become so available and affordable that insurance carriers can use
it to understand driving behaviors. Instead of relying exclusively
on traditional rating variables — which are only indirect indicators of risk — insurers can now directly measure how people
actually drive.
Progressive Insurance, for example, is already capitalizing on
this revolution. The primary auto insurance product offered on
the Progressive website (the number one car insurance website,
according to Keynote Competitive Research), is a UBI product,
Snapshot. Customers can either drive with it for 30 days and get
a better rate when joining or opt in to continuous monitoring and
get additional discounts according to how safely they drive.
Progressive is using a few simple parameters, including braking
frequency, mileage, and night driving. Over the last two to three
years, Progressive reportedly sold more than a million Snapshot
policies. That huge success effectively paved the way for the UBI
revolution and pushed nearly every large insurance carrier to offer
its own version of a UBI program.
Data is everywhere
Telematics data is now available through a variety of devices.
While professionally installed equipment is still relevant (mostly
for commercial vehicles), the main type of UBI device used today
is a small gadget you can plug in yourself to your car’s on-board
diagnostics (OBD) port. The devices are relatively affordable,
but together with the cost of cellular communications and the
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Verisk Insurance Solutions | ISO AIR Worldwide Xactware
logistics associated with their provisioning and management,
they still require insurers to make a significant investment when
introducing UBI. Until now, those factors have limited UBI to
insurers able to build and fund such programs themselves.
Car manufacturers embed other telematics equipment in vehicles.
GM’s OnStar and Ford Sync are major examples. Traditionally,
data from those devices was either unavailable for insurers or of
insufficient quality for insurance purposes. The recent proliferation of smartphones is now driving some car manufacturers to
allow drivers to link their phones to car systems for infotainment
purposes. That new approach holds promise for cars to collect
more data and have that data available for drivers and their
insurers. In January, Google launched the Open Automotive
Alliance, aimed at connecting its Android smartphones with major
car brands, including Audi, GM, Honda, and Hyundai. Similarly,
Apple plans to introduce iOS in the Car, a platform that will allow
car manufacturers to enable iPhones and iPods to stream apps,
music, and other information to and from automobiles.
Smartphones alone are best-of-breed telematics devices. Most
smartphones are equipped with a variety of relevant sensors —
GPS, accelerometers, and gyroscopes — with nearly infinite
data storage and communication capabilities. They also offer a
platform for distributing new applications and communicating
with drivers. Some nimble developers are already offering apps
that collect driving and vehicle data and provide a more personalized connected-car experience. While it’s still difficult to rely on
such data and the availability of smartphones in cars, those trends
are likely to open an opportunity for insurers to collect more data
faster and at lower costs while maintaining a more personal and
real-time relationship with drivers.
The generations of UBI programs
First Generation
Verified Mileage
1
Second Generation
Verified Mileage
+ Driving Behavior
2
Third Generation
Verified Mileage
+ Driving Behavior
+ Environment
3
Rich data, poor data
Rich data challenges
Abundant and low-cost driving data is around the corner.
Nevertheless, the insurance industry is still trying to make sense of
first- and second-generation UBI programs. Those programs use
exposure-related driving variables, such as mileage, duration of
driving, and number of braking or speeding events. Traditionally,
telematics vendors made those data variables available to insurers
simply because that was the only data available. Unfortunately,
those variables are just secondary contributors to risk.
Taking UBI into the third generation will require insurers to handle
even greater volumes of data. With traditional driver rating plans,
insurers can collect just a few dozen data points per driver over
the lifetime of a policy. But telematics devices are capable of
collecting dozens of data points per driver per day. To mature into
the third generation of UBI, insurers need to find a solution for
collecting, communicating, managing, and analyzing unprecedented
quantities of data.
Understanding risky driving behavior requires richer data. Rich
data relates to the quantity and quality of data. In today’s UBI
landscape, insurers need to find a way to differentiate and make
sure their UBI program collects data that allows them to remain
competitive over time. Collecting the wrong amount or type of
data today means the current UBI program would have limited
benefits and would require redevelopment in the future.
An additional challenge is the harmonization of data across
different devices, platforms, and data sets. Building a sustainable
UBI program requires an insurer to become independent of a
specific device vendor and offer solutions for smartphones and
connected cars. A program needs to structure, validate, clean, and
bring together each such data set into a unified platform that can
analyze the data regardless of how it’s collected or how rich it is.
The only sustainable solution is rich data. Rich data ensures that
even in years to come, and as analytics continually improve, the
data could support such enhancements.
Another challenge is sensor calibration. Rich data sensors, such as
accelerometers, gyroscopes, and car computers, need calibration
so programs can interpret their data correctly. Three-dimensional
Context — road conditions, traffic patterns,
and so forth — is critical when evaluating
telematics data. Many telematics programs
analyze events and data, such as hard
braking and g-force, without the context
in which they happened.
Visualize | Q2 2014
5
Big opportunity for commercial lines
Commercial lines auto insurers can achieve their telematics goals
relatively easily. Commercial vehicle owners and fleet managers
already use telematics devices for a variety of operational reasons.
Most of the commercial vehicles in the United States are still not
equipped with telematics, but installation rates are continually
growing. That creates a huge opportunity for insurers. While
UBI has been more available for personal lines, opportunities
are increasing for commercial lines insurers to introduce new
insurance schemes for their fleet customers to benefit from
telematics. UBI may be one of those models, but there’s also
much to gain from other models, such as advanced fleet safety
and risk management solutions.
Asaf Tamir is head of Telematics Innovation for Verisk Telematics,
a unit of Verisk Analytics. In 2004, he cofounded and led Sensomatix,
a technology company that developed the Driving DNA analytics
platform for usage-based insurance and the Safety Scoring model.
Verisk Analytics acquired Sensomatix in 2013.
Once a UBI program collects,
validates, harmonizes, and
calibrates data, the challenge
is to make sense of the data.
accelerometers are considered the critical element in monitoring
how people brake, accelerate, turn, and negotiate a curve, ramp,
or traffic circle — the basic elements of driving behavior analytics.
Accelerometers are by nature uncalibrated and require extensive
processing before insurers can interpret their data.
Once a UBI program collects, validates, harmonizes, and calibrates
data, the biggest challenge lies in the ability to make sense of the
data. First- and second-generation UBI used simple counting of
a few basic driving events, but introducing the third generation
mandates a much deeper understanding of driving events and
their context. No one braking event is similar to another. For
example, it’s relatively easy to explain why braking in low speed
on a rural road is much less risky than high-speed braking on a
freeway. But it can be difficult to make sense of other types of
events and the permutations of their environmental characteristics. A good analytics platform should differentiate between the
different types of braking events while also taking their context
into consideration: where they occurred and the implications
of that location, the conditions on the road (traffic, weather,
infrastructure), and their overall contribution to risk.
