Good risk segmentation allows insurers to focus resources and capital on the right business areas. In recent years we have seen significant improvement in the sophistication of risk segmentation at underwriting. Being able to segment at a more granular level than competitors allows an insurer to win business in more profitable sub-segments at a more competitive price. There are several areas in which automation can assist this process:
Data Gathering: The individual nature of risks, lack of sufficient commonality between risks and lack of sufficient data for a particular trade can make segmentation more difficult. However, the last 10 years have seen improvements in data quality and analysis techniques and some insurers have used external information to supplement their own. Automation can be used as a tool to gather information form different systems and silos in real time and then serve these up to customisable dashboards or standard reports.
Risk Calculator: Although there is software on the market today which can put together a risk calculation it tends to be broad and crude in nature. It will take into account an aggregate score of the past profitability of a trade, generic figures on the size of the market and estimated growth potential. Although useful, these tools do not offer the granular level of detail needed to make an informed decision. Robotic Process Automation is great at pulling together and evaluating information. This allows you to pull together live information from your business, cross reference with existing underwriting capability and apply your own scoring system as to how risk averse your particular firm is in certain areas.
Predictive Modelling: With live data and Machine Learning it is possible to apply predictive modelling of segments, but considering the amount of information and rate of external changes, this technology hasn’t matured to the point where Proservartner consider it anything more than a ‘useful indicator’ at this point.
Portfolio Management and Risk Strategy: Automation’s role in management and strategy is simply to take away the collection of data. With the right information, you can then make a more informed decision. In the past much of this information has come either through the companies own books or from third parties such as Lexis nexus, but automation technology can replicate the sourcing of and reporting of this data at a much lower cost point.
To find out more how your insurance firm can leverage automation be sure to get in touch