Get with the program

Insurers and brokers could be sitting on a gold mine in the shape of their claims and risk assessment data, and forward-looking companies have been developing technologies to unleash some of that value.

Recognised as finalists at the Insurance Times Awards last month, several companies have spent the last couple of years developing bespoke software to offer new or improved claims services to clients or to enhance their own business intelligence. Here, we get to grips with three of the winners.

Marsh Claims HealthCheck

Launched: In 2009

Won: Claims Initiative of the Year 2010

What’s the big idea? Marsh wanted to set itself apart from competitors, so it spent two years developing a bespoke software tool that can show clients how much claims are costing them and the quality of service they are receiving from the insurance industry. “We see claims as a differentiator,” explains Marsh’s UK risk management practice claims leader, Mark Daynes. “This helps bring together our claims offering in a more efficient and effective way, and we hope that clients would see we are adding value.”

What does it do? The software analyses clients’ claims and compares it with Marsh’s own data – covering more than 600,000 claims with a combined value of £2.9bn – to produce three graphs that show the cost of claims, reserve values and how quickly they are settled over a five-year period. Client data is displayed as a red line, and compared with average market data and data for similar clients, so they can immediately see how they compare to the rest of the market.

The graphs are then analysed against an 11-point checklist, which awards a score to each one on a ‘red, amber, green’ traffic light scale. Criteria include the quality of the data – such as how old it is, whether it has been confirmed and whether there are any obvious errors – and whether clients could be incurring high legal fees, such as by having a high proportion of claims unresolved after several years.

The software is not offered as a standalone product, but used as part of a consultation with the client. Before the meeting, their broker will input their data, produce the report and analyse the results. The conversation may then take anything from 20 minutes to several hours. “Depending on what we find, that usually leads to a wider discussion with the client about the impact of their claims,” Daynes says.

What does it do that other systems don’t? Marsh believes there isn’t another system that does exactly what Claims HealthCheck does, which is to offer a high-level perspective on claims trends.

Who’s using it? Marsh has used the system with “well over 100 clients” that fit within the appropriate claims profile: large corporate clients with full-time risk managers that have sufficient numbers of employers’ liability, public liability and motor claims per annum.

How will the system develop in the future? Marsh reviews feedback of the product both monthly and quarterly from users and the IT team that built it, and plans to look at how it could be extended and enhanced. One possibility is to include data on other types of claims for different sectors of its client base, such as property.

What are the returns? Marsh will not discuss the project’s return on investment (ROI) or how this would be calculated, but says the software has become part of its offering to both existing clients, to help them improve their claims management, and when tendering for new business. With one client, for example, Marsh used Claims HealthCheck as part of a new business presentation and, on winning the account, was able to demonstrate that its reserves were higher than comparable companies and secure a £500,000 premium reduction from its incumbent insurer.

Aon Benfield, ImpactOnDemand

Launched: August 2010

Won: Broker/Intermediary Innovation of the Year 2010

What’s the big idea? ImpactOnDemand gives insurers and reinsurers an immediate and vivid picture of their exposure to global catastrophes, including earthquakes, hurricanes, wildfires, tornados, hailstorms and volcanic eruptions. Aon Benfield spent two years developing the system to enable it to offer an extra business tool to clients.

“Companies can see if different offices worldwide have been underwriting risks in the same location,” Aon Benfield’s head of catastrophe management, international regions, Paul Miller, explains. “For example, if an insurer is operating in France and the UK, you might find the French desk underwriting a building in Canary Wharf, and the London desk underwriting the one next door.”

What does it do? ImpactOnDemand is a web-based application, so clients do not need to invest in new technology or data storage capacity. They launch the system from an icon on the desktop and upload their data to a secure server. The information they supply is not accessible by Aon Benfield, unless a client wishes to discuss it with their broker, and it is accessed through a secure connection. The results can be displayed as a map, tables or management reports.