Rich driving variables are the way to understand how people
drive and to sustain UBI risk models over many years.
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Verisk Insurance Solutions | ISO AIR Worldwide Xactware
What is Verisk doing?
Verisk recently formed Verisk Telematics, a business unit
devoted to the development and application of telematics
and analytics for insurance purposes. We’ve been pursuing
telematics for many years, but this new unit further
highlights our belief in the potential of telematics for
the insurance industry.
In 2013, Verisk acquired the assets of Sensomatix. Over
the last decade, Sensomatix developed Driving DNA®, an
advanced analytical platform for UBI, and the Safety Scoring®
rating model for driving behavior. Key Sensomatix personnel
joined Verisk Telematics and formed the Verisk Telematics
Innovation Center. This research and development facility
is part of Verisk Telematics and leads the technological
development of UBI programs and models for the company.
Verisk continues to file its GeoMetric® location-based
rating rule and Safety Scoring behavior-based rating rule
in many states, and we’re working with customers to
use those models for their UBI programs.
For more information on Verisk Telematics and our
programs, e-mail telematics@verisk.com.
Evolution of homeowners
data and analytics
By Douglas K. Wing, Assistant Vice President, Analytic Products,
ISO Insurance Programs and Analytic Services; and Steve Lekas,
Vice President, Property Product Management, Verisk Insurance
Solutions – Underwriting
Since the introduction of the modern homeowners policy in 1950,
home insurance has employed a high-touch underwriting process
using agents, specialized underwriters, and property inspectors to
understand and quantify the risk. In the mid- to late ’90s, personal
auto insurance began a transformation from a similar highertouch underwriting process to assessing risks mechanically using
descriptive data predictive of future loss.
That change occurred in auto insurance when a few key ingredients
for innovation were present: profitability challenges, data, and
competition. Profitability challenges created focus and added
energy for innovation and problem solving. Those challenges also
led the way for the rapid evolution in homeowners pricing and
underwriting capability. In this article, we’ll explore the other two
ingredients, data and competition.
Because very little aggregated data regarding many of those risk
indicators was available, early homeowners rating plans were very
simple. As an example, the 1991 ISO HO-3 Manual used eight to
ten rating elements that included slight variations by state. Today,
insurers file multithousand-page rate plans with thousands of
pricing tiers using dozens of rating variables.
Good, deep, clean data is critical to creating analytics that lead
to a better understanding of risk and more consistent decision
making. The speed with which new data sources and tools are
becoming available has increased steadily over the past 20 years.
Prior claim histories, Public Protection Classifications, replacement
cost estimators, insurance credit scores, catastrophe models, data
prefill, and latitude/longitude-based risk areas were only the
beginning, paving the way for highly granular risk-specific data,
such as building permits, weather, aerial imagery, sensory technology, and more. Those advancements are giving companies distinct
competitive advantages by incorporating a more complete picture
of homeowners risks into rating and underwriting decisions.
Competition
Data
A homeowners risk is complicated to underwrite. The interaction
of the owner, geography and weather, the property and its components, the condition and maintenance of the structures, and much
more all meaningfully affect the risk.
The homeowners policy of the 1950s combined a number of
existing coverages, such as multiperil dwelling, liability, and contents,
followed by a plethora of broader optional coverages. That spirit
of broadening coverage continued in homeowners for decades.
Visualize | Q2 2014
7
The evolution of U.S. homeowners underwriting
1730s
First insurance policy written
1750s
First insurance company established
1820s
to
1830s
First government regulators
1830s
The Great New York Fire
1850s
The first fire insurance in the United States
believed to have been underwritten.
Ben Franklin’s Philadelphia Contributionship
is the first insurer to underwrite
fire and market and make
contributions to fire prevention.
w
State governments become
involved in the business of fire insurance.
w
New York collects premium taxes and
requires annual statements.
w
Massachusetts mandates a method
of keeping capital reserves.
After a period of rapid increase in the
number of fire insurance companies,
the Great New York Fire bankrupts many.
Segmentation by
commercial occupancy type
Insurers begin to segment
commercial risks based on
fire loss data showing that
some occupancies (for
example, paper mills) have
greater risk than others.
1850s
1860s
8
First concentration analyses
Insurers begin employing
mapmakers for a better
understanding of
geographic risk
and exposure.
First national trade organization
After the Civil War, the National Board of Fire
Underwriters (NBFU) established as a trade
organization to make and ensure adequate rates
and proper forms for the industry. The NBFU
conducts arson investigations, researches
improved firefighting technologies, and is the
first to introduce a Standard Fire Policy, later
adopted by Massachusetts in 1873.
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
After a number of major catastrophes — Hurricane Andrew,
the Northridge earthquake, the 2004–05 hurricane season, and
the severe wind and hail of 2007 through 2011 — the homeowners industry started constricting coverage, availability, and
marketing, which continues today. But those practices may be
changing again.
Ongoing advances in pricing sophistication are increasing
insurer confidence in underwriting. That’s leading many of
the top U.S. insurers to invest heavily in marketing to increase
market share. Until about five years ago, homeowners insurance
ads were virtually nonexistent. Even during the auto insurance
ad wars of the early 2000s, the only reference to home might be
a small homeowners graphic on a multiline insurer’s auto ads.
Today, insurers are using recurring characters to pitch homeowners insurance in prime time.
By investing heavily in data and analytics, some homeowners
insurers have the confidence to offer homeowners as a lead line
and as a market differentiator from monoline auto carriers.
Highly granular rating plans and underwriting methodologies
based on predictive analytics are enabling those insurers to offer
more competitive policies without compressing margins.
Good, deep, clean data
is critical to creating
analytics that lead to a
better understanding of
risk and more consistent
decision making.
For less sophisticated homeowners insurers, modernizing their
ability to segment and price risks more granularly is the key to
remaining competitive and preventing adverse selection.
Recent advancements and the near-term future
Recent advancements in homeowners pricing use rating by
peril and property characteristics. The ability to rate by peril
has been an enormous competitive advantage to the select
few that have implemented the methodology. Insurers rating
by peril have seen their collective market share increase by
6 percent while their average loss ratios remain 7.4 points
below their competitors.
While by-peril rating is dramatically affecting insurer performance, there are opportunities to introduce additional levels of
granularity into pricing decisions. One example is how building
characteristics influence the effects of the peril.
