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Data and analytics transforming the risk business

Insurers gain advantages from industry's accelerated adoption of data analytics and technology

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February 24-25, 2021

The insurance industry is undergoing a digital transformation. In an interview, Maroun Mourad, President of Global Underwriting at Verisk, discusses how data, analytics, and digital technologies are changing the industry and delivering benefits for risk professionals.

How are data and analytics changing the insurance industry, in life insurance, as well as personal and commercial property/casualty lines?

Data and analytic solutions are augmenting the insurance industry's ecosystem across the policy lifecycle from customer segmentation, acquisition, and servicing, risk assessment and pricing, fraud detection and right-touch claims management, capital deployment, and extreme event management. Some companies are doing more with data and analytics than others, but nearly all companies in the industry — from life insurers to personal lines writers to commercial P&C companies — are applying data and analytics to improve their business performance.

Verisk sees great potential for using data and analytics to deliver better customer insights, enhance the ability to serve customer needs, and drive a more satisfying customer experience. Beyond the improvements for customers, which is really where every company should focus, data and analytics also offer significant operating leverage like bringing teams together in an increasingly remote world, enhancing an organization's efficiency and improving loss ratios and overall profitability.

How does Verisk view technology-enabled underwriting across different market segments? 

Flexible architecture and simplified technology adoption deliver tremendous advantages for underwriters. An old adage in insurance is that we must underwrite to the segment versus adoption of a one-size-fits-all approach. While underwriting a small commercial or personal auto/home risk can be done 100% algorithmically today, the level of  automated underwriting adoption in the middle market or complex commercial segments depends on data availability as well as an insurer's appetite for data adoption and use in those segments. Either way, it's important to note that data shouldn't replace human experience, otherwise referred to as "tribal knowledge" in insurance circles, but rather augment it. You still need deep domain insurance expertise to run an insurance business!

The combination of analytics and underwriting experience creates a blend of art and science. The ratio of art and science in underwriting risks can and should vary by segments. For personal or small commercial risks, it might look like 90% science and 10% art, while for the middle-market space, it might be 60%/40%. Underwriting larger and more complex risks calls for even more human experience, though science can still play a significant part in delivering new insights as well as operational and cost leverage.

What role does Verisk see InsureTechs playing in innovating the insurance industry?

InsureTech companies are bringing innovation to virtually all types of insurance — life, health, personal, and commercial lines both in the United States and internationally. InsureTechs come in different flavors: pure tech plays, marketing and customer acquisition, data analytics, fraud detection, as well as MGAs and MGUs. They play different roles across the policy lifecycle and are, in the vast majority of cases, hyper focused on a single point solutions.

Verisk is the most established and largest of insureTechs, as we've been serving insurers in the space since 1971. Our 50-year journey was mostly focused on the U.S. P&C space and we have expanded into the international and life insurance space in recent years.

In 2016, the founding year of InsureTech Connect, many established insurance companies viewed InsureTechs as a competitive threat, here to disrupt. Fast forward to this year's well attended ITC, and you'll notice that one of the largest group of investors in InsureTechs is the insurance industry — insurers, reinsurers, and brokers. One of the beautiful things about InsureTechs is they are helping the industry reimagine insurance and the customer experience.

From your perspective, what are some of the biggest challenges to the industry's optimization of data and analytics?

First, insurers must trust the data provider and ensure that the data they are using is of the highest quality. You can have the best algorithms, but if they're placed on top of data that isn't clean and reliable, insurers won't get the desired lift in terms of segmentation, pricing, modeling, and fraud detection. Good data quality is also needed for effective benchmarking. In addition to quality, data needs to be recent and constantly expanded to provide wide coverage. This is where I strongly believe that Verisk, with our largest industry proprietary and contributory databases, brings a clear advantage to the industry in terms of data accuracy, speed to market, and coverage.

Second, a cultural shift towards more and faster adoption of data analytics is needed across segments. The personal lines industry has been a heavy user for over a decade and the commercial insurance is catching on quickly, especially in the small commercial space. The life industry's adoption of data analytics is increasing fast and is thus attracting a lot of insurer and investor interest to the space.

Verisk is committed to helping the industry derive the full benefits of data and analytics so it can continue to protect people, property, and financial assets.

 Maroun Mourad.PNG 

Maroun Mourad is President of Global Underwriting at Verisk Analytics Inc. As a data analytics executive, he leads Verisk's businesses across life insurance, U.S. commercial lines underwriting, and property and casualty underwriting internationally.

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