Mapping the next move: as the challenges from the global financial crisis and climate change continue to be felt by the insurance industry, technology will play a greater role in helping companies improve their capabilities in exposure management
In today's competitive market within the insurance sector there is an increasing demand by companies for accurate data .to better understand and manage their risk exposures.
The data can also help companies enhance their claims management process, and ultimately, deliver better value to their customers.
Technologies--particularly around location intelligence, geographic mapping, and a host of new risk data--provided by various software organisations, are being extensively used by insurance companies.
The global financial crisis and the continuing commotion over climate change have meant insurance companies are looking more closely at technology solutions to better predict and respond to future challenges.
Challenges facing the industry
The twin challenges of the global financial crisis and climate change facing the insurance sector should not be underestimated.
While the general insurance industry in Australia has shown strong resilience in the face of the current economic conditions, experiences overseas have shown that insurance companies can be challenged--the near-bankruptcy of insurance giant, American International Group, is an example.
And the issue of climate change and its impact on insurance companies has been well documented.
Late last year the Insurance Council of Australia released figures which showed that weather related incidents accounted for 31.5 per cent of all general insurance claims in 2007, as compared to 12.3 per cent of all general insurance claims in 2000.
"Weather related claims costs are expected to become an increasing determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant. of premium price levels," Insurance Council chief executive, Kerrie Kelly, said. "This expectation reflects current trend data that shows weather related claims, as a proportion of total claims, have been increasing."
To handle challenges like these, insurance companies have been deploying technology tools like location intelligence to make better decisions over predictability and gain insight into their decision-making processes.
Location intelligence combines a number of data sources including aerial maps, geographic information systems, historical data, consumer demographics, and customer records.
Respected news website, Insurance Networking News, suggests that companies overseas have used information gathered from location intelligence for:
* Predicting potentiallosses associated with natural disasters.
* Optimising their claims resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs when disasters strike.
* Expanding market segmentation Market Segmentation
A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. for improved market development and penetration.
* Developing more innovative product and service offerings; and
* Improving underwriting decisions with more advanced risk selection capabilities.
Location intelligence in use
During the recent bushfire tragedy in Victoria, location intelligence was used by insurance companies during the claims process in identifying properties damaged by the fires.
Overseas, mortgage insurer Genworth Financial is an international financial services organization that offers a portfolio of primarily consumer-focused products through its various companies, including annuities, combination products, investment services, life insurance, long term care insurance, medicare Canada has been one company reported to have used the technology with positive results.
In the past, Genworth assessed mortgage risk by neighbourhood. Now it uses 'heat maps' to visually represent risk down to the street level, across traditional neighbourhood boundaries.
Genworth also takes into account a property's proximity to schools, major roadways, residential parks and railways, all of which impact property value.
"Heat maps are a much more precise way to understand our market, and the associated risk with each property," Genworth Financial Canada chief executive, Peter Vukanovich, says of the technology.
"Maps, for that matter, are much easier to understand than reports."
In the UK, insurer Royal Sun Alliance (RSA) benefited from the use of geographic information systems in 2006 following a major explosion at an oil storage depot.
Interviewed about the company's use of geographic information systems during the event, Graham Heale, property portfolio director at RSA, made the following comments: "This was clearly a major incident in the UK insurance market. I knew that by Monday, 9am, I would be faced with the inevitable question 'how much is this going to cost?' "Purely as a result of our GIS (1) (Geographic Information System) An information system that deals with spatial information. Often called «mapping software,» it links attributes and characteristics of an area to its geographic location. capability, which enabled us to model using zones of damage from the epicentre epicentre
Point on the surface of the Earth that is directly above the source (or focus) of an earthquake. There the effects of the earthquake usually are most severe. See also seismology. of the loss, we were able to give a reliable estimate of our loss at 12 noon that day--within three hours of being asked the question at 9am on Monday morning.
"Following seven months of actual physical assessment of the damage and loss adjustment, the number that we gave is still within 7 per cent of the final cost."
Telma Cordeiro, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
"Historically, it was smaller to medium sized organisations [adopting the technology]," she says.
"However, events of late, both economical and climatic, have pushed larger organisations to look for competitive strategies and the solutions and the outcomes they are looking to derive from location intelligence, through the application of risk management and mitigation, business continuity planning Business Continuity Planning (BCP) is an interdisciplinary peer mentoring methodology used to create and validate a practiced logistical plan for how an organization will recover and restore partially or completely interrupted critical function (s) within a predetermined , and gaining a greater insight into business modeling and predictability.