In the 1980s, insurers understood that roofs with different
composition should have different costs, since the cost to replace
slate versus shingle isn’t the same. However, it wasn’t until the
early 2000s that insurers were able to analyze the roof materials
and age of roofs to determine what the cost difference should
be. Now, not only do insurers have access to that data, but the
industry also uses multivariate analytics and models to
determine how characteristics of the roof — including
materials, shape, and size — influence hail risk.
In the near future, underwriters will be able to take advantage
of aerial imagery for an even more precise view of roof risk.
High-resolution images will let insurers trace roof lines and
create fully dimensioned roof plans. That level of visual detail
can potentially lead to verifying prior roof damage or even give
insight into the useful remaining life of a roof.
As insurers mitigate profitability challenges, competition
increases and data becomes more available. We can expect to see
homeowners insurance follow auto’s historical trend of price
and underwriting sophistication.
1860s
Formalized property inspections
1860s
Major court ruling
1870s
Great conflagrations and valued policy
1890s
First systematic rating plans
Late
1800s
The Daily Report created to
allow a property inspection
to be completed and returned
to the insurer to decide
whether to decline the risk or price and retain
the risk; that practice enables insurers to write
risks great distances from their offices.
In Paul vs. Virginia, the Supreme Court rules
that “issuing a policy of insurance is not a
transaction of commerce,” keeping regulation
of insurance in the hands of the states.
w
The Great Chicago and Great Boston Fires
bankrupt many fire insurers, cause rates to
increase, and create an industry push for
construction materials changes.
w
Wisconsin is the first state
to enact a Valued Policy law.
The industry develops the Universal
Mercantile Schedule and Mercantile Tariff
and Exposure Formula for Measurement
of Fire Hazards.
First insurance credits
Fire-resistant building methods
and materials and fire suppression
devices used to vary the price of
fire insurance for the first time.
1900s
First tiered rating plan
1900s
San Francisco fire
Fire insurance is the first line of insurance
to attempt to make a specific rate for each
risk — made up of a cost per hundred dollars
of insurance and set based on as many
variables as underwriters can collect
when visiting the property.
The San Francisco earthquake
of 1906 leads to fires of such
magnitude that losses were
said to amount “to a sum as large as the
aggregate of all great conflagrations in the
United States for the [prior] fifty years.”
Visualize | Q2 2014
9
1910s
First government rate approvals
1920s
Inland marine
policy boom
New York is the first state to supervise
insurer rates. Three years later, the National
Convention of Insurance Commissioners
advocates wider supervision.
With the inland marine
policy boom, total
premium more than
doubles and competition
increases quickly.
1930s
IMUA forms
1940s
Major federal legislative changes
1950s
1960s
to
1980s
10
The Inland Marine Underwriters Association
forms to set rates and commissions, seeking
cooperation from the fire insurance industry.
w
In the United States vs. Southeastern Underwriters Association, the U.S. Supreme Court
decides that a federal antitrust law, the Sherman
Act, applies to the business of insurance.
wThe McCarran-Ferguson Act enacted,
providing, in part, that the business of
insurance be subject to the laws of the
several states that relate to the regulation
or taxation of such business.
First multiperil policy
The first homeowners multiperil policy
created — combining fire, inland marine,
and liability policies. The new combined policy
is less expensive than purchasing separate
policies. The multiperil policy takes off because
it’s more economical, simpler, and broader.
High-growth period
Homeowners business
experiences a high-growth
period, as well as steady
100-plus combined
ratios for the majority
of years in the period.
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
Douglas Wing, vice president of Analytic
Products for ISO Insurance Programs and
Analytic Services, is responsible for the ISO
Risk Analyzer suite of predictive analytic tools.
He leads ISO’s initiatives to enhance its
offerings through analytics and predictive
modeling across all lines of insurance. Before joining Verisk, Doug
was in Actuarial Research and Development at Liberty Mutual.
Steve Lekas, vice president, Property Product
Management for Verisk Insurance Solutions –
Underwriting, is responsible for product
development and management strategies for
property lines as well as leading the development
and launch of innovative property products.
Before joining Verisk, he was director of Homeowners Product
Management and Actuarial at Esurance (an Allstate company).
Predictive Analytics
Fifteen years ago, the thought of entering an address into
a database and getting valuable information related to the
house was a distant dream. Now, such data to support the
business decisions of homeowners insurers is commonplace. The Verisk Insurance Solutions group at Verisk
Analytics has been at the forefront of this critical evolution.
One of its latest services to support ratings is ISO Risk
Analyzer® Homeowners, which includes the homeowners
environmental module and the homeowners building
characteristics module. The environmental module delivers
nine separate peril loss costs at the census block group and
ZIP code levels. ISO Risk Analyzer Homeowners delivers
highly segmented and accurate loss cost predictions for
fire, lightning, water (weather- and nonweather-related),
hail, wind, liability, theft and vandalism, and other perils.
The ISO Risk Analyzer Homeowners Building Characteristics
Module is a powerful analytic tool that incorporates
property-specific features to project highly refined loss cost
relativities across nine perils. The building characteristics
module uses 20 different property characteristics and
determines which of them are important, how much
they matter, and how they interact with one another.
Homeowners: A growing concern
Homeowners premium continues to grow (outpacing auto
premium growth), making the potential opportunity for the
industry that much greater.
1970s
Insurance Services Office established
1970s
Fire protection and simpler contracts
Twenty years ago, in 1994, homeowners direct written premium
(DWP) was about $24.4 billion, or only 24 percent of personal
auto’s $100.7 billion DWP.
In 2012, homeowners DWP was about $76.9 billion, or 44 percent
of auto’s $174.3 billion.
The statistics demonstrate that when homeowners is unprofitable,
it’s a much bigger weight on insurers’ profits.
$24.4 B = 24% of
$76.9 B = 44% of
$100.7 B
$174.3 B
1990s
to
2000s
1990s
ISO forms on April 1, 1971, as a national
voluntary, nonprofit, unincorporated association
of insurers — creating economies of scale, more
efficient operations (such as multiline policies and
standardized policy language), and a storehouse
of statistical data and actuarial analyses for the
industry. Over the next several years, ISO
consolidates most of the major state, regional,
and national rating and statistical organizations
for various lines of property/casualty insurance.
w
ISO Public Protection Classifications (PPC™)
are first used in pricing homeowners policies.
w
Legislators and regulators require “easy
to read” insurance policies. Insurers
react by introducing the first simplified
policies in the personal lines marketplace.
Major catastrophes influence risk management
w
Hurricane Andrew negatively affects industry
profits — prompting insurers to seek higher
rates and increase consideration of risk
concentration.
w
Northridge earthquake reminds insurers of
the potential for large losses in homeowners
and negatively affects industry profits.
w
Hurricanes Katrina, Rita, and Wilma bankrupt
many insurers and cause others to scale
back coverage and availability in hurricaneexposed areas and purchase more reinsurance.
