If you are looking for the most obvious threat to accurate underwriting, it makes sense to say that the buck stops at the individual or team doing the underwriting. Inexperience or a lack of knowledge in the area will prevent underwriters from being able to quantify risks accurately and appropriately. As data continues to make gains in usefulness within the insurance industry, the ability to interpret pertinent data, and dismiss irrelevant data from factoring into risk consideration are valuable skills that cannot be assumed to be possessed. Insurers who do not do so already might wish to consider the benefits of implementing dynamic underwriter training as needed, both as a refresher, and as a way to introduce concepts or skills necessary in this evolving market.
The Love Affair With Data
The use of data from an insurer’s standpoint is irreplaceable in risk analysis. Data has firmly earned its place in the underwriting industry and won’t be leaving any time soon. However, too much of a good thing can always end poorly. The insurance market does not base itself off of individualized risk, and instead works on the collective. This does not mean that non-data sources should be excluded from consideration. Data is not and never will be perfect on its own.
The risks from an overreliance on data increase when utilizing a singular source as opposed to a comprehensive, multi-sourced database. This allows for a higher degree of accuracy and lowers the overall risk when depending heavily on the information provided. For insurers in the property and casualty industry, the phrase trust, but verify has never held more importance.
Inspection Report Reliability
The inspection report is another important part of evaluating overall risk, but it is only dependable if it is accurate. Some failures can be attributed to inspector error or even laziness. A lack of experience in the field can also become a huge problem, particularly with new or rapidly growing emerging companies. Then there are the egregious mistakes of making unverified claims or assumptions about the property that will render the report relatively useless.
Choosing to partner with inspection providers that have a thorough quality assurance procedure as part of the process can eliminate much of the risk. Still, the allure of data is present, purporting to know all relevant information. This new trend of hands-off or tech-heavy approaches is especially dangerous to profitability, particularly if they do not include an in-person inspection.
The integrity of the underwriting process can only survive its threats if they are not ignored or considered an acceptable risk. At Insurance Risk Services, we know that unnecessary risks can and will undermine your ability to remain profitable. That is why we have delivered the highest quality underwriting support and inspection reports to our partners in the property and casualty industry for over 35 years. Contact our team today to see how we can help you make gains in underwriting accuracy.