Problem: Underwriting with Accumulation Software

Posted by Ivan Maddox on Feb 3, 2016 7:30:00 AM

As I have studied underwriting natural catastrophe, one of the more interesting things I’ve learned is that it’s widely done with software built for something else: accumulation. Even though many accumulation solutions (including some cat models) offer an underwriting function, it is not suited to the actual task of underwriting.

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Topics: InsitePro, Insurance Underwriting, Natural Catastrophe, Insurance Software

Top 5 Articles from The Risks of Hazard in 2015

Posted by Ivan Maddox on Jan 28, 2016 6:30:00 AM

With 2015 now firmly in the past, I am seeing a lot of blogs with 2015 Top 5 lists. As with all good ideas, it needs to be copied assimilated. Today, I am counting down the Top 5 articles from last year based on viewership.

Without any ado at all, here are the Top 5 Risks of Hazard episodes from 2015:

  1. Is Disruption Really Coming to Insurance? In October I attended a conference in San Francisco exploring how insurance was about to be disrupted. I wrote this post afterwards, being unconvinced. Meanwhile, a nice debate about it has popped up at ITL, here and here.
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Topics: Natural Catastrophe, Property Insurance, Insurance Software

“Where” and the Internet of Things

Posted by Ivan Maddox on Jan 26, 2016 12:16:22 PM

The Internet of Things (or the IoT) is a real boon for technology bloggers, and it is time Risks of Hazard took a look at it. First, some background: here’s what the IoT is, how it works, why it’s not everywhere yet, its impact on insurance, and how it threatens the insurance industry (!). But there is not much about the IoT and natural catastrophe risk out there yet, presumably because they are not really related…

False. The IoT and natural catastrophe risk assessment have one thing very much in common: the importance of location.

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Topics: Location-Based Intelligence, Insurance Underwriting, Natural Catastrophe

The Crystal Ball - Looking Ahead to 2016

Posted by Ivan Maddox on Dec 16, 2015 9:47:27 AM

With my last blog post of 2015, it’s time to honor the tradition of making predictions for the coming year. It is an especially fitting way for Risks of Hazard to end the year since we explore underwriting analytics that help underwriters understand the chances of something happening in the future.

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Topics: Flood Insurance, Natural Catastrophe

Seeking Underwriting Perfection (Part II)

Posted by Ivan Maddox on Sep 24, 2015 7:00:00 AM

This blog post is part 2 of 2 exploring how underwriting leakage  manifests itself in the property insurance market. On Tuesday it was rate fluctuations after a catastrophic event. Today, we look at the coverage gap.

To recap briefly, underwriting leakage is the difference between perfection and reality when an underwriter assigns financial conditions on risk. Ideally, there is no difference, but in reality there is always a difference.

The coverage gap is the difference between total economic losses from an event and insured losses. It can be caused by a lack of insurance penetration into a market, a lack of suitable products available, or certain coverages missing from the available products. Here is a recent paper on the coverage gap from Swiss Re (they call it the “protection gap”, but it’s the same thing) that explains it much better. In a perfect world there would be no coverage gap because all the necessary policies would be available at the right price, offering the right coverage. This is the perfect world where there is no underwriting leakage.

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Topics: Insurance Underwriting, Natural Catastrophe

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