New property characteristic
rating variables introduced
w
Rating uses age
of construction.
w
Rating based on roof material is introduced.
2000s
Big data affects rating
Pricing sophistication within homeowners
begins to take off.
w
Credit scoring introduced
in homeowners rates.
w
The first by-peril homeowners products introduced.
w
Homeowners pricing uses auto variables.
w
Companies start using automated tools
to develop replacement cost estimates
for homes.
Visualize | Q2 2014
11
Understanding the risk:
New fire protection classes to benefit
insurers and communities
A Conversation with Robert Andrews
Vice President, ISO Community Hazard Mitigation
Robert Andrews sat down with the editors of
Visualize to discuss ISO’s Public Protection
Classification (PPC™) program, which analyzes
the quality of fire protection in thousands of
communities around the nation. Virtually all U.S.
insurers of homes and business properties use
PPC in calculating premiums. Mr. Andrews talks about the factors
that led to the development of an updated PPC structure, the new
split classifications, and the effect on insurers and communities.
Visualize: Let’s start with the basics. What is PPC?
Robert Andrews: We derive Public Protection Classification (PPC)
grades from the Fire Suppression Rating Schedule (FSRS) — a
schedule that ISO developed and uses to review the fire suppression
capabilities of communities. The PPC grading system provides
information on the level of public fire protection in communities
across the United States. To determine a community’s PPC, our
field staff surveys the emergency communications system, fire
department, and water supply.
A PPC of 1 represents a superior level of property fire protection.
A PPC of 10 indicates that the area’s fire suppression program
doesn’t meet our minimum criteria.
Visualize: How do insurers use PPC information?
Andrews: Insurers use PPC information in many ways. PPC can
help determine how much to charge for coverage: If a community
has a lower PPC, its property owners, both commercial and
residential, usually pay lower premiums, assuming everything else
is equal. Insurers can manage the quality of fire protection across
their book of business and even identify opportunities for writing
new business.
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Verisk Insurance Solutions | ISO AIR Worldwide Xactware
Visualize: What factors does ISO use to determine a PPC?
Andrews: PPC is based primarily on the quality of a community’s
fire department (50 points), water supply (40 points), and
emergency communications (10 points). For example, when
we evaluate a fire department, we look at equipment, staffing,
training, and geographic deployment of fire companies. When
we evaluate water supply, we inspect hydrants and conduct flow
tests. And for emergency communications, we evaluate dispatch
facilities. Last year, we also began recognizing a community’s fire
prevention, public fire education, and fire investigation efforts,
which together account for an additional 5.5 points (out of a
total 105.5 available points).
Visualize: What’s a split class, and how will it change on July 1, 2014?
Andrews: A split classification is one in which two classes could apply
based on the distance from the property to the responding fire
station or whether the property is within 1,000 feet of a creditable
water supply. For example, in a split-class 4/9 community, the 4
refers to properties in the community within 5 road miles of the
primary responding fire station and within 1,000 feet of a creditable water supply; the 9 refers to properties within 5 road miles of
the station but not within 1,000 feet of a creditable water supply.
The primary reason we’re revising the split classes is that properties
with Class 9 (or 8B*) in split-class communities have better loss
experience than properties with Class 9 (or 8B) in single-class
communities (communities in which the same PPC applies to all
properties). For example, in a Class 4/9 community, a property
that currently receives PPC 9 is really a Class 4 that happens to be
*Class 8B is a PPC for communities that provide superior fire protection services and
fire alarm facilities but lack the water supply required for a PPC of Class 8 or better.
more than 1,000 feet from a creditable water supply. The revised
system changes the Class 4/9 to a 4/4X, the X indicating that the
property is more than 1,000 feet from a creditable water supply.
Those changes apply in every split class, so a 3/9 would be a 3/3X, a
5/9 would be a 5/5X, and so on. In our 8B split classes, we’ll replace
the 8B with the letter Y. So Class 4/8B will be renamed 4/4Y,
Class 3/8B will be 3/3Y, and so on. The reasoning is the same: We
want to be more precise in how we classify these properties, so that
their PPC codes are more reflective of the actual loss experience.
The chart illustrates the new split classifications.
Prior
Classification
New
Classification
Prior
Classification
New
Classification
1/9
1/1X
1/8B
1/1Y
2/9
2/2X
2/8B
2/2Y
3/9
3/3X
3/8B
3/3Y
4/9
4/4X
4/8B
4/4Y
5/9
5/5X
5/8B
5/5Y
6/9
6/6X
6/8B
6/6Y
7/9
7/7X
7/8B
7/7Y
8/9
8/8X
8/8B
8/8Y
9
9
8B
8B
Visualize: How does the new PPC structure recognize the
reduced loss potential of individual properties?
Visualize: How will offering new split classes and a Class 10W
help insurers?
Andrews: No matter how great their training or advanced their
equipment, firefighters need access to a nearby water source to
extinguish a fire. But the proximity of a water source and its
effects on fire suppression can vary.
The new split classes provide more granularity, reflect actual loss
experience more effectively, and allow for more accurate risk
pricing. The changes will enable increased competition and align
better with industry trends. Put simply, these new classes will help
insurers develop appropriate rates for the risks.
The new Class 10W will also provide insurers the opportunity
to expand their portfolios. Insurers that avoided Class 10 risks in
the past may see potential for new business, where nearby water
sources could potentially reduce losses.
Visualize: Will the new split classes help communities?
Andrews: Absolutely. People who buy property insurance in such
communities should see their insurance premiums reduced. Even
those who don’t purchase insurance can benefit from the new
split classes. With a better understanding of the level of fire
protection in their community, residents can advocate for specific
safety improvements in their neighborhoods. Whether the
upgrades are new hydrants or new fire stations, they’ll make
everyone in those areas safer in the event of a fire.
Andrews: We’re introducing a new class: 10W. Instead of assigning
a PPC 10 to all properties located beyond 5 road miles of the
responding fire station, we’re introducing the “10 Water,” or 10W,
class and assigning it to those properties between 5 and 7 road
miles from the responding fire station but within 1,000 feet of a
creditable water source. Class 10W represents a property that has
better loss experience than a traditional Class 10.
In addition, while not directly related to split classes, the introduction of community risk reduction initiatives in PPC grading
can motivate communities and residents to help control fire losses.
By advocating for public fire safety education or expanding a
community’s fire prevention activities, local residents will be
able to see the results in a better PPC.
Visualize | Q2 2014
13
The new split
classes provide
more granularity,
reflect actual loss
experience more
effectively, and
allow for more
accurate risk pricing.
