RIMSLIVE: Property Data Must-Haves to Optimize Insurance Outcomes

RIMSLIVE Recap: Property Data "Must-Haves" to Optimize Your Insurance Outcomes

Recently, I had the opportunity to host a panel discussion: Using Your Own Property Data to Take Control of Your Risk and Optimize Your Insurance Outcomes at RIMSLIVE 2021, the annual conference for the Risk and Insurance Management Society (RIMS). I was joined by two best-in-class risk managers, Marco Flores of Revantage (Blackstone) and Ian Ascher of JLL.

The session covered several key themes, including: minimizing hard-market impact, measuring ROI on building-level data investments, and the future of risk management.  You can watch the video below, or if you're short on time, here's my recap of the discussion: 

Key theme #1: How has data quality impacted hard market renewals?

Marco framed the challenge as how to distinguish his renewal. He categorized primary COPE as table stakes and stressed the value of secondary modifiers in communicating better risk data to the markets and in signaling a proactive and serious investment in data.

Ian agreed and added that being able to share relevant information beyond Excel spreadsheets helps you “get to the top of the pile.” He further suggested RMIS systems are not designed for communicating to property insurance markets. As a former underwriter, Ian knows details such as roof information matter and that incomplete or blank fields always negatively impact price and terms, as well as create “data fixing” friction.  

Marco added that missing data is particularly important to CAT modeling and described the ripple effect of models defaulting to the worst-case scenario in the absence of complete information (e.g. secondary modifiers), including: potentially not buying appropriate limits, misunderstanding your actual exposures, and not having a clear understanding of your total cost of risk. He also mentioned the importance of defining fire protection as the type of sprinkler system can impact both attritional models and fire-following risk subsequent to an earthquake.

Both agreed that source documentation of data (a key feature on Archipelago) and the spirit of transparency go a long way to building trust with underwriters. Improving data across the entirety of their portfolios has paid off in several ways from optimized insurance outcomes to better internal analyses on total cost of risk, self-retention, and budgeting.

Key theme #2: How do you think about the ROI on improving data quality?

Marco and Ian both felt that developing a business case begins with a gap analysis; both cited Archipelago’s SOV diagnostic as being tremendously helpful in measuring data quality and identifying opportunities for improvement. Also, they recommended probabilistically considering the potential impact on catastrophe insurance, attritional models, and intangible assessments of underwriters; and evaluating how accurate information drives internal decisions beyond risk transfer.

As well, they both encouraged other risk managers to consider some of the potential returns as additional value from investments in due diligence, inspections, and/or development plans.  Finally, both cautioned against overweighting the time required (citing turn-arounds in weeks for their massive portfolios) and underweighting the internal use cases and value of controlling your own data.

Both agreed that risks associated with the status quo were untenable and come with optics risk related to both underwriters and managers.

Key theme #3:  How will data impact the future of risk management?

Ian felt that the role of risk managers has been ascending in many companies. He is now peers with executives who have been collecting, applying and leveraging data for many years. While over the last year, he’s felt as if he was catching up, his building-level data has positioned him for sophisticated analyses related to acquisition, development, risk retention, and more.

Marco emphasized that more robust data is necessary to calculate the total cost of risk (TCOR) as well as related trade-offs between alternative risk and traditional insurance. He also sees the impact on insurance as being part-and-parcel of acquisition decisions.

Both Marco and Ian noted that with risk managers being asked to do more, efficiency will need to be optimized—more processes, better data, and purposeful allocation of time will all be important.

Hosting this panel in the wake of Archipelago’s capital raise underscored the alignment between Archipelago's vision to help make immediate and impactful improvements to building-level quality and the realities of the commercial property insurance market and the future of the risk management profession. More than ever, Benjamin Franklin’s famous aphorism rings true: an investment in knowledge pays the best interest.

Better data will inevitably lead to better insurance outcomes and more-informed decisions. I’m pleased to be on this transformational journey with Ian, Marco, and my colleagues at Archipelago.