Commercial underwriters are all too familiar with the challenges associated with self-reported data on insurance applications. Sometimes applications have missing details. If an application is complete, the information might be incorrect or misleading. Sometimes applicants will try to stretch the truth in their favor.
Getting an accurate picture of risk
Other times, customers simply don’t understand the question or really don’t know the answer. You can research an applicant to build an accurate picture of the risk—but that takes time and a good data source. Verisk is committed to providing that data source, with information that’s accurate, timely, comprehensive, and as actionable as possible.
One data request that’s particularly painful for insurers is the loss run. When you ask an agent or insured to request one from the prior or current insurer, it creates an interesting conflict of interest. The incumbent is legally obligated to provide the loss run but certainly not bound to respond in the quickest, most expedient manner possible.
Beware competitors' retention tactics
The current insurer doesn’t want to invest resources to make sure that you, the competition, get the loss runs quickly so you can take its business. Instead, the loss run request lets the insurer know the account is being shopped. If the account is profitable, aggressive retention tactics may be employed. That makes it harder for you and could create the potential for adverse selection.
Such inherent time delays could decrease your likelihood of winning business, and insurers need to question whether they should even request loss runs. It’s true that prior losses are predictive of future losses, but if you wait on the loss run, a competitor might beat you to the quote and win the business. Alternatively, you can provide a quote subject to the receipt of loss runs, but that adds complexity, time, and expense. Triaging with rules based on size and type of business helps, but it’s far from perfect.
Regardless of the approach, the process is inefficient. There are significant benefits to streamlining it by receiving loss runs at the point of submission:
- increased revenues
- faster speed to quote
- better agency relationships
- improved profitability
In addition, an accurate picture of a risk better ensures proper pricing to decrease premium leakage. When there’s no shopping trigger for the incumbent insurer, you can reduce potential adverse selection. And streamlined underwriting means skilled underwriters can focus on higher-level work.
The Commercial A-PLUS advantage
Verisk Insurance Solutions has launched Commercial A-PLUS™—a contributory database of commercial claims with easy access to up to 93 percent of the commercial insurance market. Future articles will discuss the many advantages of our data quality, but the most exciting benefit is the ease of implementation. Most insurers already contribute claims to our ISO ClaimSearch® solution for fraud detection and government reporting. Releasing those claims for A-PLUS is free and easy; you just have to sign a two-page contract amendment.
Once onboard, you can access the A-PLUS reports through the same platform most insurers already use for data and analytic reports that help you complete and validate application information: ProMetrix®.
We’ll continue the conversation on Commercial A-PLUS in future articles. In the meantime, learn more on our website.
Rick Stoll is vice president for commercial underwriting products, Verisk Insurance Solutions. You can contact Rick at email@example.com.