Visualize: Do you expect many areas to be eligible for the new
classes?
to increase only minimally. We already have test files available.
Those who want a copy should contact their LOCATION PPC
project manager.
Andrews: Yes. We expect that approximately 19,000 communities
across the country will receive the new X and Y classes and have
properties eligible for the new Class 10W. Note that we’ve filed
the PPC changes in all states except Hawaii, Idaho, Louisiana,
Mississippi, North Carolina, and Washington.
Visualize: Are insurers required to use the new classes by July 1?
Andrews: No, they’re not. While we believe the new classes are
beneficial, it’s up to each insurer to decide whether to adopt,
not adopt, or modify the new classes by July 1, 2014.
For LOCATION® customers, we plan to support the current split
classifications (without the X, Y, and 10W codes) for the PPC
Enhanced Service only, until the end of 2016.
Visualize: What is the expected effect of the changes on the
LOCATION PPC database?
Andrews: We’ll return the new PPC classes as applicable in the
enhanced version of the LOCATION PPC database. The format,
structure, and field names will not change, and we expect file sizes
14
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
Robert L. Andrews is vice president of ISO Community Hazard
Mitigation, part of the Verisk Insurance Solutions group at Verisk
Analytics. He’s responsible for the daily operations of the division,
which evaluates municipal fire protection, building code enforcement,
and flood mitigation in communities around the country. Before
assuming his current role, he was the mid-Atlantic and southeastern
regional vice president for Verisk Commercial Property. In that role, he
managed field operations staff who performed surveys at individual
properties and businesses.
To learn more about the PPC changes, e-mail
ppc-cust-serv@iso.com or call 1-800-444-4554.
You can also visit www.isomitigation.com.
For more information about LOCATION, contact
your LOCATION PPC project manager or e-mail
location@verisk.com.
The role of building codes in reducing natural
disaster property losses: Hailstorms in Missouri
An issue brief by Jeffrey Czajkowski and Kevin Simmons
To reduce losses from natural disasters, communities must
properly enforce effective building codes.
•Strong building code enforcement is frequently touted as
a critical component to reducing property damage due to
natural disasters.
•However, many states in the United States have no statewide
building code in place; adoption is up to individual municipalities.
Even if localities adopt similar building code standards, it’s
unlikely all jurisdictions would equally and/or properly enforce
their adopted codes.
Hailstorms are a persistent and chronic source of property
losses for homeowners and insurance companies in the
United States.
•U.S. property insurer losses due to hailstorms are conservatively
estimated at $1.6 billion per year. In recent years, the trend in
severe weather damage has increased significantly. In 2011, the
insurance industry experienced its worst wind/tornado/hail
year ever, at more than $26 billion in claims.
•Forty-four percent of the country is at “average risk” (2 to
3 hailstorms per year on average) or above of being hit by a
hailstorm, with 75 percent of the cities in the continental
United States experiencing at least one hailstorm per year.
Hail losses were the second-largest cause of insured property
loss in Missouri from 2008 to 2010, as well as the most
frequent source of a loss claim incurred.
•For each of the three years from 2008 to 2010, affected ZIP codes
in Missouri averaged 4,000 claims per year, with an average loss
of approximately $7,500 per claim.
•Missouri is a state where building code adoption and enforcement
are at the jurisdictional level.
Source: Verisk Climate
ISO’s Building Code Effectiveness Grading Schedule
(BCEGS®) ratings provide a joint assessment of both the
stringency of adopted codes and how well communities
enforce those adopted codes.
• Since 1995, ISO has administered the BCEGS ratings
for the property/casualty insurance industry across the
entire country. The ratings place special emphasis on the
mitigation of natural hazard losses and the role of code
enforcement.
• We use the BCEGS ratings in Missouri to examine and
quantify the role that effective and well-enforced building
codes play in the mitigation of residential property
damage from hail.
Visualize | Q2 2014
15
Adhering to local building
codes and communities’
ensuring the proper licensing
of contractors play a critical role
in the mitigation of hail losses.
Based upon various industry and exposure-based models, the
more favorably rated ZIP codes in Missouri — with effective
and well-enforced building codes — significantly reduced
damage from hail from 12 to 28 percent on average, as
compared with less favorably rated and unclassified ZIP codes.
•By adopting and enforcing appropriate building codes, a midsize
community of 50,000 people that experiences a moderate hailstorm could expect to reduce losses by approximately $4 million
to $8 million.
•Highlighting this type of substantial savings is critical for decision
makers weighing the costs and benefits of implementing more
effective and well-enforced building standards.
We model industry- and exposure-based hail claims
insurance data from 2008 to 2010 in the highly hailimpacted state of Missouri.
•The property loss data comes in two forms: 1) ISO property/
casualty insurance industry claim data aggregated at the ZIP
code level and 2) more granular exposure-based data from a
national property insurer.
•We use data on insured losses from 2008 to 2010 to explain
the observed damage while controlling for hazard (for example,
hail size and frequency), exposure, and vulnerability variables
(for example, construction type and roof type) that can either
increase or decrease loss.
•For our loss models, we use a discrete group of BCEGS ratings
in the empirical analysis of “more favorable” (average ratings
1 to 4), “less favorable” (average ratings 5 to 10), and “unclassified”
(average rating 99).
Adhering to local building codes and communities’ ensuring
the proper licensing of contractors play a critical role in the
mitigation of hail losses.
•Proper installation (for example, only one layer of shingles) and
the quality of materials used to construct the roof and supporting
structures determine how much damage a structure will sustain
if exposed to hail.
•It’s better to have some minimally effective and enforced code
in place as opposed to none at all.
16
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
Jeffrey Czajkowski (jczaj@wharton.upenn.edu)
is the Travelers and Willis Research Network
Fellow at the Wharton Risk Management and
Decision Processes Center. He holds an M.S. in
environmental and urban systems from Florida
International University (FIU) and a Ph.D. in
economics from FIU. His primary research fields are the economics
of natural hazards and environmental economics. Leading risk,
natural hazards, and environmental economics journals have
published his research.
Kevin Simmons (ksimmons@austincollege.edu)
holds the Clara R. and Leo F. Corrigan Chair
of Economics at Austin College. Dr. Simmons
received his Ph.D. in economics at Texas Tech
University, where he developed an interest in the
economics of natural hazards. In 2010, he served
as a Fulbright Scholar in Norway and will again serve as a Fulbright
Scholar in Canada in 2014. Funding for his research has come from
NOAA, NIST, and the National Science Foundation. In addition, he
has received funding from various insurance-related institutes, the
Institute for Catastrophic Loss Reduction (Toronto, Ontario), and the
Insurance Institute for Business and Home Safety (Tampa, Florida).
