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The view from Q4-cat frequency over severity, data housing, and more

In an interview with WRIN TV, Joe Louwagie, assistant vice president, Property Claim Services (PCS) discusses the importance of accessing and accurately using data to make the best underwriting and rate-making decisions. He deems this critical in an environment where lack of data is increasingly a challenge as more data is housed by third-party vendors using emerging technology.

The broader property insurance industry — which has favorable market conditions on terms — has increasingly focused on extreme perils, including volcanic eruption, meteorite impact, and tsunamis following earthquakes. Joe said, “The challenge is the lack of data. So even with favorable market conditions, accurately developing the expected loss from rare-occurring events is a challenge.”

Joe explains that, traditionally, insurance companies and companies such as ISO have provided sufficient data for underwriting and rate-making. However, what’s changing is technology and who houses that data.

With technology sparking innovation — such as drone technology in the near future able to diagram the exterior of a home or mobile applications to diagram the interior of a home — companies are changing the way they work. Joe said, “The frequency by which claims organizations need to send out an adjuster to do a field inspection is changing; it’s causing a strategic and staffing review in carriers and independent adjusting firms.”

In the past few years, PCS has seen higher-frequency, lower severity cat seasons. For smaller insurers, the higher frequency of attritional catastrophes puts pressure on aggregate covers, and local insurers have a disproportionate share of local catastrophes. As for reinsurance and capital markets, Joe said, “The lack of a major event means the balance sheets are strong, and, in fact, the lack of an event for several years in combination with excess capacity with robust capital means that cedents are firmly in the driver’s seat in terms of rates and terms.”

Tom Johansmeyer

Tom Johansmeyer is Assistant Vice President – PCS Strategy and Development at ISO Claims Analytics, a division of Verisk – insurance solutions. He leads all client- and market-facing activities at PCS, including new market entry, new solution development, and reinsurance/ILS activity. Currently, Tom is spearheading initiatives in global terror, global energy and marine, and regional property-catastrophe loss aggregation. Previously, Tom held insurance industry roles at Guy Carpenter (where he launched the first corporate blog in the reinsurance sector) and Deloitte. He’s a veteran of the US Army, where he proudly pushed paper in a personnel position in the late 1990s.

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