The system receives live data feeds from a variety of sources, including: Tropical Storm Risk, which predicts and maps tropical storm activity worldwide; EuroTempest, which predicts and reports on European windstorms; and the National Oceanic and Atmospheric Administration, which maps tornado, hail and thunderstorm activity. It can also analyse exposure in real time, so as an event unfolds, insurers can predict how many claims they will receive.

What does it do that other systems don’t? Miller says the key benefit of this product is its confidentiality, as other services involve clients surrendering their commercially sensitive data to outside providers. The system is fast – it can plot one million risk locations in less than five seconds – and there is no limit on the number of records that can be uploaded and analysed, or the amount of data contained in each one. And it is flexible, allowing data uploads in a variety of formats including databases, spreadsheets or text files. “Clients don’t have to put in a massive effort to adapt their own systems,” Miller says.

Who’s using it? According to Miller, every client that has been offered the system has taken up the offer. So far, this amounts to “hundreds” globally.

How will the system develop in the future? Aon Benfield is committed to updating the system at least twice a year, to incorporate new features suggested by clients.

What are the returns? It’s difficult to quantify, says Miller. “It’s really tough to say we will get X million pounds of new revenue to support this product. It wasn’t developed as a tool that had to make X% return in a given period – it was to meet client demand.”

RBSI Geospatial Systems

Launched: June 2010

Won: Insurer Innovation of the Year 2010

What’s the big idea? A £200m bill for flood claims in 2007 provided RBSI with plenty of incentive to seek out ways of improving its underwriting. The result is RBSI Geospatial Systems, which collates information from a variety of sources and displays it visually on a map. RBSI bought in data sets on different perils and combined that with its own claims experience over the past 20 years.

“Underwriters can see not just addresses and points of interest, but also what is up the road and what else we have insured in the area, in case there’s a higher level of cumulative exposure,” head of geographic information systems Richard Jones says. “You can do a lot more with information as a map than you can with numbers and tables.”

How does it work? When underwriters key in an address, the system displays a map showing key points of interest and the risks of five different perils: flood, fire, subsidence, windstorms and theft. Each layer can be turned on or off to isolate certain risks. Another part of the screen shows statistics on the risk of each peril and recommended actions, though Jones insists it is not meant to replace an underwriter’s judgment.

“This is just a tool to support our underwriters, not a hard and fast set of rules. The ultimate decision remains with them. It makes suggestions they can take or leave, but we have a hierarchy in place for getting sign-off if they want to do something markedly different.”

What does it do that other systems don’t? Jones believes that RBSI’s system benefits from better quality data than comparable systems developed by other insurers. It differentiates between single addresses, and its flood data maps the whole of the UK in 5m2 grids and includes not only coastal and river exposure, but also surface and ground water as well. It can also distinguish between different levels of flood risk for individual properties – whether water is likely to reach over a doorstep, or up to the first floor, for example.

The ‘batch assessor’ function allows underwriters to look at the risks of entire portfolios by inputting spreadsheets of multiple addresses. It will then display the aggregated risk of the portfolio, and compare it to the average across the UK, by region, and to others in the market.

Who’s using it? The system is used by commercial property underwriters in the NIG business, which is sold through brokers and in which each risk is comparatively large. The data that underpins the system is also used in the automated personal lines quoting engine.

How will the system develop in the future? RBSI is investigating the impact of other variables on a client’s risk – the connection between having a pub in the immediate vicinity and the risk of criminal damage, for example – and may include that data if it is valid. Meanwhile, on subsidence, the next step is to lace in vegetation data, such as the proximity of oak and willow trees, to understand how they interact with different types of soil. The system might also be used for marketing and fraud detection purposes.

What are the returns? There is no data on ROI as yet, but the project is forecast to pay for itself by the end of 2011, and Jones believes it could beat this target. Returns are expected to come from better underwriting and more competitive pricing of good risks hidden in bad postcodes, as well as quicker service for brokers. Several have already enquired about how it could be used to help clients manage their risk – for example, by demonstrating that they could cut their premiums by putting stock on racking rather than on the floor. RBSI believes it will also be able to give reinsurers a clearer picture of its total exposure. IT