Fall 2013

Verisk Review is a journal of ideas and opinions from Verisk Analytics. The publication provides expert commentary on the science of risk, including risk management, predictive analytics, property/casualty insurance, catastrophe management, fraud prevention, and a wide range of other topics.

Contents

There's No Place Like Home

By Scott G. Stephenson

In The Wizard of Oz, it's unlikely Auntie Em's homeowners insurer ever could have anticipated a weather event so extreme that it suddenly changed the ZIP code of the family's Kansas home. But a comprehensive approach to homeowners risk management, based on a better understanding of exposures and pricing, can help turn most any insurer into an insurance wizard.

Verisk Health's Fraud Alliance: The Power of Pooled Data

By Dr. Karthik Balakrishnan

Can a family practitioner actually render 50 hours of service each day? Well, yes and no. Obviously, no individual can achieve that feat, yet one provider divided that many hours among several health plans — unbeknownst to each of them. In an industry facing new scams and trends in fraud, here's news about an alliance aimed at pooling healthcare data across multiple payers to prevent schemers from being able to divide and conquer.

Turning Emerging Climate and Environmental Risks into Opportunity

By Kyle Beatty

A wide range of businesses now recognize the extent of the damages they can incur from extremes of the natural environment and increasingly volatile weather. Beyond concerns about resilience, however, companies are realizing such events present new possibilities. How can reframing the challenge and tapping into new combinations of data and analytics transform climate risk into opportunity for insurers, manufacturers, and their customers and partners?

Operating Digitally

By Dr. Anu Karna

Technological advances have created the digital customer — empowered, distracted, and social through technology. That means companies need to transform themselves digitally, too, continually communicating with customers and capturing their sentiments. Those businesses that excel at doing so will be the standouts in the years ahead.

Playing the Numbers: Using Analytics to Innovate, Adapt, and Thrive

By Marty Ellingsworth

As innovations build on prior successes, the clearest path to improved performance is finding the "next piece of knowledge," or n+1. That knowledge can improve risk-based pricing decisions. The smart money is on insurers moving toward successive waves of n+1, rerating home and auto risk characteristics to be more efficient and effective.

Conflict Mineral Regulations: Exploring the Potential Impact on Risk Management

By Kirsten Wallerstedt

Yesterday, blood diamonds stirred up controversy. Today, that dubious distinction goes to conflict minerals, which are essential to the manufacture of consumer electronics, apparel, jewelry, and much more. Because of the risks involved with those minerals, new regulations make it essential for insurers and risk professionals to ensure that their customers have visibility into the supply chain — to help avoid customer backlash and regulatory ire.

U.S. Seismic Zone: Higher Stakes for Today's Quakes

By Robert L. Andrews

Only four states — Florida, Minnesota, North Dakota, and Wisconsin — do not have an identified seismic exposure. The remaining 46 are at risk — some more than others, but all as never before. Simply compare the damage from and cost of some historic earthquakes with the cost of the destruction had those same events occurred today. Adopting and enforcing advanced state and local building codes would be a significant step toward preventing possible losses.

Assessing Seismic Risk and Mitigation Efforts

A Conversation with Ralph Dorio

ISO community mitigation manager Ralph Dorio discusses the need for up-to-date business codes, how communities can adequately assess seismic risk and mitigation efforts, and what they can do to protect themselves from seismic and wind events.

Advantages of By-Peril Rating for Homeowners Insurance

By Douglas Wing

Risk-based pricing — charging different rates for different risk characteristics — leads to stability and confidence in pricing. In the case of homeowners insurance, by-peril rating enables insurers to hit a grand slam: rating policies adequately, increasing market share, reducing loss ratios, and lowering combined ratios.

Finding Cover from Cyber Attacks

By Shawn E. Dougherty

As the number of cyber attacks grows, so do the associated costs. That said, leading-company owners and managers are questioning whether they have proper coverage, because traditional insurance products may no longer do the job. Here's how to tell what's adequate — or not.

Transforming Property Claims Handling

By Jeffrey C. Taylor

A key component of advanced aerial data is more sophisticated imagery that provides a clear view of exterior structural characteristics like never before. Armed with that level of knowledge, insurers can elevate their ability to handle claims: expediting loss site inspections, reducing fraud, offering better service to help customers rebuild after a massive catastrophe — and, optimally, remaining competitive and ahead of any peers.

Real-Time Catastrophe Loss Estimates: What Do They Really Mean?

A Verisk Review Expert Panel with Dr. Tim Doggett and Kathryn Fobert

A discussion with AIR Worldwide experts Dr. Tim Doggett and Kathryn Fobert reveals why modeling firms must communicate real-time loss estimates as a range, how a company can tailor real-time loss estimates to its own portfolio, and what is at stake — from planning resource loss mitigation to setting expectations for investors.

Using Data and Analytics in Workers' Compensation

By Robert T. Lewis, Esq.

Exploding workers' compensation claims — those where relatively minor medical conditions or injuries may worsen over time and make settlement difficult — continue to plague insurers by significantly driving up costs. However, by applying available data analytics tools to identify high-risk claims, insurers can stop claims from spiraling out of control and better manage workers' compensation expenses.

Data: The Breakfast of Supply Chain Champions

By Peter Marotta

When average consumers shop for a box of cereal, most never think about the various links in the supply chain responsible for producing that one carton and its contents — or the risks involved along the way. From cereal manufacturing to financial transactions — recognizing the risks, gathering the facts, and knowing what to do with them will separate the winning companies from the rest. Here's where to start.

Homeownership: The Troubled Dream

By Jeff De Turris

Through increasing storm severity, Mother Nature has been able to taint the dream of homeownership. That factor, coupled with an economic environment still hampered by the recent recession, has turned the dream into a nightmare for some. But understanding where homeowners may incur new, expanded, or emerging risks — and how to prevent them — can help those dreamers have a pleasant night's sleep.

Designing UBI Programs That Achieve Positive ROI

By Jim Weiss

Meet the chief of Ubiquitous Insurance Company and his three program designs for the company's entry into the usage-based insurance market. One option will help grow the business, another will stem deteriorating loss ratios, and the third will create a new revenue stream. But which of those programs may cost more than it will return? Find out from this case study.

Loan Quality, Data Integrity, and Continuous Improvement: What Fraud Taught the Mortgage Industry

By Jeff Moyer

Changes brought on by recent regulations have rendered much of the mortgage lender's standard operating procedure obsolete. So what's a lender to do? Lenders must demonstrate that their processes support data integrity and that data management supports the performance of their role. In short, data has taken center stage in risk management — and knowing how to use it for continual improvement and change management will be critical in an environment of constant recalibration.