The Ecopia AI team had a great time connecting with the Insurtech community at ITC Vegas in September. Between sponsoring the c-suite reception, hosting a VIP dinner for our customers and partners, and overseeing a putting competition at our booth, we had a busy week! Luckily, we still managed to attend some sessions to hear about what’s new in the world of Insurtech.
Here are our key takeaways from ITC Vegas 2022:
TLDR: Data is the future of Insurtech. However, the data has to be high quality to be useful, and carriers are struggling to find the right data at the level of quality they need.
COVID Didn’t Just Change the Retail Industry - It Also Changed Insurance
It wouldn’t be a 2022 trade show if there wasn’t some mention of the pandemic, right? While everyone knows COVID-19 had a huge impact on the healthcare, retail, and service industries, we were interested to learn how insurers are facing a similar shift in how consumers interact with them in a post-pandemic world.
In one session, we learned how consumer expectations for property and casualty (P&C) insurance carriers have evolved over the past few years, and how carriers are turning to data to improve the client experience and reduce churn. Verisk noted that since 2019, comparison shopping for P&C insurance policies has increased by 63%. As more insurance transactions take place online, so does more browsing of other carriers to make sure the best price is being received.
The ability to meet and exceed these higher consumer expectations is heavily dependent on the ability of the carrier to price risk accurately and fairly. Carriers need to price policies correctly so that they are not overpricing them (causing consumers to go to a competitor), or underpricing them just to win business (opening the carrier up to excess risk). The best way to solve this? Price risks as accurately as possible using the highest precision data available.
Accurate Underwriting Data is Critical to Maintaining Competitiveness
The critical foundational element to pricing risks accurately is location (geocoding). However, traditional geocoding solutions do not provide the level of granularity P&C carriers need, as they use approximations to estimate where a building is located in relation to risk factors. These approximations return a single point for each address - based on the assumption that the building is either in the center of a related land parcel, or at the point along the street related to the street-based address; some insurers even resort to postal code centroids when a parcel or street-based geocode is unavailable. None of these geocoding methods adequately represent where the building(s) at that property are located in the real world.
The solution lies in building-based geocoding; the ability to understand the precise location of each building related to a given address. However, to solve this problem, you first need to understand the location of every building across the country - a non-trivial feat. Insurers that leverage building-based geocoding in their underwriting process deliver the most accurate quotes to customers shopping for the best price, reducing the likelihood of both overpricing a policy and losing to another carrier. In a panel, Verisk stated that using precise data in insurance is not just important for gaining operational efficiencies, but it is in fact critical to maintaining competitiveness in relation to other carriers.