Library: Intelligent AI – The power of digital twins

Executive summary

The commercial property insurance market of 2021 is ripe for modernisation.

Commercial property insurance desperately needs Digital Twins

Insurers and brokers lack comprehensive real time risk data to help them monitor, detect and mitigate commercial property risks.

Fewer than 5% of commercial property locations are physically surveyed for risk and, of those which are, only 1 in 7 risk recommendations are actioned. This leaves the customer and insurer exposed financially if disaster strikes.

With mounting losses, insurers are forced to increase prices and restrict coverage and customers end up paying more.

Commercial property insurance is currently loss-making. The status quo is not working. There is an urgent need for rapid transformation to real-time intelligent insight. Digital Twins of risk can provide a 360° view of risk across 100% of your commercial property portfolio.

This report explains how Digital Twins of risk can be used to drive a smarter underwriting and risk management approach.

Change is happening fast.

Insurers have an opportunity to build competitive advantage by translating the mass of available data into actionable insights, leading to better decision making.

Cloud computing, faster data processing and advances in artificial intelligence for data extraction and image analysis mean it is now possible to accurately develop digital models of risk at commercial properties without having to visit them.

Digital Twins create near real-time models to give a far more accurate 360° view of risk across 100% of commercial properties at a fraction of the current cost.

Digital Twins are made of up to 300 data sets, including:

• Open data (e.g. crime, fire, rateable value, financial data etc.);
• Satellite spectral analysis data;
• IoT (internet of things) sensor data;
• Real-time natural catastrophe data (eg river flow and flood data, temperature and weather data, rainfall, landslip and seismic data); and
• AI generated data and AI extracted risk report data.

Real time risk data is essential

According to a 2021 survey by Intelligent AI, based on feedback from 43 insurers and brokers, 100% of insurers and brokers believe that having accurate and detailed information on commercial property is important or very important for their business.

Yet they are struggling to achieve this, with only 13% saying they are very good or good at gathering this level of data on commercial property portfolios.

The importance of having real-time risk data across 100% of a property portfolio is clearly recognised, with 96% of respondents saying it would be valuable or very valuable.

But again, there is a gap between intention and reality, with only 13% admitting they are very good or good when it comes to their actual use of real-time data.

There is big potential for improvement. With a detailed risk breakdown across all sites through Digital Twins of risk, insurers and brokers can analyse risk more quickly and accurately, ensuring a far more precise 360° view of risk across 100% of commercial properties.

The approach saves time, reduces costs and allows for a better customer experience. Insurers can shift from being just a policy provider to a trusted partner, helping their customers drive business continuity and avoid disruption.

Digital Twins allow insurers and brokers to deliver better results:

• Accurately analyse and price risk
• Carry out desk surveys at a fraction of the time and cost
• Accurately analyse whole commercial property portfolios
• Identify high and low-risk properties fast
• Track and drive-forward risk improvement programmes with commercial customers
• Aid portfolio steering to encourage a diverse mix and balance of risks
• Allows insurers to identify and create a more profitable business by bringing down the overall cost of risk by reducing claims cost (frequency and severity) and lower operating expenses.
• Allows commercial property owners to analyse property portfolios before they are acquired, driving down risk, and improving health and safety and business continuity.
• Allowing users to better understand risks, not only within their estate, but potentially across their global supply chain.

See the full report for more…

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