I know we’ve had this discussion in the insurance industry about where do we need real time and given what we do, we don’t need real time a lot. We’re not doing surgery. This is not a missile going off and hugging the earth. We just don’t need that real time data and I would submit that the pace of the marketplace is increasing and we need real time data in as many places as possible, whether it is at the data collection for rating or for underwriting, whether it is for claims management. As much as we can use real time data or let’s say right time data on how markets and territories are changing for our marketing and distribution and product development functions. So I think we’re going to need more real time data than we might hope, depending on where we come from on this.
Modeling could be very simple or it could be very complex, depending on the algorithms involved but modeling is key to this and visualization. Spatial information management, geographic information systems, use of geo data, this is really the ultimate mash up. This is really a combination of elements or categories of data – from aerial photography to ground level information to data information about our producers and about our customers and about our prospects, to information about the territory to information about the subsurface geology, all of this looked at in a very holistic fashion. That’s a mash up.
What we have here is a culmination, a combination of data elements, of the analytics that are involved, of the visualization of the presentation of the data and of the ability to allow people to interact with both the data that’s in this mash up as well as with the visualization itself of the results.
Think about it. There are times when you watch a football game, for those of you in the United States, and they’ll show a shot of the coaches up above a field or in the press box. They have a view of everything that’s going on. Sometimes you see some band practices, some college or high school band practices and the band leader is very high up on a ladder, looking at the formation of the band. That eagle eye or bird’s eye perspective is really what we need and what a mash up of all these elements really presents for us, using and developing a strong sense of place. But it’s more than underwriting. I know that the topic of this is underwriting and if we look in the middle of this diagram – something I couldn’t do in a presentation but all of you are looking at this on a screen – if you look in the middle, yes, geo underwriting is the topic here and I think that the main point here is not only the real time data collection or the data collection through a visual device that’s GPS-enabled – which is beautiful – it’s the dynamic risk accumulation.
What is the risk accumulation at the point of sale or the point of prospecting, as those men and women go out in the field or as they identify the territories that they want to penetrate? Life agents going out to the homes or the underwriters or the marketers in the property/casualty home office. What territories do we want to penetrate? Do we want to put various products into – they can do a point of prospecting dynamic risk accumulation. If we underwrite those homes or those businesses with certain lines of coverage – whether it’s a BOP, whether it’s commercial multi-peril, whether it’s personal lines, auto – whatever the coverage is, what is that going to do to our risk accumulation if we bring that on board? What does that mean for our surpluses and reserves? What does that mean financially if we underwrite that business, right then? And of course for the underwriting you can do the dynamic risk accumulation right then as well.
As I said, it’s more than underwriting. Having a sense of place, having that spatial sense really cascades through the entire insurance value chain. For strategy and decision support what should be my competitive positioning and why? How is the territory changing? You have to have a sense of not what the territory was two months ago or two years ago. You have to understand how the territory is continually in change. That is to say what new residences, residential areas are being built up? What businesses are coming into the territory?
Also geo-driven target marketing and customer segmentation. What market should I go after and why? From a spatial standpoint, building on that spatial sense, that sense of place throughout, so when I do my marketing, when I develop my marketing plans, where do I want to go and why. Not just for potential ROI or on the profitability of my products, but factoring in the spatial considerations as well. Distribution, of course, is critical. Agency site location. Agency performance and profitability analysis. And we all know this – those of us in the industry – and claims – not just the CAT squad deployment in fraud analysis in which spatial does play into, but also the identification of rehab facilities or continuing care retirement facilities as I said and the quality of those facilities. There are databases out there that give quality of a lot of these medical care providers and you can link that in with their various facilities and you can link that in with a geometric or a geographic figure if you will, a geometric figure around the territory that you’re in or planning to go in. So it’s more than that.
How might we look at this? How might we augment the value chain? We’re suggesting three key insurable domains. One is people, another is places and the third is physical artifacts. People – we know who people are – we know what we’re talking about here. It’s demographic cohorts. It’s ethnic groups, it’s different types of businesses if we’re talking about business. On the places we’re talking about topography. We’re talking about that above ground, ground and below ground characteristics.
Physical artifacts. By that I mean, broadly spoken, vehicles, trophy buildings, chemical plants, liquid natural gas facilities, thing you can touch. Those are the physical
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