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Our third thinktank of senior underwriting and risk engineering professionals took place recently. Co-hosted by Risk Solved and GWTInsight it developed on subjects raised at the previous forums.

What’s happening in Risk Engineering?

There is no let up in the challenges around recruitment and retention of staff. The challenge goes well beyond risk engineering and underwriting. The insurance industry needs to attract the next generation and train them up. Within the existing talent pool salaries are at an all time high. This has been exacerbated by the cost-of-living crisis and an ageing workforce who are retiring. Outsourcing continues to problematic in terms of costs and mixed service delivery.

What were once considered ‘vanilla’ buildings risks are becoming more challenging. The reason is increased sophistication in infrastructure and developments such as EV/Batteries. There is a feeling that the insurance industry is playing catch up with technological changes and how they communicate the risks with clients.

AI as a risk Engineering and underwriting tool

Our partner GWTInsight explored how ‘real time’ data can align the risk engineering and underwriting functions to support rating and pricing decisions. With a limited bandwidth across both functions AI can free up valuable time and resources to assess risks and provide valuable insights.

There is a belief that clients don’t want to share data. This is not necessarily the case. One Accenture report shows that they will if it reduces their costs. By working collaboratively everyone can benefit. It requires understanding and education.

The volume of data is huge and will continue to increase. As an example, in one office in London over 50,000 data points per hour were being captured. We have moved from a dripping tap to a power hose of information. Using the learnings could be very powerful if a client has an appetite and sees genuine value. The client interface is key. For example, the dashboards need to meet the needs of the end user. Also the IoT systems need to be recognised across the insurance industry. It is another argument for collaboration and co-operation with shared technology. For example, in motor fleet, everyone recognises Thatcham.

Overall, the cost benefit and ROI from sensor technology requires education to break down barriers, and a serious conversation about the level of collaboration needs to be had.

Lithium-ion Batteries – where we are now and what does the future hold?

Lithium-ion batteries have been around since 1991. They are ubiquitous, from watches to smartphones, to e-scooters and buses. Members considered the current issues and risks as well as the hidden perils. They also explored what the future holds and what is coming down the tracks in terms of less risky alternatives. The session was an opportunity for members to share their experience together with risk management and mitigation options.

Issues include the lack of infrastructure to support power hungry demands to a lack of firefighting and suppression techniques.

The future will see answers to the charging problems, recycling and how batteries react under temperature. New batteries that do not rely on Lithium Ion, such as Sodium are being developed. However, these may be 10 to 15 years away.

Underinsurance: Using technology to bridge the gap

Members were keen to continue the discussion from an earlier forum session. This time, David Jones from Kroll. He covered equipment and property underinsurance issues supported by case study examples. With the continued gap in resourcing members explored how technology can support the insurance industry.

Underinsurance is a constant and reports plus members’ experience shows that the majority of businesses are underinsured in one form or another. This is exacerbated when there are a broad range of business sites. Many businesses also ignore machinery and contents in favour of property or simply referring only to the book value from previous years.

A clear issue is the gap in data gathering and reporting, particularly with rapid inflation. This is particularly important with the rise in cost of basic building materials and consumables.

The fear for clients is that greater accuracy will lead to an increase in premium. However, with data in the hands of the risk function aligned to a platform, this can help put the client in control by raising red flags that could drive an onsite valuation.

Engagement between the underwriting and risk engineering functions is important. Brokers should also be involved in this process By providing underwriters with a range, risk improvements can be made.

In the final analysis there is a duty of care to get valuations right and this is not simply the responsibility of the insurer. Brokers and clients need to be part of the process. The keys to getting this right are collaboration, education and the use of technology.

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