About the Wharton Risk Center
Established in 1984, the Wharton Risk Management and Decision
Processes Center develops and promotes effective corporate and
public policies for dealing with catastrophic events, including natural
disasters, technological hazards, terrorism, pandemics, and other
crises. More information is available at http://www.wharton.
upenn.edu/riskcenter.
The authors acknowledge research support by the Travelers
Companies, Inc., and ISO.
Reprinted with the permission of the Wharton Risk Management
and Decision Processes Center, University of Pennsylvania.
Hail Loss in Missouri: 2008–2010
The map shows the location of each
of the 532 ZIP codes in Missouri with
a hail loss in at least one of the three
years from 2008 to 2010, overlaid with
their average BCEGS rating. Among the
532 ZIP codes with at least one claim,
59 percent have a BCEGS rating — either
more favorable (19 percent) or less
favorable (40 percent). Thus, for our
analysis, conditional upon the occurrence
of the hazard, only 41 percent of ZIP codes
in Missouri used in the loss analysis have
an unclassified 99 BCEGS rating. The
more heavily populated areas of the state,
such as Kansas City, St. Louis, Joplin,
Springfield, and so forth, have BCEGS
ratings in place.
More favorable BCEGS (≤4)
Less favorable BCEGS (≥5)
BCEGS not rated (99)
No hail loss data between 2008 and 2010
Expected Hail Damage by Hail Size and BCEGS Ratings
We are able to use our industry
More favorable BCEGS
loss model results to illustrate
expected damages. For example,
Less favorable BCEGS
BCEGS not rated
35,000
the chart shows predicted losses
from our estimations for various
30,000
also illustrates lower average
predicted damages in ZIP codes
with more favorable BCEGS
ratings for all hail sizes.
Average Damage
categories of hail size. The chart
25,000
20,000
15,000
10,000
5,000
0
.5
1
1.5
2
2.5
3
Hail Size (inches)
Visualize | Q2 2014
17
Q1 2014 catastrophe review
The first quarter’s six catastrophes incurred $2.2 billion in
insured losses.
As reported by Verisk’s Property Claim Services® (PCS®), catastrophe activity in the first quarter of 2014 was slightly below average.
PCS designated six catastrophe events, amounting to $2.2 billion in
insured losses in the United States. Unsurprisingly, five of the six were
winter storm events, including the “polar vortex,” which occurred in
January. The polar vortex was responsible for the vast majority of the
quarter’s catastrophe losses — more than $1.5 billion across 17 states.
The 2014 results are slightly below the ten-year average (2005 to
2014): seven events and approximately $2.5 billion.
This year’s first quarter was the quietest since 2011, in which seven
events caused approximately $2.2 billion in catastrophe losses. It
was followed in 2012 by the most severe first quarter of the past
decade, in which six catastrophe events led to $3.6 billion in losses.
In Canada, the first quarter was catastrophe-free for the second
year in a row. Catastrophe 25, a winter storm designation from
December 22 through December 26, 2013, was the last catastrophe
designated for Canada, with nearly 28,000 claims and with
approximately $194.1 million in losses.
This is the third first quarter in a row in which no catastrophes
occurred in Canada. In 2009, 2010, and 2011, only one catastrophe
event occurred in each first quarter.
First-quarter activity tends to account for a small portion of U.S.
and Canadian catastrophe losses. The second quarter, already upon
us, brings with it the start of hurricane season, the annual gauntlet
that can pose the greatest threat to catastrophe team contingency
plans. The months that follow will show whether the quiet 2013
season ushered in a false sense of security.
Catastrophe Activity
2
400
1
0
0
1
Q
11,570
Number of FPAs
10,000
8,495
8,621
8,000
6,000
5,375
5,235
4,000
2,372
2,000
0
65
1
2,244
686
2
1,950
1,071
3
4
5
6
7
8
8B
PPC
(lower PPC value used for split-class areas)
18
Q
1
Fire Protection Area Distribution by PPC
12,000
The graph at right illustrates PPC
distribution across fire protection
areas. Lower PPC numbers indicate
greater fire suppression capability.
Our statistics show that those
communities have better loss
experience — and that’s good
news for property insurers.
Q
1
Q
1
20
Q
1
Q
Q
Q
1
20
07
1
20
20
1
20
Q
1
Q
Fire protection by the numbers
20
14
3
800
20
13
4
1,200
20
12
5
1,600
20
11
6
2,000
20
10
7
2,400
09
8
2,800
08
9
3,200
06
10
3,600
05
Personal property losses accounted for 75 percent of first-quarter
activity ($1.7 billion), followed by commercial property losses at
23 percent and vehicle losses at 2 percent. Seventy-three percent of
polar vortex losses came from personal property, with 26.7 percent
from commercial property and 0.3 percent from auto.
Catastrophe Events
Catastrophe Losses
4,000
1
First-quarter 2014 catastrophe activity affected 19 states, with
Georgia sustaining the greatest losses ($318 million). New York
and Pennsylvania followed, with $296 million and $219 million,
respectively. Georgia was also among the top states in the first quarter
of 2013, with catastrophe losses of $640 million. The most affected
state of the first quarter of 2013 was Mississippi, with $805 million.
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
9
10
Fire protection by the numbers
(continued)
We track and regularly update key numbers of interest to insurers,
community officials, and the fire service. Below are a few national
stats on community fire protection and our Public Protection
Classifications (PPC™) — a grading from 1 to 10 that measures
the quality of public fire protection.
52,208
1,599
10,649
We’ve also mapped 1,599 fire stations in the United States that
lack response capabilities for structure fires. Those stations are
insufficient to receive credit in our PPC gradings.
1,115
fire stations that meet minimum criteria for fighting a
structure fire, including 24x7x365 first-alarm response
and sufficient personnel, equipment, and training to
support fire suppression operations
33,758
fire stations that lack response capabilities for
structure fires
recognized fire stations that provide automatic aid —
assistance dispatched automatically by contractual
agreement between two communities or fire districts
to all first-alarm structural fires
47,684
fire protection areas1
30,359
split-class fire protection areas2, where more than one
PPC applies
subscription-based fire protection areas
unique water supply systems — including large
municipal water systems, individual hydrants, and
alternative water sources — mapped in our files
3,206
noncreditable water supply systems that don’t meet
our minimum criteria for effective fire protection
3,299
fire protection areas with tanker shuttle operations
(in lieu of hydrants) — where tankers transport water
to fire scenes
6,826,278
individual hydrants and other static water supply points
1. A fire district, community, county, or any other legally defined geopolitical jurisdiction, or a portion of it, providing
fire suppression services and assigned a unique Public Protection Classification (PPC)
2. B
e sure to read “Understanding the Risk: New Fire Protection Classes to Benefit Insurers and Communities”
on page 12 for more information on split classes.
