Comprehensive management of new and emerging risks is vital for any company aiming to ensure compliance and maintain a strong financial position. For insurance companies, however, it becomes doubly crucial as risk is the very basis of their value and product. This is why solutions such as loss control could become the next big opportunity for insurers.
The term insurance loss control is a set of risk management practices designed to reduce the likelihood of a claim being made against an insurance policy. Loss control involves identifying the sources of risk and is accompanied by either voluntary or required actions that a client or policyholder should undertake to reduce risk.
They allow carriers to provide policyholders with incentives to be more risk averse. For example, an auto insurance company may reduce the premium for a policy if the driver takes a driver’s education course. This means that the company will collect a smaller premium, but it also reduces the risk of a claim being filed by the insured because a trained driver is more likely to operate the vehicle in a safer manner, making them less likely to be involved in an incident.
In a recent webinar, John Greco, vice president of loss control for Skyward Specialty Insurance, explained how the technology transformed his organisation’s prospects. He said: “Going back to 2016, when I started with Skyward, we did not have a centralised database. We had different business units that just kind of went to certain vendors, got the data, and then it just went into the file. There was no data mining or anything that could do any type of predictive modelling.
“The other problem we had before we went with RCT (Risk Control Technologies) – before we went with a centralised database – was that we were having some issues from a regulatory compliance standpoint, because there were a number of states that required the mandate and loss control be provided, especially when it comes to worker compensation. So we had struggled previously.”
Greco admitted that since focusing on data, and building an efficient programme built upon Risk Control Technologies’ software, they were leading themselves blindly down a path with no information.
Martina Conlon, head of property & casualty insurance at Datos Insights, explained that data has now become king in regard to carriers managing their risks. In fact, Conlon went further, claiming that loss control departments are on the verge of being able to transform an organisation and make better predictions about loss experiences.
Conlon spoke effusively about the prospect of the space, stating: “It’s also an exciting time for loss control departments and loss control overall within insurance organisations. But modern loss control technologies really are positioned to improve efficiency, reduce claims, increase customer engagement, and leverage data to make better predictions about your loss experience.”
These potential gains offer a clear incentive for carriers, who could well reap the rewards of the burgeoning technology to predict potential losses more accurately than ever before.
When prompted to explain how Datos Insights tackles loss control, Conlon said: “For simple risks we have mature predictive models around loss control, we have more mature predictive models around underwriting and we have improved workflow management that is making underwriting organisations more efficient in general.
“And then finally, where we are today we add into that mix AI-enabled text ingestion, automated data collection, InsurTech enabled underwriting in terms of leveraging a lot of these AI enabled solutions, and predictive and proactive loss control that has an AI element to it. This is really reducing the amount of time for that analysis piece and has been the hardest one to really slim down over time. So it’s an exciting time for underwriting.”
According to David Da Costa, CEO of Risk Control Technologies, the prospect of an efficient loss control system allows carriers to do more than just the bare minimum. It would enable them to help clients mitigate risks, using the data to predict and get ahead of prospective issues.
Da Costa said, “The reality is, once you actually have that rich loss control data, and not just from physical surveys, but from a larger data set now that we’ve increased your coverage, there’s so many things that you can do with that.
“So just to highlight one or two examples, a lot of our clients work with their actuarial departments where they’re joined at the hip, essentially. And they’re constantly taking that data and working with the actuaries to combine it with claims data to create better predictors of risk or of claims.
“So they’ll look at it and say, ‘whenever we see this pattern of data collection on the loss control side, which again is typically pre-claim, we see that we find a claim occurs’. So let’s better understand that, better create those correlations or something, so we can flag it and get ahead of it and automatically create recommendations for customers. Let’s spend our time understanding how are we going to help you remediate that and be a partner, that’s not just flagging a risk and saying ‘figure it out’, but rather let’s show you how we can help you actually mitigate that and be a good partner.”
Ultimately, as data and predictive programming only grows in ability due to technological advancements, loss control risk management will only advance in stature for InsurTechs looking to build strong consumer relations. As we move into a modern world emphasizing customer satisfaction, carriers should seize the potential gold mine of loss control risk management. They must implement models that can mitigate potential losses well before they occur.
Listen to the full webinar here.
Keep up with all the latest FinTech news here.
Copyright © 2023 FinTech Global
