The Cautious Underwriter

According to the Insurance Information Institute, Americans reported $52B in losses from weather-related catastrophes last year.

Tue Sep 03 13:16:00 EDT 2019
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The following article is part of a three-part series: A Profitable Weather Strategy: Why YOU Should Care.

According to the Insurance Information Institute, Americans reported $52B in losses from weather-related catastrophes last year.

Mother Nature is unpredictable, and it’s not possible to predict the exact time and date she will strike because of a number of factors: air pressure, wind, precipitation, etc. However, Insurance providers are challenged to mitigate their risk exposure to protect their organization and their clients, despite Mother Nature’s unpredictability.

Mitigation is far more complex than drawing a line on a map -- slope, elevation, wind patterns and terrain makeup are just a few of the many factors to consider.

So when a national property and casualty insurance carrier is deciding whether to write new business on 100,000 home owners’ policies distributed across the U.S., the underwriting group leverages heavily automated processes to quickly review and price new policies while ensuring that exposure is adequately covered.

After an unusually stormy spring, the carrier decides to enrich the 100,000 locations with recent weather impact to gain an updated view of each property’s roof condition. The underwriting group sets wind, hail, and rain thresholds at 70 MPH, 90% chance of large hail, and 4 inches/24 hours, respectively.

The data output shows that 30,000 of the 100,000 locations were exposed to one or more of the conditions described above in the past 60 days. 2% of these locations had significant enough damage to avoid writing new business in order to dodge immediate claims payouts.

The total savings? Over $1.5 Million.

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