November 25, 2021

The Future of Insurance Underwriting

Insurance companies are relying more and more on technology for claims handling and underwriting.

Two companies, Praedicat and Verisk, recently announced new risk analysis products that your insurance companies may be using soon.

Preadicat’s Company Risk Score (CRS) evaluates how risky a company is to underwrite, based on “how exposed a company is to emerging risks that could drive litigation involving the company as a defendant.” In other words, a company’s CRS is an expression of its potential for getting sued.

The CRS is especially useful when evaluating a company’s directors and officers insurance exposure, as it examines the potential for securities class action litigation risk.

“After simulating … how harmful a companies’ products and business activities are, we estimate the likelihood that litigation will emerge, targeting those product and business activities that scientists think cause bodily injury or environmental damage. We use the model results to distill a company’s products and business activities risk into a single 100-point Company Risk Score,” says Julia Fuller, Senior Vice President, Account Management at Preadicat.

“Based on peer-reviewed science and objective third-party data, our evaluation is used by companies to better understand the impacts of their products and business activities, and by insurers to underwrite the liability risk of those same companies. As emerging risks get more and more complex, innovations like the Company Risk Score are helping make underwriting these risks a whole lot easier,” said Fuller.

While Preadicat’s Company Risk Score helps underwriters evaluate a company externally, gaining perspective on the litigation climate it operates in, another company, Verisk, helps underwriters look within the company. Verisk uses artificial intelligence to analyze data and ratings in Yelp reviews “to provide insurers with a more holistic assessment of businesses.”

Winning the Race to Zero Questions

According to its press release, Verisk is leveraging artificial intelligence (AI) and image analytics to generate insights from more than 200 million reviews on Yelp, the company that connects people with great local businesses.

Using AI, Verisk analyzes unstructured data in Yelp reviews, including images that might indicate how a business has evolved. Insurers can use these insights to inform discussions about coverage with potential customers, see how employees are mitigating risks and make underwriting decisions with greater speed and precision.

“Finding current and robust information online to underwrite small commercial insurance can take significant time and effort,” said Tracey Waller, director of small commercial underwriting at Verisk. “By working directly with Yelp, Verisk is augmenting its high-quality and consistent analytics on millions of small businesses with information that is up-to-date, organized and easy to digest.”

Through Yelp, Verisk says it can seamlessly integrate millions of data points, including “Yelp’s trusted reviews and images in real-time, which supports Verisk’s ongoing effort to help insurers accelerate their digital transformations” and “win the race to zero questions on insurance applications.” Yelp’s platform, which enables consumers to discover, connect, and transact with millions of local businesses of all sizes, provides a powerful source of data for insurers that’s constantly being updated.

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