Risk Insider: Ernie Feirer

A Clearer View of Location Risk

By: | April 28, 2017 • 3 min read
Ernie Feirer, CPCU, is Vice President and General Manager, Commercial Insurance, at LexisNexis Risk Solutions, where he is responsible for developing a suite of solutions for the commercial insurance market. He can be reached at [email protected]

Location information is critical for assessing risk and underwriting commercial property insurance effectively.

Most commercial property underwriters today gather risk-specific location information manually. In addition, they are limited by having incomplete data on existing exposure and property-specific peril by location when they underwrite.

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Fortunately, access to geospatial technology and new data sources are allowing carriers to improve the breadth and efficacy of risk peril data in commercial property underwriting.

Access to raw data is useless if you can’t interpret it. New geospatial technology solves this problem by converting raw peril data into machine-readable risk scoring indices that can be integrated into an automated underwriting workflow.

Peril-specific risk scoring indices can be produced by taking historic peril-specific data on an address and assigning it number from one to five, indicating the intensity of its peril exposure. For example, a property that has a long history of hail events will have a hail score of five. A property that has little or no hail event history may have a hail score of two.

Carriers can then establish thresholds based on these peril indices so that they can easily sort out which potential risks are a definite yes, definite no, or require further scrutiny. For example, a carrier may not have the appetite for property with a wind peril score of four or higher, and it may want to apply additional underwriting attention on a wind peril score of three.

Having these tools in place positions the carrier to implement better location specific underwriting along with a process we’ve called Strategic Visualization.

How Strategic Visualization Works

Underwriters don’t have the time to visualize every property across dozens of parameters. Strategic visualization helps by simply automating a process that leverages risk-specific indices to identify risks that require additional underwriter attention.

An automated scoring engine can use indices across different risks to identify those that are below acceptable thresholds and automatically send them through to bind. Risks that exceed underwriting thresholds are referred for further action and underwriter attention.

Scoring can be fine-tuned to match organizational risk tolerances at the SIC or business category level. Carriers can implement peril-specific indices or thresholds by business type into existing underwriting workflows, visualizing only the risks that are above the threshold and, in turn, improve productivity and their bottom line.

A carrier underwriting a car dealership, for instance, may set a lower risk threshold for hail while jewelry store underwriting may necessitate a lower threshold for theft.

What types of risk-relevant geospatial information should underwriters look at? The options are constantly expanding, but the following five categories of geospatial data should be considered:

Location-Based Risk Factors are business-related information at the geocode level. It is used to assess a location’s risk level based on the neighborhood business climate, including bankruptcies, foreclosures, vacancies, business failures, business creation and business change rates.  Location risk factors help the underwriter understand the type of neighborhood and environment in which the business is operating.

Natural Hazard Data provides insight on the propensity and potential future damage from natural hazard perils by location. These perils include floods, high winds, tornadoes, hail, brush fires and earthquakes. While the availability of natural disaster data is not new, the ability to distill this data to a set of property specific indices, along with analysis of existing exposure and visualization on a single platform is new.

Firmographic Data assesses the types of businesses that surround a particular property location that can have impact on risk. For example, a day care located next to a bookstore and elementary school will have a different level of risk than a day care sandwiched between a liquor store and a pawn shop.

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Historical Loss Data is perhaps the most effective predictor of future risk. Aggregated loss history indices from industry-wide contributory claims databases reveal valuable insights regarding historic theft, wind, hail, lightening, fire, water and liability claims by location.

Existing Policy in Force Data provides the current exposure context based on policies already on the books and allows the carrier to assess whether underwriting that new business — in that particular location — will create exposure beyond their appetite for risk.

Real time access to geospatial insights at point of underwriting can significantly improve the commercial underwriting process. Underwriters only touch those risks that require more attention. At any point, carriers can customize and fine tune the technology to better match their risk tolerance.

