Commercial Carriers Are Under Pressure
High levels of automation have improved efficiency for personal lines property insurance, but the diversity and complexity of commercial lines continue to put pressure on expenses and loss ratios. Two industry stats make the case: first, according to the NAIC, the combined ratio for commercial multi-peril has been over 100% for the past 4 years. In addition, according to EY, a large gap exists between the best and worst groups of carriers with underwriting expense ratios ranging between 28% and 34%.
Improving underwriting efficiency and risk assessment accuracy are two avenues for improving these results. CAPE’s own studies show that a major driver of commercial property claims is roof condition. In fact, in a study of over one million commercial locations, those properties with poor or severe roofs have 70% higher average loss ratios and claims frequencies than those with excellent roofs. And the impact is widespread—a large-scale study of over 7.5 million commercial addresses across almost 10 million properties showed that more than 21% were in bad condition.
Reducing both expenses and loss ratios may seem at odds—but new forms of accurate and instant property intelligence can improve efficiency as well as accuracy earlier in the underwriting workflow. Ideally, underwriters would quickly understand the condition of properties and then identify those characteristics that are likely to impact claims. The ability to quickly and easily identify the properties and specific attributes that drive claims can offer a path to next-level underwriting results.
Introducing the next generation of CAPE Commercial Property Intelligence
At InsureTech Connect 2021, CAPE will be unveiling a major, upcoming update to its commercial lines product and application, in order to help carriers and underwriters meet these needs. It includes several improvements aimed at generating faster, more accurate risk assessments.
For multi-building properties, the application will provide an aggregate condition rating. This saves time and lets an underwriter focus their attention on properties with significant risks.
Roof material and geometry will be automatically provided. In geographies with weather risks, these property attributes are a proven driver of claims, so viewing them upfront alerts the underwriter to important risk factors.
When using CAPE’s proprietary Roof Condition Rating, it can be helpful to have an explanation to share with the customer. This makes the rating more actionable and pricing more transparent. The next generation CAPE commercial product also provides reason codes for specific roof condition factors like structural damage, patching, ponding, or material degradation.
Aside from the roof, the paved area of a commercial parcel is another driver of claims. Liability and workers comp claims, directly and indirectly, originate from paved surfaces in bad condition and missing or insufficient lighting. Poor pavement can directly lead to slip and fall claims, but also raises concerns about the general condition and possibly overall lack of maintenance and safety of a property. Poorly lit properties may also be at risk for crime. The CAPE commercial application grades pavement based on the prevalence of cracks and lighting coverage. Lot debris, also included in-app is a proven predictor of crime.
Take A Deeper Look
When a property has significant risks, an underwriter can dig deeper by looking at images. The CAPE time series capability will let underwriters go back in time to see how the property condition has changed. The upcoming update also provides access to oblique and street imagery so underwriters can see more factors for those properties that are a concern, such as building windows, siding quality, fencing, access points, and more.
Lastly, the update features enhancements that make life easier for underwriters. These include…
- Search History: Letting underwriters with long cycles refer back to their previous work
- PDF Reports: structured output to share findings with risk engineers, inspectors, agents, and brokers
- 3rd Party Data: One-click access to tax assessor records and hazard information within the application.
Bringing Innovation to Commercial Lines
Carriers face intensifying competition, disruptive technology changes, and increasing risk complexity. Employing new approaches to improve efficiency and risk management will lead to better results and help carriers adapt to this changing landscape.
The CAPE team is focusing on continuous innovation in order to bring new risk signals, automation, and greater efficiency to carrier underwriting teams. If you are a commercial underwriter interested in using the most advanced technology in order to quote and bind better risks, faster, then reach out to our team for a demo today.
To see these new improvements in action, watch the video below:
The images in these examples were provided by Nearmap and other imagery providers.