Library: Verisk – Insurers get a clearer picture of risk exposure with image analytics

Executive summary :

In today’s fast-paced, digital marketplace, the value of pictures isn’t measured in thousands of words, but in millions of dollars. And in small commercial insurance, images can tell far more about a business than many questions on an application combined.

Get yourself classified correctly

Take a landscaper, for example, whose business activities may extend beyond cutting grass and spreading mulch. Photos of workers in action might reveal tree trimming high above the ground. Other images may show workers excavating a lawn to install drains. Either of these activities is critical for an underwriter to know about since they potentially create new exposures, but could easily be missed, especially if the work is intermittent.

Data gathering takes time

Discovering the full range of a business’s activities and attributes that can impact premiums, coverage, and claims is critical for accurate underwriting but can be difficult in practice. Underwriters often rely on information available on websites and social media or provided by the insured or agent. Verifying information can be prohibitively time-consuming and may not produce a complete picture because data sources are fragmented and sometimes out of date. Agents are under increasing pressure to quote policies quickly, which can result in reliance on incomplete or even faulty applicant information.

Innovation must replace manual processes 

In fact, a Verisk analysis found that just over half of small business policies were misclassified in Standard Industrial Classification/North American Industrial Classification System (SIC/NAICS) codes. Inaccurate classification could mean missing details of critical business attributes, which could impact both sides of the transaction, such as leaving the insured vulnerable if a policy expressly excludes an activity or an insurer collecting premiums misaligned with the risk.

As insurers strive to streamline and automate underwriting, spending effort on manual research is at odds with customer and agent expectations for a fast turnaround. The answer to speedier and more accurate underwriting lies not in more time on research or more back-and-forth questions between underwriter and business owner, but in innovation.

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