Changes in reconstruction costs by state
(April 2013 to April 2014)
Replacement cost estimates will continue
to rise in the second quarter of 2014.
NH
WA
MT
VT
ND
OR
ME
MN
ID
NY
WI
SD
UT
CO
CA
AZ
IL
KS
OK
NM
NJ
OH
IN
DE
WV
MO
MD
VA
KY
DC
NC
TN
AR
SC
MS
TX
CT
PA
IA
NE
NV
AL
GA
LA
To learn more, view the 360Value® Overview
of Property Reconstruction Cost Changes
for second-quarter 2014.
FL
HI
MA
RI
MI
WY
The year-over-year increase in reconstruction costs grew approximately 3.0 percent
for the previous four quarters (2Q–4Q 2013,
1Q 2014). Reconstruction costs are still up
for the period between April 2013 and
April 2014; however, the increase is half of
the recent trend at 1.5 percent. Contributing
to that change is an overall decrease in
materials costs in the United States.
AK
Legend
0.00 – 1.00%
3.01 – 4.00%
1.01 – 2.00%
4.01 – 4.08%
2.01 – 3.00%
Visualize | Q2 2014
19
Motor Vehicle Report Services improve
risk selection and reduce fraud
Policyholder driving violation information is an important part
of auto underwriting. But the high expense requires insurers to
think beyond just ordering a motor vehicle report on every driver.
Verisk’s Motor Vehicle Report Services suite provides auto writers
with sophisticated tools to optimize their spend. The services
include motor vehicle reports (MVRs), a violation predictor
model, Driver Discovery, and Violation Monitoring.
•We can provide full driver abstracts from all 50 states and
the District of Columbia. And our intelligent ordering system
can combine the use of archive and database MVRs with
our violation predictor model so that you order only the
information you need.
•Driver Discovery helps you find new drivers throughout the
policy life cycle. It monitors policyholder households for newly
licensed drivers and drivers who’ve moved into the household.
You get alerts only for drivers who don’t have coverage through
another policy. Our ability to check for outside coverage virtually
eliminates underwriters having to chase down false leads.
RISK:check® Renewal enhanced
with Driver Discovery service
We’ve enhanced RISK:check® Renewal —
a sophisticated underwriting tool to help you
identify rating error on in-force policies —
with Driver Discovery. Personal auto
insurers use RISK:check Renewal to correct
erroneous or out-of-date information on
policies before renewal. And now we’ve
added the functionality of our Driver
Discovery service. Driver Discovery uses
data from the various state departments of
motor vehicles to identify households with
newly licensed drivers or licensed drivers
who have recently taken up residence in the
household. That
allows insurers
to rate the
policy correctly
before making
a renewal
offer to the
policyholder.
Learn more
20
•Violation Monitoring tracks drivers for violations throughout
the policy life cycle. Depending on the thresholds you set, you’ll
receive either an alert or an MVR. You can access driver violation
reporting — including a five-year history of MVRs — through
our online portal, create custom queries, and search large
volumes of data.
The advanced tools and analytics in the suite can help you
improve risk selection, control expenses, reduce fraud, and
maximize premium accuracy.
Verisk is adding property slope and
site access to 360Value® prefill
Powered by Verisk Climate technology
Working with Verisk Climate, Verisk
Underwriting is adding property slope and site
access to the list of building characteristics
offered in its 360Value® property prefill offering.
Soon, when you enter an address in 360Value,
the system will prefill as many as 21 propertyspecific building characteristics for residential
structures and 13 for commercial structures.
Property slope refers to the grade of the land
on which the property sits. Typically, the steeper
the grade, the more it costs to reconstruct the
property. Site access refers to any impediments contractors face to reach the worksite
easily. Properties located in remote areas or in difficult-to-reach areas, such as islands
without bridges, cost more to reconstruct. Verisk Climate uses innovative analytics
based on proprietary technology employing satellite, topographical, and mapping
sources to determine steep slopes and uses road network data to determine island
access, remote/rural, and urban areas.
The number of properties that meet those criteria varies greatly by region and in
many areas can be small. However, the effect on the replacement cost estimate can be
significant. Incorporating reliable information on property slope and site access will
help insurers confirm that their policyholders have adequate coverage for a potential
loss and collect premium commensurate with the actual risk.
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
Verisk Insurance Solutions Client Summit 2014
Must-see underwriting sessions
Verisk is getting ready for its upcoming Client Summit at Loews
Portofino Bay Hotel at Universal Orlando®, May 18 to 20. The
conference is a premier venue for property/casualty insurers to
attend educational sessions, hear from industry experts, and learn
about the latest industry innovations and strategies.
Verisk Insurance Solutions – Underwriting will host several
sessions and product showcases this year. Here are some we think
you’ll find particularly interesting:
Combating Fraud with Point-of-Sale Analytics
Personal auto insurance has become hypercompetitive, making it easy for consumers to
shop for auto policies. Unfortunately, that
ease of doing business can also make it easier
for fraudsters to obtain policies using false
information. Learn about a new fraud database
concept that Verisk and a number of leading auto
writers are considering.
Get the Big Picture: Integrating Aerial Imagery into Your
Underwriting and Claims Workflow
Xactware introduces Property InSightTM — a product that collects
data from multiple sources, including ultrahigh-resolution aerial
imagery, and instantly provides professionals with detailed roof
plans and other key information.
industries. Learn more about how the property/casualty industry
is going digital and the trends that allow insurers to gain the full
benefits of implementing digital technologies in their businesses.
Start Your Engines: Increasing Efficiencies in Auto Underwriting
Get an overview of best practices for portfolio improvement,
expansion, application of portfolio analytics, and efficiency.
We’ll discuss:
•how to identify shortcomings in current underwriting processes
•best practices to improve risk selection and underwriting
•how to improve your current book of business by identifying
additional risk and opportunities for growth and operational
efficiency
The Telematics Tipping Point: Are You Ready?
Get a pragmatic step-by-step overview of how to implement a
differentiated usage-based insurance (UBI) program. Today’s
market leaders successfully implementing telematics have taken
market share from their competitors. Auto insurers who don’t
have telematics programs in place are at greater risk for adverse
selection. Learn why stepping into the competitive market with
a next-generation telematics program is now necessary.
Although preregistration is no longer available, you can still register
on-site. Go to www.verisk.com/cs for more information.
Homeowners Competitive Strategies: Leap Ahead with
New Analytics for Pricing and Underwriting
A common goal for many homeowners insurers is to make better
and faster underwriting decisions while reducing expenses.
