A dentist, a mechanic, and a chef walk into a bar.
The dentist says, “I’m going to buy an auto repair shop and use part of it as my office. You’ll be able to get your teeth and oil checked at the same time!”
The mechanic says, “That’s nothing. I’m going to add a walk-in smoker to my garage. You’ll be able to get a tune-up and enjoy great barbecue while you wait!”
The chef says, “I got you both beat. I’m closing my restaurant and carving it up for lease to any business that wants a piece. Can I take your reservation?”
The ground-truth expertise of Verisk’s field representatives is the foundation of the new data-gathering and validation strategies enabled by technology.
While this might cause a good laugh (or cry), it actually represents one of the biggest challenges in commercial property insurance today. That’s because the activities associated with these services bring widely different potential hazards to their places of business. A dentist polishing molars in a midrise office building is much less likely to accidentally start a fire than a car mechanic wielding a welding torch or a chef grilling a ribeye. But businesses change quickly these days, and the type of business conducted on the premises is among the most crucial building characteristics for underwriters to know before writing a policy. Primary building use is one of five core attributes that help insurers determine coverage and premiums—along with year built, square footage, number of stories, and construction class.
Occupancy changes almost a quarter of the time over a decade, according to Verisk research into ProMetrix® data. Shifting occupancies means shifting risks, and underwriters need up-to-date information about building use to more accurately price policies. Despite this need, less than half of businesses in an industry survey were assigned correct Commercial Statistical Plan (CSP) codes.2
The problem with unreliable sources
While the other core building attributes might seem less ripe for mistakes, research shows that relying on sources that may be incomplete or unreliable—such as public tax records, Internet research, or information from the agent or property owner—can often lead to critical errors.
Square footage was wrong in 80 percent of the insured risks evaluated in a Verisk study that examined insurer records.3 Nearly 40 percent of insurer records studied contained incorrect ISO Construction Class information compared with field-verified data. Mistaking a wooden frame structure for one more resistant to fire can pose problems for insurers and their customers.
And even when data is available, it may not be standardized for easy input into an insurer’s workflow. A multistory building may appear to have a different number of stories depending on how basements, attics, and mezzanines are recorded, to give an example of how even a straightforward measurement can be off without reliable data.
Need for speed without sacrificing accuracy
In the accelerating market for commercial property insurance, customers expect an answer on quotes more rapidly than ever before. Ideally, an underwriter can type in a business address and get back 100 percent of the core attributes via robust prefill. This data can help the underwriter with risk selection and pricing and improve the customer experience by enabling a quicker, more informed quote.
Gathering and verifying property data often requires both expertise and time, with the gold standard an on-site survey from a highly trained field representative. While it’s impractical to routinely visit every commercial property in the United States in person, it is possible to use modeled data based on field-verified information to help deliver detailed property data more accurately and quickly.
How Verisk can help
Recognizing the deep, industrywide need for core attribute data for more commercial properties across the United States, Verisk’s statistical team employed advanced machine-learning technology to develop analytical models that give insurers a 100 percent fill rate for primary building use, year built, square footage, number of stories, and construction class.
The ground-truth expertise of Verisk’s field representatives is the foundation of the new data-gathering and validation strategies enabled by technology. When the pandemic arrived in Spring 2020, and on-site visits became nearly impossible, Verisk devised pioneering strategies for using the data-collection expertise of its 400-plus field survey professionals to help underwriters continue to serve their customers.
With an average of 12 years of experience each, Verisk’s survey professionals bring a nuanced understanding of how occupancy, construction class, and geographical differences can affect loss costs and claims. The knowledge of field survey experts with boots-on-the-ground experience underlies the data that Verisk delivers, whether it’s generated on site, virtually, or through computer automation.
Today, underwriters who once turned to incomplete and inconsistent tax assessor data or relied solely on guesswork to estimate their exposure can now depend on data that’s efficient and backed by ProMetrix reliability.
Learn how ProMetrix provides the data, analytics, and risk insights that are transforming commercial property underwriting.