Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • November 2017
11

Claims: Getting it together

Open-access content Tuesday 7th November 2017 — updated 5.50pm, Wednesday 29th April 2020

Andrew Lowe explains why an industry-wide contributory claims database would be invaluable for commercial property insurance

2

In the past year, the UK commercial property market reached its highest value. Yet, it is a sector of the insurance industry that could be exposing itself to increased losses owing to its limited ability to gain a complete picture of risk, both at an accumulated level - to determine risk exposures across a book of business - and at point of quote. A study by LexisNexis Risk Solutions found only a third of insurers have a complete understanding of the location and associated risks of their commercial property portfolios. 

To gain both an accumulated and granular view of risk, key risk data needs to be aggregated across five data sources: property, place, people, policy history and past claims. 

Actuaries are already able to aggregate property, place and people-risk data from multiple sources and intelligently map this data to support risk selection and pricing of exposures. However, the risk profile assessment should be supplemented with past claims data as well as past policy information, such as whether there have been any mid-term cancellations, policy adjustments or gaps in cover. These data attributes have a direct correlation with loss costs based on analysis of our policy history motor database. This found, for example, that people with a gap in cover in the past year had up to a 50% higher loss cost than those that didn't, and people with a policy cancelled prematurely had up to a 33% increase to loss cost.

In contrast with the private motor insurance market, which uses CUE - a centralised contributory database of motor insurance claims data - access to commercial property claims data is limited to the experience of the insurer. While claims information is valuable for actuarial risk analysis, it will not be a true picture of all the claims associated with that policyholder or property.  An industry-wide view of all commercial property claims related to single properties or a whole property portfolio would bring a new dimension to the understanding of risk exposure. We're pushing against an open door - 83% of the commercial property insurers we surveyed would support the development of an industry-wide contributory claims database, believing it would be extremely valuable, and 85% would be willing to share their own claims data. Furthermore, 62% would be willing to contribute to an industry-wide property database. 

A centralised claims database is just one example of the explosion in captured data in the insurance sector that will allow new analytics approaches and new ways of understanding risk. Although the commercial property insurance market has been slower to adapt to using data and analytics, owing to the complexity of the risks and manual nature of securing this business on a day-to-day basis, there is strong appetite for change. 86% of the UK commercial property insurers surveyed said they believe data and analytics will transform their business, and leveraging data is a top priority, followed very closely by managing profitability and better understanding the risk profile of their book. 

The actuarial profession already has the required skillsets to make a significant contribution, but key to this is gaining a wider appreciation of the datasets that exist or should exist in the future that will be of value for risk assessment. As well as searching for new data sources, actuaries may also choose to extend their expertise more fully into predictive analytics in the commercial property environment. 

The increasing sophistication of mapping tools overlaid with new datasets - from contributory claims records to data from smart building technology - will provide the insights the actuarial profession needs to fully understand its risk exposures.  


Andrew Lowe, business director, commercial insurance, at LexisNexis Risk Solutions 

This article appeared in our November 2017 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

Science of behaviour

Michael Sanders talks data science with actuary Peter Tompkins and explains how behavioural insights can be used to make people do things differently
Monday 6th November 2017
Open-access content
2

How big is the gender pay gap in our profession and how do we eliminate it?

How big is the gender pay gap in our profession and how do we eliminate it?
Monday 6th November 2017
Open-access content
2

Book review: Loss Coverage by Guy Thomas

Loss Coverage attempts to dispel one such misconception regarding the value of adverse selection in insurance pricing markets.
Wednesday 29th November 2017
Open-access content
2

What if artificial organs could replace the need for donors?

Artificial organs look likely to play an increasingly important role in transplantation. Nay Wynn considers the implications for insurance
Tuesday 7th November 2017
Open-access content
TA filler - Copy.png

The decumulation puzzle

Simple rules of thumb can help guide people on how to manage their pension drawdown accounts, says Christine Ormrod
Tuesday 7th November 2017
Open-access content
2

How to disagree constructively

You can become skilful in stating your opposition without being disagreeable, says Ally Yates
Tuesday 7th November 2017
Open-access content

Latest from General Insurance

td

Brain power

The latest microchips mimic cerebral function. Smaller, faster and more efficient than their predecessors, they have the potential to save lives and help insurers, argues Amarnath Suggu
Wednesday 1st March 2023
Open-access content
bl

'Takaful' models of Islamic insurance

Ethical, varied and a growing market – ‘takaful’ Islamic insurance is worth knowing about, wherever you’re from and whatever your beliefs, says Ali Asghar Bhuriwala
Wednesday 1st February 2023
Open-access content
il

When 'human' isn't female

It was only last year that the first anatomically correct female crash test dummy was created. With so much data still based on the male perspective, are we truly meeting all consumer needs? Adél Drew discusses her thoughts, based on the book Invisible Women by Caroline Criado Perez
Wednesday 1st February 2023
Open-access content

Latest from November 2017

2

SME insurance market set for digital transformation

Small firms are increasingly looking to interact with their insurers online, suggesting the market is set to experience a similar digital transformation to the one seen for personal insurance.
Monday 4th December 2017
Open-access content
2

CBI warns of 'sluggish' GDP growth

UK GDP is expected to grow at a rate of 1.5% this year and next before falling to 1.3% in 2019, according to forecasts released today by the Confederation of British Industry (CBI).
Monday 4th December 2017
Open-access content
2

Investment management efficiencies could slash pension costs by third

Sharing administration and transaction resources between investment managers could save a typical defined benefit (DB) pension fund £700,000 a year in fees.
Friday 1st December 2017
Open-access content

Latest from small_opening_image

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from missing_standfirst

news in brief

March news in brief

Paper: A Cashless Society in 2019 Cash is under pressure. A tense 2018 led to a tumultuous 2019: Facebook's announcement of plans to launch its Libra cryptocurrency with a consortium of companies united all regulators against the project.
Friday 28th February 2020
Open-access content
2

Forging new paths

The Terminator is coming!  At least that's one potential vision of the future, invoked by Boris Johnson at the UN last year while he speculated about artificial intelligence (AI). We can certainly debate how realistic that vision is, and what the possible timescales might be.
Friday 28th February 2020
Open-access content
2

Expert advice

This edition of the magazine focuses on data science and its applications, which will be a recurring theme for the IFoA.
Friday 28th February 2020
Open-access content

Latest from 11

2

Presentation skills: A practical reality

Jean Eu gives advice on how to present well, get your message across and ensure your audience engages with it and remembers you
Tuesday 7th November 2017
Open-access content
2

Mind the gender gap

Mark Williams questions the sustainability of gender-based actuarial factors in pension schemes in light of social and actuarial rationale
Monday 6th November 2017
Open-access content
2

Challenging the way we think

Anthony Fitzsimmons and Derek Atkins ask whether there is an opportunity for actuaries to address hard-to-quantify risks
Monday 6th November 2017
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Leading Insurer/Asset Manager – Pricing Actuary (Mortgages)

London (Greater)
Competitive
Reference
148750

Senior Consultant - Risk Settlement - Any UK Location - Up to £100,000 plus bonus

London / Manchester / Edinburgh / Remote
Up to £100,000 + Bonus
Reference
148832

Finance Transformation Actuarial student/Qualified Actuary

London (Central)
£50,000 - £75,000 depending on experience
Reference
148830
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