Geospatial visualization is shaping the future of commercial underwriting. Carriers that incorporate the technology in their underwriting processes will gain a significant competitive advantage.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

As risk manager for a cloud computing and software company, Laurie LeLack knows that the interconnected economy and cyber security remain top risks.
By: | December 14, 2017 • 4 min read

R&I: What was your first job?

One of my first jobs was actually at a local insurance agency when I was a high school student, before I had any idea I was going to get into insurance. After college, I was a claims analyst at Sunbeam.

R&I: How did you come to work in risk management?

I fell into it after college, where I studied international business. I had a stack of resumes, and Sunbeam came to Florida from Rhode Island, so I applied. I interviewed with the director of risk management and just stuck with it and worked my way up.

R&I: What is the risk management community doing right?

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Getting a holistic view of risk. Risk managers are understanding how to get all stakeholders together, so we understand how each risk is aligned. In my view, that’s the only way to properly protect and serve our organizations.

R&I: What could the risk management community do better?

We’ve come a long way, but we still have to continue breaking down silos at organizations. You also have to make sure you really understand your business model and your story so you can communicate that effectively to your broker or carrier. Without full understanding of your business, you can’t assess your exposures.

R&I: What was the best location and year for the RIMS conference and why?

Being on the East Coast, I like Philadelphia.

Laurie LeLack, Senior Director, Corporate Risk and Americas Real Estate, Citrix Systems Inc.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Organizations understanding their cyber risk exposures and how this line of insurance can best protect them. Five to ten years ago, people shrugged it off as something just for technologies companies. But you can really see the trend ticking up as a must-have. It was always something that was needed, but people came to their own defining moments as we got more involved in electronic content and social media globally. Cyber risk is inherent in the way we do business today.

R&I: What emerging commercial risk most concerns you?

The advent of security and contractual obligations. These are concerns as we all play a part in this big web of a global economy. There’s that downstream effect — who’s going to be best insulated at the end of the day should something transpire, and did we set the right expectations?

R&I: Is the contingent commission controversy overblown?

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I think so. At the end of the day, it’s all about the transparency you’re getting from the people you work with. I think some best practices in transparency came out of the situation, but we were working on a fee basis, so it wasn’t as much of an issue for us as it may have been for other companies.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

I’m cautiously optimistic. We seem to be stable in terms of growth, and I’m hoping that the efficiencies and the economies of scale we achieve through technology will benefit us. But I’m also worried about the impact that could have on the number of jobs globally.

R&I: Who is your mentor and why?

Robert O’Connor, my former director when I was first on-boarded at Sunbeam, gave me so many valuable tidbits. I’ll call him to this day if I have an idea I want to bounce off him. He’s a good source of comfort and guidance.

R&I: Of what accomplishment are you most proud?

I have two very empathetic, healthy and happy boys. Eleven and soon-to-be 14.

On the professional side, there were a lot of moments during my career at Citrix where we were running a very lean organization, so I had the opportunity to get involved in many different projects that I probably wouldn’t have had in other larger organizations.

R&I: What is your favorite book or movie?

My favorite movie is Raiders of the Lost Ark.

R&I: What’s the best restaurant you’ve ever eaten at?

A place in Santa Barbara called Bouchon.

R&I: What is the most unusual/interesting place you have ever visited?

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Caverns in Gatlinburg, Tennessee. They were interesting. It was cool to see these stalagmites and stalactites that have been growing for millions of years, and then just above ground there are homes from the 1950s.

R&I: What is the riskiest activity in which you’ve ever engaged?

Riding on the back of my husband’s Harley.

R&I: What about this work do you find the most fulfilling or rewarding?

I like educating people and helping them find their ‘aha’ moment when you highlight areas of risk they may not have thought about. It allows people to broaden their horizons a little bit when we talk about risk and try to explore it from a different angle. I try not to be the person who always says “No” because it’s too risky, but find solutions that everyone is comfortable with given a risk profile.

R&I: What do your friends and family think you do?

I tell my kids I protect people and property and sometimes the things you can’t feel or touch.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]