WIN Magazine - Spring 2016 - (Page 16)

FEATURE DATA AND ANALYTICS: ANOTHER DIMENSION TO UNDERWRITING IN THE SPECIALTY INSURANCE MARKET T BY JIMMY CURCIO HE SPECIALTY INSURANCE market is built upon the need to manage risks that fall outside the underwriting appetites of the standard insurance market and require special knowledge and experience to underwrite. Historically, there has been less information available to underwriters about such risks compared to risks in the standard market, and so insurers in this space have competed on specialty distribution, class and expertise. As the volume of data and information and the ability to process it grows, players in this space have the opportunity take advantage of tools traditionally employed by the standard market. But why should they? First, consider the cost of making any investment and whether it outweighs the cost of not doing so. While the cost associated with acquiring data and analysis tools and resources may vary from company to company, not making the investment into data and analytics may cost more. Not only is it a possibility that competitors - even non-traditional competitors (think Google) - will use data and technology to better price their business and provide solutions more quickly to customers, it is today's reality. DATA AND TECHNOLOGY ARE YOUR FRIENDS Perceptions about the size of data sets and the levels of technology and expertise needed to perform useful analysis can hinder efforts to institute a data and analytics strategy, so it may be helpful to first clarify the difference between data that most of us work with every day (or have access to) and Big Data. The size of this data is understated by its name. It is typically so large that traditional databases are unable to manage it. Some examples of Big Data include telematics, unstructured data from social media and weather information. Jumping into Big Data without first evaluating other sources would be like trying to run before you learn 16 | v i e w t h i s i s s u e a t | to walk. There is a lot to be gained by focusing on more manageable data sets, which can have plenty of predictive power. Technology has also substantially reduced the time and cost needed to analyze data. By combining software solutions such as SAS, S-PLUS and MATLAB® or free, open-source products like R with the processing speed and memory of computers today, almost anyone can perform high-end statistical analysis. While expertise is required to do advanced analysis with these tools, spreadsheet products like Microsoft Excel® offer even basic users the ability to analyze and make better use of their data. So what can underwriters in the specialty market, such as Program Administrators (PAs), do today? Taking these steps can put you on track to improve the way you do business. OUTLINE YOUR GOALS First, be specific about what you are trying to achieve. Are you looking to increase profitability? Grow

Table of Contents for the Digital Edition of WIN Magazine - Spring 2016

Surviving the Cyber-Liability Avalanche: How Contracts with Business Partners and Vendors Expose Companies to Cyber Liability
Data and Analytics: Another Dimension to Underwriting in the Specialty Insurance Market
Embracing New Technologies & Attraction Marketing Strategies
How the Cloud Levels the Playing Field for MGAs
Staying Agile in an Era of Disruption
Standardizing the Non-Standard Industry: E&S Working Group Champions Automation and Efficiencies
Using Technology Communities to Foster Innovation in the E&S Wholesale Distribution Model
Autonomous Vehicles: Considerations for Personal and Commercial Lines Insurers
AAMGA 2016 HeatMap of Emerging Issues and Trends: Challenges and Opportunities for the Specialty Insurance Industry
A Personal Note on Leadership: There’s Hope in the Young
In the WIN-ner’s Circle: Jim Mastowski and Coryn Mastowski Thalmann of Jimcor Agencies
Index of Advertisers

WIN Magazine - Spring 2016