Data analytics are making their mark on commercial insurance

Insurance professionals need a lot of information. Previously, that meant insurance brokers would collect data based off of prior policies, fill out a few supplemental applications, tie a bow on it all and send it to a number of insurance carriers. From there, the premium was calculated and the broker presented it to the employer.
However, the old-school way of doing things isn’t enough today.
“Submissions should not sit on an underwriter’s desk for an extended period of time. The data and analytics that now exists needs to be conveyed not only to the carriers but also to employers, so that their companies can benefit to their fullest potential,” says Patrick Zedreck, area assistant vice president, at Gallagher.
Smart Business spoke with Zedreck about how data analytics are affecting — and will continue to affect — how insurance policies are designed and priced.
How are data analytics being used by the insurance brokers? How does this technology benefit employers?
Data analytics are becoming extremely useful and important. As technology progresses, the access to information is much easier. With all of this data only a couple clicks away, your broker can compare and contrast different quotes to each other. For example, he or she can discover what an employer should expect for umbrella and general liability insurance — the two types of policies with the least variables and therefore the easiest to benchmark.
It’s possible to identify if a company has premiums in line with its peers of like size within their industry. The data is also able to point out where an employer may or may not be properly insured — either the company is overpaying or the limits are too low. For example, it can measure a large number of companies against each other to discover what the median limit should be, so they are not underinsured and are hit with what could be a detrimental loss to the company.
Another way brokers can help employers use data analytics is tracking injuries on the job. Companies can learn if there’s been a specific type of claim that could be potentially prevented in the future, like slips, trip and falls within a certain part of the business. If that company has had some claims in the past, and then uses data to set up better safety programs and a safer work environment, the broker can take those procedures and reports to the insurance carrier to negotiate lower rates.
How has underwriting changed in this new environment?
It is imperative that the insurance adviser does his or her research and benchmarking before sending out to carriers. This will greatly benefit the company and allow it to manage what exactly it wants from its program.
In addition to using historical information, benchmarking and looking at loss histories, insurance carriers are now using real-time information to collect data to underwrite companies more precisely. For example, with a large bus fleet or trucking company, certain data analytic tools will show the habits of drivers during their routes. It can show if an employee is driving the proper speed limits, accelerating and breaking too quick, while also using cameras to get an internal view of the route from beginning to end. This technology helps enable a safer work environment for employers. It also helps insurance carriers gain a better understanding of the safeguards companies have in place or are willing to put in place — and may make them more willing to work with employers on lowering premiums.
What else should employers know about data analytics in the insurance industry?
Employers should start to expect more out of their brokers in the future. They should be aware that this technology and data exists as a resource to be utilized for their benefit. As time goes on, real-time information will only become more and more useful to them.

It’s no longer a matter of just taking your losses, and the rate increases that go along with those; there’s a modern way to present your business to the insurance marketplace. It is important that your broker uses data analytics to validate your premiums, limits and deductibles. Be sure to ask how brokers arrived at the limits they put in place for your insurance program.

Insights Insurance/Risk Management is brought to you by Gallagher