The data can also help companies enhance their claims management process, and ultimately, deliver better value to their customers.
Technologies--particularly around location intelligence, geographic mapping, and a host of new risk data--provided by various software organisations, are being extensively used by insurance companies.
The global financial crisis and the continuing commotion over climate change have meant insurance companies are looking more closely at technology solutions to better predict and respond to future challenges.
Challenges facing the industry
The twin challenges of the global financial crisis and climate change facing the insurance sector should not be underestimated.
While the general insurance industry in Australia has shown strong resilience in the face of the current economic conditions, experiences overseas have shown that insurance companies can be challenged--the near-bankruptcy of insurance giant, American International Group, is an example.
And the issue of climate change and its impact on insurance companies has been well documented.
Late last year the Insurance Council of Australia released figures which showed that weather related incidents accounted for 31.5 per cent of all general insurance claims in 2007, as compared to 12.3 per cent of all general insurance claims in 2000.
"Weather related claims costs are expected to become an increasing determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant. of premium price levels," Insurance Council chief executive, Kerrie Kelly, said. "This expectation reflects current trend data that shows weather related claims, as a proportion of total claims, have been increasing."
To handle challenges like these, insurance companies have been deploying technology tools like location intelligence to make better decisions over predictability and gain insight into their decision-making processes.
Location intelligence combines a number of data sources including aerial maps, geographic information systems, historical data, consumer demographics, and customer records.
Respected news website, Insurance Networking News, suggests that companies overseas have used information gathered from location intelligence for:
* Predicting potentiallosses associated with natural disasters.
* Optimising their claims resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs when disasters strike.
* Expanding market segmentation Market Segmentation
A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. for improved market development and penetration.
* Developing more innovative product and service offerings; and
* Improving underwriting decisions with more advanced risk selection capabilities.
Location intelligence in use
During the recent bushfire tragedy in Victoria, location intelligence was used by insurance companies during the claims process in identifying properties damaged by the fires.
Overseas, mortgage insurer Genworth Financial is an international financial services organization that offers a portfolio of primarily consumer-focused products through its various companies, including annuities, combination products, investment services, life insurance, long term care insurance, medicare Canada has been one company reported to have used the technology with positive results.
In the past, Genworth assessed mortgage risk by neighbourhood. Now it uses 'heat maps' to visually represent risk down to the street level, across traditional neighbourhood boundaries.
Genworth also takes into account a property's proximity to schools, major roadways, residential parks and railways, all of which impact property value.
"Heat maps are a much more precise way to understand our market, and the associated risk with each property," Genworth Financial Canada chief executive, Peter Vukanovich, says of the technology.
"Maps, for that matter, are much easier to understand than reports."
In the UK, insurer Royal Sun Alliance (RSA) benefited from the use of geographic information systems in 2006 following a major explosion at an oil storage depot.
Interviewed about the company's use of geographic information systems during the event, Graham Heale, property portfolio director at RSA, made the following comments: "This was clearly a major incident in the UK insurance market. I knew that by Monday, 9am, I would be faced with the inevitable question 'how much is this going to cost?' "Purely as a result of our GIS (1) (Geographic Information System) An information system that deals with spatial information. Often called «mapping software,» it links attributes and characteristics of an area to its geographic location. capability, which enabled us to model using zones of damage from the epicentre epicentre
Point on the surface of the Earth that is directly above the source (or focus) of an earthquake. There the effects of the earthquake usually are most severe. See also seismology. of the loss, we were able to give a reliable estimate of our loss at 12 noon that day--within three hours of being asked the question at 9am on Monday morning.
"Following seven months of actual physical assessment of the damage and loss adjustment, the number that we gave is still within 7 per cent of the final cost."
Telma Cordeiro, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
"Historically, it was smaller to medium sized organisations [adopting the technology]," she says.
"However, events of late, both economical and climatic, have pushed larger organisations to look for competitive strategies and the solutions and the outcomes they are looking to derive from location intelligence, through the application of risk management and mitigation, business continuity planning Business Continuity Planning (BCP) is an interdisciplinary peer mentoring methodology used to create and validate a practiced logistical plan for how an organization will recover and restore partially or completely interrupted critical function (s) within a predetermined , and gaining a greater insight into business modeling and predictability.
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