Verisk recently introduced an innovative benchmarking and risk-scoring platform to support better-informed decision making for insurers of energy assets.
The EPIX platform
The platform — Energy & Power Intelligence Xchange™, or EPIX™ — is built around the core energy, power, and mining value chain. It brings together Verisk’s global energy and insurance capabilities to provide the “one-stop” data and analytics solution many energy insurers have been seeking.
Elizabeth Casas, managing director, Energy and Insurance, and Rebecca Stepp, director, thought leadership and consulting, sat down with Visualize to talk about how EPIX can help insurers develop sound strategies, operate more efficiently, and grow profitably.
Tell us about the business needs EPIX addresses for our customers.
Elizabeth: Energy is an incredibly complex industry to insure. Before covering any energy-related operation, the insurer must accurately identify the operation’s assets, examine its financial performance, and thoroughly understand its production and management methods.
The insurer then needs to evaluate the safety and operation of these sophisticated facilities and must also understand how each facility affects others in its portfolio. In the case of an oil refinery, for example, that usually means sending an engineer to visit one or two facilities to examine and report on potential risks. For the remaining sites, insurers often rely on old reports or reports generated by third parties. This is a very time-consuming manual process, one that has not changed much over the past several decades.
Until now, insurers have had little or no access to standardized industrywide data to make fully informed decisions. They typically rely on the experience and “gut instinct” of underwriters and risk engineers.
EPIX will help fill this data gap?
Rebecca: That’s right. Last month, we launched the platform’s first two applications: EPIX Asset and EPIX Portfolio. EPIX Asset provides asset and production data on hundreds of companies and their assets, which include oil fields, refineries, and power plants.
With EPIX Asset, users can map out energy facilities owned by different companies, compare risks, and share insights through visualizations of key market data. By having the ability to compare and benchmark an asset or company against a group of peers, an underwriter is better equipped to make decisions pertaining to capacity, attachment point, rates, and terms.
EPIX Portfolio allows users to zoom out and see how assets are interconnected. It lets them view exposure to natural catastrophes and supply chain risks and helps them compare their portfolios to a global pool of available energy assets and companies. This helps insurers determine whether they have the right balance of energy risks to meet their financial objectives and build a data-driven strategy for growing profitably in the energy segment.
Here are just a few examples of the data EPIX currently draws from:
- over 15,000 data points on more than 700 refineries around the world
- information on nearly 7,000 power plants in North America and more than 10,000 offshore assets
Imagine this amount of information at a risk engineer’s and underwriter’s fingertips! And this is just the first deployment of EPIX.
Elizabeth:The energy insurance market is at a turning point. Increased capacity, declining rates, and reduced demand have created a “perfect storm” that’s been putting pressure on insurers. Expensive, inefficient, time-consuming internal underwriting processes need to be reassessed and streamlined to improve bottom line results.
How will EPIX help address those challenges?
Rebecca: By bringing greater precision to underwriting and strategic planning.
Today, underwriters spend much of their time gathering information. Access to a single source of data and analytics can help them understand their insureds more quickly and deeply, which enables them to readily tailor programs to the insureds’ specific needs. This leads to more sustainable relationships, while helping insurers improve their own loss and expense ratios.
EPIX also allows for more rapid market expansion because new opportunities are uncovered by understanding the pool of assets and companies available to insure.
Elizabeth: Energy underwriters have learned that insuring better-quality risks doesn’t always translate to better loss ratios. Even the best-rated assets can report losses that carry costs in the hundreds of millions of dollars.
A better understanding of the risk landscape—along with an assessment of weaknesses, strengths, and the market’s financial outlook—can help underwriters balance their exposures and plan how and where to deploy their capacity. A more holistic view can reveal opportunities for more innovative alternative approaches and enable insurers to pursue those opportunities in an increasingly complex and volatile environment.
EPIX provides this view through a central repository that streamlines delivery of energy-specific data, aerial imagery, and accumulation-management tools. It delivers ready access to commercial and financial energy intelligence and real-time information, whether you’re evaluating a risk or responding to a disaster.
Rebecca: Imagine being able to estimate losses and business interruption costs quickly and accurately after an extreme event or get a risk score on a potential customer. Imagine leveraging Internet of Things data for real-time operational information. EPIX will provide all of this, along with the insight and analytics to make sense of it all.
Elizabeth: We’ll be launching two more applications for EPIX later this year. EPIX Experience will be a proprietary database of industry loss events, and EPIX Operations will offer in-depth insights into how energy companies manage their assets and operations.
These four applications will provide one central repository where insurers can find essential information about an energy prospect or customer. EPIX will allow them to do this at a global level or by individual site, helping them underwrite with more precision, create operational efficiencies, reduce costs, and grow profitably in a challenging market.