You've got to ask yourself one question: “Do I feel lucky?"By Anthony Recanatini | November 13, 2014
As an insurer, how much do you rely on luck? As Verisk’s principal commercial property consultant, I interact with many carriers who insist they would never count on luck. If you agree with them, you may want to think again.
In fairness, to answer the question, we first have to define “luck” as it pertains to insurance underwriting. To the average person, luck might be happenstance, coincidence, or fate and generally cast as either good or bad. I suggest that luck in the insurance industry is a function of information. Information creates precision and predictability; lack of information creates a vacuum — what a layman would call bad luck.
So, where are the information vacuums in underwriting? They start with the insurance application itself. On a typical business owner policy (BOP) form, for example, the commercial property section has 14 key elements, including construction type, number of stories and basements, total area, year built, roof type (particularly for enhanced wind properties), other occupancies, responding fire station, fire protection area, fire protection on premises (sprinklers, standpipes, CO2/chemical systems), and distance to the nearest fire hydrant.
Those critical factors in underwriting and pricing affect the degree of risk, premium accuracy, and competitiveness. Since the stakes are high, carriers have to find ways to eliminate information vacuums. One all-too-common way is to rely totally on an agent’s assumptions about a property. The carrier takes a calculated (or, perhaps, not-so-calculated) risk that the agent is correct or hopes any errors won’t matter. A second way is for the agent or carrier to take the time to do the research by sending someone out to the property, locating public records (and crossing your fingers they’re accurate), and hoping that your competition hasn’t quoted the property before you do.
A third way is to obtain verified data to fill virtually all the key elements of a standard commercial property insurance form. Verisk Commercial Property’s draws data from our ProMetrix® commercial property database of more than 3.5 million commercial buildings and more than 6 million businesses. It can be transmitted instantly through a secure, easy-to-use API (application program interface) and includes verified third-party sources and data from our proprietary Building Code Effectiveness Grading Schedule (BCEGS®) for local building code enforcement. And we do it all while actually reducing the time to quote the policy.
I’d like to think that most carriers are vigilant about avoiding the perils of information vacuums. I’m 100 percent certain that our customers know they don’t have to rely on luck to succeed. For more information about our verified data solution, read our press release. If you want to see how Verisk Commercial Property Consulting can help you with a variety of issues, contact me directly at ARecanatini@verisk.com.
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