Sponsored: Ventiv Technology

Risk Managers: Harness the Power of Data and Analytics

Data is everywhere, and technology has given risk managers the tools to work with it directly, finding the answers they need to drive their businesses forward.
By: | March 6, 2018 • 5 min read

By Kristi McFarlin, Vice President, Analytics, Ventiv Technology

Data and analytics have always been the language of insurance.

“Go back to the early days of Lloyd’s, when underwriters of the day met in coffee houses to share their experiences around which ships successfully made it to port. That’s how marine insurance began – with people pooling information and using it to inform business decisions,” said Rob Hoyt, Department Head and Professor of Risk Management and Insurance in the Terry College of Business at the University of Georgia.

But as the insurance industry became more formalized, actuarial science emerged as a way to institutionalize the process of collecting data and applying it to the practice of evaluating and pricing risk. As data analytics fueled the growth and sophistication of the insurance and risk management industry, it also grew increasingly siloed to a subset of specialists.

Actuaries and data scientists became the experts at drawing in concepts from mathematics and applying them to analyze and measure risk. Within an organization, there are typically a select few experts or service providers who are responsible for the data.

But all of that is changing.

New technologies are lifting the veil shrouding data analytics and making it more accessible to the end user – risk managers and business practitioners with the decision-making power to apply analytical findings to implement operational changes.

“As computing power and the pervasiveness of data increase exponentially, the walls between data professionals and risk management professionals have broken down,” Hoyt said. “As a result, it’s critical that a broader set of individuals in risk management understand the fundamentals of data analytics.”

User-Friendly Tools Enable Risk Professionals to Answer Critical Business Questions

Rob Hoyt
Department Head and Professor of Risk Management and Insurance in the Terry College of Business at the University of Georgia

Risk managers have an opportunity to provide enterprise-level value by spending less time collecting information and more time finding answers.

And this is what CEOs and Boards are looking for. More than ever, they need someone who can work with data quickly and operationalize their findings. Risk managers are in a prime position to fill that role and enhance their value within their organizations, while driving the business forward.

The approach to data analysis has become more agile, self-service and intuitive. Advancements in technology have helped us produce analytical tools that let the business practitioner do the data exploration themselves.

Artificial intelligence and the ability to use natural language to explore data, for example, allows lay people to ask critical business questions and find the answers themselves.

At Ventiv, we partnered with IBM to implement Watson Analytics. It’s just like asking a question of Google or Siri. Instead of figuring out how to get access to data, explore it, and get questions answered, risk managers are empowered to jump in and query their data directly and generate automated predictive analytics without the need to engage a professional data scientist.

Dr. Hoyt has already seen some health care risk managers take advantage of AI-driven analytical tools to identify the root of their exposures. Hospital staff and administrators already know that patient falls are a top risk – but do they know enough about those falls to prevent them from happening in the first place? Natural language querying makes it easier for risk managers to probe their history and look for common threads.

“Now, they can identify the common characteristics of patients most likely to fall, which serves as a starting point for targeted prevention efforts,” Hoyt said. “It’s an example of making data actionable in a clear business context.”

Modern analytical tools also allow risk managers to integrate third party data to gain a more holistic view of their exposure. Examining external parameters like weather patterns, census records or building materials against an organization’s loss experience and claims data can illuminate links that inform a new risk mitigation approach.

Comparing building materials and climate conditions to property losses, for example, can help determine if certain locations are more susceptible to mold. If you can see that the building is in a high-moisture region, you can go back to the building materials and cleaning protocols and find new ways to prevent and mitigate mold damage.

Predictive analytics, also enabled by third party data integration, increasingly play a role in business decisions as well.

“Large consumer retailers have used predictive analytics around weather data to reroute inventory where they expect a spike in demand. If one of their locations is in the path of a hurricane, they can send more water and other practical supplies their way,” Hoyt said. “They harness the power of analytics to satisfy a customer that hasn’t even emerged yet.”

An abundance of data and intuitive modeling tools allow risk managers to drive these strategic decisions and enable true enterprise risk management across their organizations.

Risks of User Error

Kristi McFarlin
Vice President, Analytics, Ventiv Technology

Despite the user-friendly nature of modern analytical tools, they can create more risk for an organization if that user lacks basic understanding of data science. Risk managers and other business leaders still have to ask the right questions and understand how to interpret those results.

Introducing bias is one risk. Leading or narrow questions may produce the results that a risk manager wants to see, but they may not be accurate if they are not comprehensive. Misinterpreting the answers can also undermine data’s usefulness.

“There’s an interesting statistic that the interest rate in the U.S. is positively correlated with the height of the Fed chair. So rates were really high when Paul Volcker was the chair at 6’7”, but dropped way down when Janet Yellen took over,” Hoyt said. “Of course, the Fed chair’s height isn’t driving interest rates, but it’s a simple example of how critical it is to separate correlation from causation. Without that distinction, results are skewed and meaningless.”

A Partner with Data and Domain Expertise

The opportunity for risk managers to take a leading role in data analysis is clear, but doing it well remains a challenge. There are two ways to better equip themselves: education and partnering with expert vendors.

Practicing risk managers can take their pick of educational options, ranging from hour-long webinars all the way up to professional designation courses and master’s programs in data analytics.

“At the University of Georgia, we made curriculum changes to ensure every undergraduate in the college of business understands how to use data to ask business questions,” Hoyt said. “We also added a Master’s in Business Analytics degree program that can serve risk managers already well into their careers.”

As a graduate of UGA’s risk management program myself, and a technology employer, I can testify that recruiters increasingly want new hires to come with this education and experience already under their belts.

Those are the kind of graduates that we at Ventiv are interested in hiring because they are prepared to meet the demands of the data and analytical needs, but they also have domain knowledge of risk management and insurance terminology.

To fill in the gaps and ensure data is handled and interpreted correctly, though, practicing risk managers need a vendor who also comes equipped with both data and domain expertise.

You would want to partner with a technology provider like Ventiv that knows your industry and knows how to empower you to make data-driven decisions that generate optimal outcomes like reducing claim frequency and severity. At Ventiv, we also understand the regulatory and reporting requirements around insurance.

And, of course, you would want to select the risk management software system with the best analytics, reporting, and data-discovery tools for your needs. As the first and only provider in our sector of the risk technology market to offer Watson Analytics as an embedded, fully integrated component of our software solution, we think Ventiv is the obvious choice. That’s because with Watson Analytics, Ventiv has reimagined what advanced analytics can do for the risk, claims, and safety profession.

To learn more about Ventiv Technology’s solutions for the risk management and insurance industry, visit http://www.ventivtech.com/.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Ventiv Technology. The editorial staff of Risk & Insurance had no role in its preparation.




Our people, software, and innovative solutions empower organizations to achieve optimal results of their risk, insurance, and safety programs. Through the depth and breadth of our software solutions, global capabilities, and domain expertise, we are the proven leader in supporting virtually every type of industry and the largest and most complex companies in the world. Ventiv Technology proudly partners with over 550 organizations and 300,000 users in more than 40 countries.

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.

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Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”

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Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.

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“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]