The Risks of Hazard

Recently I’ve been researching where hurricanes have historically made landfall in the southeastern United States, and I have found little nuggets of wisdom that help drive underwriting in Florida. The variability of the frequency of hurricane strikes along the coast is surprising. Some places get nailed a lot, and some rarely get hit.

AM Best has had some really compelling videos on their site this week, including this clip from Tuesday that showed us the future of underwriting through the crystal ball of Gail McGiffin of Ernst & Young. She and Meg Green discuss what property insurance underwriters of the future will be expected to do and how they will do it.

In the United States, ZIP codes are universally understood proxies for location. People often instantly recognize an address’s state or region from the first digit or two, and sometimes a full ZIP becomes well known (e.g., 90210 for Beverly Hills).

But these days, ZIP codes do much more than route mail. They are used for things like credit card identity checks; demographic data collection by the U.S. Census; real estate pricing and marketing; and (incongruously) property insurance risk rating, accumulation, and reporting. That last one may come as bit of a surprise, so let's take a look at how insurance companies use ZIP codes — and whether or not their methods make sense. 

It’s time to take a second look, as promised, at last month’s Inside the Minds of Insurance Innovators, a Q & A session about innovation that features 16 leaders within the insurance industry. Published by Carrier Management, it provides a rare and real opportunity to consider industry ideas that are both common and unique. This post is dedicated to the latter, highlighting the three responses that stood out to me the most. 

Carrier Management published a great feature on innovation in P & C insurance last month (June 2015). Inside the Minds of Insurance Innovators explores the subject of innovation with a group of 16 leaders from different carriers, reinsurers, brokers, rating agencies, and (for good measure) a modeler, by asking each of them 11 questions. The questions and responses present an overall picture of how a 400+ year-old industry approaches the future at a time when the business and technology is changing faster than ever before, and the speed of change is still accelerating.  

There are some definite trends in the responses, and some complete outliers. I'd like to explore what these 16 industry thought leaders are telling us with a two-part series: In today's post I will focus on the consensus. Later in the week I will look at the not-so-universal responses, which are interesting of course because they're different.