Risk Insider: Tony Boobier

Underwriting ‘Big Risks’

By: | February 24, 2015

Tony Boobier is an experienced independent consultant focusing on insurance analytics. An international speaker, commentator and published author, he lies awake at night thinking about the convergence of insurance and technology. He can be reached at [email protected]

The unfortunately named Torch building went up in flames this past weekend.

It looked pretty scary, and that was only seeing it on the video. One hundred and one apartments out of 676 were damaged.

I was full of admiration for the firemen who apparently went up there to do something about it. In my mind, I have pictures of Steve McQueen doing his thing in the Towering Inferno, and wondering how those guys did their thing. It’s hard also not to have 9/11 thoughts as well.

But once the emotion had elapsed, the professional side of me was triggered, but I’ll admit, with some slight jealousy.

Big properties create big risks. But don’t big ideas create big risks as well? And maybe big data presents big risks too.

My insurance background is principally claims management, I came to risk some years later. I couldn’t help but wonder, firstly, what day one reserve they would put on the loss; secondly, how they would do the repair, and thirdly, what poor individual they would send up there to do the assessment.

I remember my wife was rather taken aback after I told her that I had been put in a harness and sent down the middle of a catalyst cracker in an oil refinery to review a major fire, and then later on, in a separate claim, into a cage over the River Thames to look at a collapsed wall.

I also wondered about the underwriter at Oman Insurance Co. OIC is the largest insurance company in the UAE with a gross written premium over $3.25 billion in 2014. They have large underwriting capacities and good reinsurance in place, apparently, so maybe it’s just another day at the office for them. But it’s a big loss, you can’t get away from it.

We’re in unprecedented territory in Dubai, I think.

Big properties create big risks. But don’t big ideas create big risks as well? And maybe big data presents big risks too. What’s the big data equivalent of having 20 percent of your building burn down, and at a couple of hundred meters in the air at that?

What liabilities might this create, and how would an existing or future policy respond? How might we value the loss? Who is good enough to anticipate on day one what the full scale of a major data loss or security failure might really comprise?

We may get some new learning from the recent experience at Anthem Health Insurance where even the details of the executive seem to have been lost to hackers.

I’m increasingly thinking that underwriters need to develop a new competence — that of imagination. I suspect they have always had it, but maybe they might need to step up a gear in their thinking.

Perhaps the underwriters of the future will need to be quite different — as creative as they are actuarial. Underwriters in pony tails and T-shirts? Wouldn’t have happened in my day.

Read all of Tony Boobier’s Risk Insider articles.

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