We’ll demonstrate how you can do just that by using data,
analytics, and new technologies.
Reimagining a Digital Experience with an Engaging and
Intuitive User Interface
As we look at technology adoption over the last few years, it’s
easy to see that the world is going digital. Digital technology is
significantly and single-handedly transforming a broad range of
Visualize | Q2 2014
21
Verisk conferences
Every year, Verisk sponsors conferences to help you keep current on important issues,
learn new techniques and best practices, network with your peers, and meet our expert
staff. Here’s a look at what’s ahead:
Verisk Insurance Solutions Client Summit 2014
May 18–20, 2014
Orlando, Florida
Our program will help
you stay up to date with
emerging trends, share
best practices with your
peers, and learn about
the latest products and
services. We’ll be offering
a variety of interactive
sessions for industry
professional at all levels
and in all disciplines.
Here’s a sampling of the
underwriting sessions on
the agenda:
• The Telematics Tipping
Point: Are You Ready?
• Start Your Engines:
Increasing Efficiencies
in Auto Underwriting
• Get the Big Picture:
Integrating Aerial Imagery into Your Underwriting and Claims Workflow
• Combating Fraud with Point-of-Sale Analytics
• Homeowners Competitive Strategies: Leap Ahead with New Analytics for
Pricing and Underwriting
• Reimagining a Digital Experience with an Engaging and Intuitive User Interface
You can still register on-site. Go to www.verisk.com/cs for more information.
22
Verisk Insurance Solutions | ISO AIR Worldwide Xactware
AIR Envision 2014
May 13–15, 2014
Scottsdale, Arizona
AIR Worldwide, a member of the
Verisk Insurance Solutions group,
is hosting this client conference for
the catastrophe modeling industry.
Attendees will gain new insights into
the best strategies for risk management. Topics include previews of
new and updated models for flood,
hurricane, thunderstorm, and
earthquake. We’ll also discuss
Touchstone®, AIR’s next-generation
modeling platform.
Introducing Alan Tinney,
Sales Director, Auto
2014 Executive Summit and Risk Symposium
June 16, 2014
London, England
Verisk Insurance Solutions returns to London
for the 2014 Executive Summit and Risk
Symposium. Verisk hosted its inaugural Risk
Symposium in London last year. This year
we’ve expanded the event to add a program
specifically for senior executives.
The Executive Summit — Morning sessions
The exclusive event invites executive-level decision makers in the London and
European markets to meet, network, and share their vision and expertise on
many key issues in insurance risk.
The Risk Symposium — Afternoon sessions
We’ve assembled a comprehensive lineup of industry professionals to share their
expertise on topics that include catastrophe risk, data management, aerial imagery,
and much more.
You can register at www.verisk.com/rs. For more information or to receive
updates, send e-mail to risksymposium@verisk.com.
2014 Farm Bureau Underwriting Conferences
Verisk Insurance Solutions is pleased to be a sponsor of the following Farm Bureau
conferences, a series of conferences from Farm Bureau insurance companies.
Southern Regional
Underwriting
Conference
June 22–25
Carolina Beach,
North Carolina
Midwestern/Western
Underwriting
Conference
July 13–16
Branson, Missouri
National Underwriting
Executives Conference
July 27–30
Golden Isles, Georgia
Alan Tinney
joined Verisk
Insurance
Solutions –
Underwriting
in March as sales
director, Auto.
Alan is responsible for developing and implementing strategic plans
and coordinating customer strategy
for the Verisk Underwriting auto team.
He’ll work with insurers to develop and
implement solutions to enable them to
evaluate and segment auto risk properly,
improve the customer experience, and
realize opportunities for profitable growth.
Alan was most recently vice president
of National Accounts at Equifax, where
he was rewarded for outstanding
performance in his first year of service
to the insurance division. Before
Equifax, he worked for ChoicePoint –
LexisNexis for 20 years, where he was
regularly recognized for outstanding
performance. During that time, he
served in many levels of the sales
organization, from regional manager
to assistant vice president of National
Accounts. Through his experience and
knowledge of the industry, he brings a
new perspective that will allow Verisk
to capitalize on the competitive
advantages of its auto products and
services and offer additional value to
the insurance customer experience.
Visualize | Q2 2014
23
Verisk web seminars
In the news
Upcoming
Here’s a look at some of the
newsworthy happenings at Verisk:
Verisk experts speak about hot industry topics
Sign up for complimentary upcoming seminars. Here’s one that might interest you:
Usage-Based Insurance: Better Drivers in the Making?
Monday, June 16, 2014
The traditional view of insurance is to estimate risk and price it based on retrospective
loss experience. But what if telematics and usage-based insurance could do more
than predict risk? What if they could actually change risk by changing driving behaviors?
In this thought-provoking session, we’ll explore how strong feedback mechanisms
allow drivers to modify their behaviors — thereby changing the level of risk.
New Verisk Telematics Division
Offers Filed Driver Discount Program
AIR’s Touchstone to Integrate
Third-Party Catastrophe Data
and Models
Verisk Analytics Divisions PCS and
Verisk Climate to Integrate Natural
Hazard Analyses into Catastrophe
Bulletins
On Demand
In case you missed them, you can also listen to these on-demand seminars.
Is the sellers’ market back?
Construction and remodeling
are on the upswing. How
did the property insurance
industry fare in 2013? You’ll
learn about the findings of
Xactware’s 2013 Property
Report for the United States.
You’ll get insights that will help
you understand last year’s
major trends and prepare for
the upcoming year.
Building Safety into Your Business
Model Using Telematics
Rating Solutions: Powered by Predictive
Analytics?
Learn how you can apply predictive
analytics to telematics-based data to
analyze the unique signature or “DNA”
of how a vehicle operates. We use our
upcoming Safety Scoring® manual rule
as a case study of how you can apply
those insights in auto insurance rating
and communicate events to policyholders to help prevent accidents before
they happen. Finally, we discuss where
safety fits in the context of a broader
usage-based insurance (UBI) program,
with examples of how a safety-oriented
approach can help foster stronger
relationships with policyholders.
Precision in pricing in today’s competitive
market is critical. It can help make or break
your bottom line. Learn about the power
you can derive from our rating solutions
when combined with predictive analytics.
We discuss the range of options for analyzing
and investigating organized fraud networks.
Find out how to deploy groundbreaking
technology to improve data interrogation
and case investigation in a fully interactive
format. Using a case study, we illustrate
the potential effect that approach can have
on your organization.
VIS2014Q2 (4/14) z14001
The Housing and
Construction Marketplace:
Xactware’s Annual
Property Report