A recent Verisk article and analysis of commercial portfolios revealed an estimated $4.5 billion in commercial property premium leakage over the course of four years—simply due to misclassification of construction class and fire protection. Misclassification is only one measurement of premium leakage; risk and exposure are also often affected.
Insurers need to know where they’re losing money and address the leaks before suffering additional damage to their bottom line. We’ve worked with many insurers facing those challenges. When our clients engage us for a consultation, our team discusses goals, concerns, strategic business objectives, and measures of success to understand each insurer’s situation. We have 45 years’ experience as a data and analytics provider, with expertise in every aspect of commercial lines insurance. We know that all insurers are not alike. Our Portfolio Assessment services identify risks, opportunities, and processes for improvement, providing specific advice on ways to attain the stated goals.
Whether seeking market expansion, increasing your risk or geographic appetite, paving the way for straight-through processing, or trying to stem the tide of sagging profitability, the best starting point, in our experience, is a book cleanup using ProMetrix® data and analytics. We build an assessment based on that foundation, with recommended actions and guidance for going forward. And we can customize our Portfolio Assessment services for your specific needs and goals.
There are several broad categories for assessment that apply across all commercial lines:
- Portfolio improvement takes a comprehensive look at specific characteristics that affect policies in your portfolio to verify information and identify hidden risks and exposures. This assessment includes business classification, occupancies, fire protection, rate and loss costs, insurance-to-value calculations, NAICS codes, business violations, and driver and vehicle data, among many details. It features our Data Append for Catastrophe Impact service to help calibrate the average annual loss (AAL) estimate for a catastrophe on each individual property in your current book of business.
- Portfolio expansion is a concentration of Verisk assets that will assist you in how to grow your business and increase market share, analyzing opportunities for expansion into new geographic markets and developing additional business in established territories. We focus on your desire to enter new lines, classes, or industries outside current scope, and we analyze potential cross-sell opportunities by segmenting your customers based on the insights and experience we’ve gained working with other clients.
- Portfolio analytics compares key metrics against state and industry measures. This analysis looks at adverse selection and benchmarks the average Relative Hazard Percentile (a comparative evaluation of a building’s construction, occupancy, internal protection, and exposure) against state and countrywide averages for similar buildings in our ProMetrix® commercial property database. It benchmarks your Public Protection Classification (PPC™) grades, Class Insight ratio loss costs, claim results, and loss ratios against peer groups or the industry.
- Portfolio efficiency identifies weaknesses in your underwriting portfolio and recommends improvements. This tool analyzes loss control functions and helps prioritize policies for reevaluation according to agreed-upon metrics. The review includes business misclassification, building characteristics, occupancy, and protection systems. Portfolio efficiency services can also analyze your distribution network to identify agents who consistently provide incomplete or inadequate information. Using agent identifiers, we evaluate the loss experience of the business that your agents generate. You get a report on agents with the largest variances so you can make effective decisions about who to work with.
For more information, visit our Consulting website.
Peter de Freitas is vice president-ProMetrix and Consulting, Verisk Insurance Solutions. You can contact Peter at PDeFreitas@Verisk.com.