In case you missed it, Ecopia AI (Ecopia) recently hosted a virtual panel discussion featuring insurance thought leaders from SwissRe, reThought, and QBE. Led by insurance digital strategist Lisa Wardlaw, this session addresses the challenges today’s P&C carriers face when implementing data solutions, as well as how important geospatial data is for adapting insurance strategies to account for increasing climate risk. 

While most P&C insurers recognize that geospatial data and master data management (MDM) are critical for optimizing their risk portfolios, many are experiencing fatigue as they choose from the wide variety of data available. The panel discusses this inundation of data for insurance, as well as how carriers not only can but should develop geospatial data lineage throughout their entire organization to eliminate redundancies, increase tech stack sustainability, and help customers be more resilient to increasing climate risks.

This session is full of interesting insights from some of the most forward-thinking minds in insurance. We’ve highlighted the key discussion points in this blog, plus included the recording below so you can hear what these thought leaders have to say about the future of P&C insurance.

The challenge: navigating digital transformation in insurance

Insurers are no strangers to data. Geospatial analytics has long been a critical component of underwriting, claims management, reinsurance, and other workflows requiring detailed data about a property. Hundreds of companies now offer services to meet this need, from geocoding to risk scoring and everything in between; many simply provide the data needed for insurers to perform these services themselves. Either way, carriers have a wide range of options when sourcing the data needed for P&C property analysis.

However, the panelists agree that all of this optionality and opportunity comes with challenges. As carriers continue their digital transformation journeys, many are over indexing on data. It’s the insurance version of the proverbial kid in a candy store; excited by the new availability of data, firms are purchasing too much of it without a centralized strategy. The result is redundant and disparate datasets being used by different departments within the same carrier. For example, the underwriting and claims departments at one carrier may leverage different property attributes databases for their analyses, producing contradictory results about the same policy. This is not only disorganized, but also wasteful of the company’s resources.

Further complicating data strategies is the reality that insurance carriers typically do not have systems in place to store and manage the multiple large datasets needed for property analytics, especially as technology evolves and data becomes more granular and dynamic. The panelists reflect on how singular departments within a carrier will often use between 10 and 20 datasets to support their workflows, an incredibly large amount of information to store and share. Unfortunately, most insurers are afraid of moving away from legacy data management systems, preventing them from reaping the full benefits of abundant geospatial data. 

The impact: rising geospatial fatigue in P&C insurance

All of these challenges have created an environment of geospatial fatigue. Thomas Phillips, Head of Geo Innovation and Insights at SwissRe, says that many insurers are so severely struggling to onboard the data sources they’ve obtained that they are abandoning the effort altogether. Add to that the industry’s reluctance to replace legacy systems or prevent siloed departments from acquiring similar datasets, and you’re left with carriers overwhelmed by redundant data sources they feel they can never effectively leverage. 

Geospatial fatigue is a vicious cycle. It begins by leaving carriers with inaccurate and out-of-date data for decision-making, and then leads to redundancies across departments as disparate data sources are integrated into related workflows. As these redundancies multiply, so does a carrier’s overall geospatial data fatigue. At the same time, the carrier is wasting resources supporting an unsustainable tech stack. These negative effects further deter carriers from investing in new or different data sources.

In reality, the wide scale availability of geospatial information creates an opportunity for deeper insight and data validation. QBE Ventures Global Head of Emerging Technology Alex Taylor points out that the most tech savvy insurers are increasingly incorporating data created by layering and analyzing multiple sources, deriving additional value from initial tech stack investments. Additionally, comparing one dataset to another helps these carriers pinpoint errors or confirm facts. For this to happen, however, insurers must develop geospatial data lineage with a firm-wide master data management strategy.

The solution: geospatial data lineage & master data management

Exacerbating the issue of geospatial fatigue is the lack of data lineage across location-based data sources. This is often a result of poor MDM, or the ability to connect multiple datasets to each other to create a unified system of record across a book of business. reThought Insurance CEO Cory Isaacson emphasizes that master data management is equal parts challenging and necessary in insurance, as the industry’s intricate data systems involve hundreds of tables and thousands of fields that must be reconciled to achieve true property intelligence. That’s no small feat, especially for organizations hesitant to implement new processes.

The panelists go on to agree that for P&C carriers, master data management begins with geocoding. Insuring a property requires first locating that property, and then layering in all relevant information that will impact its risk profile. This can include historical claims, modeled hazard risk, property attributes, and similar data linked back to the address or building. But if the foundational property data is inaccurate, so is any resulting analysis using these rich data sources.

Jai Mehra, Senior Associate at Ecopia AI, then mentions a staggering statistic: some of the most widely used insurance geocoding engines are still wrong 42% of the time. That means many insurers are basing around half of their property analytics off of inaccurate location data. The panelists all agree that while shocking, this statistic is indicative of the challenges insurers face, and the importance of this geocoding accuracy across the entire enterprise for facilitating geospatial lineage and MDM. If insurers can be confident in their geocoding solution, they can begin to derive actionable property risk insights and inform multiple departments across the firm, reducing fatigue and redundancy.

Thomas follows up on this thread with another surprising statistic: at least 28% of data used for reinsurance workflows is incorrectly matched to the correct property. This lack of geospatial lineage is a direct result of poor master data management and inaccurate geocoding. Even if geocodes are accurate and data reflects real-world property conditions, it’s meaningless without being connected together. Jai and Lisa provide an overview of how a robust system of unique identifiers for parcels, addresses, and buildings can change how carriers establish this lineage, providing an authoritative way for underwriters, claims analysts, and other insurance professionals to understand complex property relationships. They emphasize how unique identifiers also facilitate stronger MDM, as real-world addresses can change while unique IDs can remain persistent across all departments. 

Based on these statistics and their own knowledge of the industry, the panel concludes that carriers can only begin to adapt their firms to the changing needs of today’s insurance consumers once geospatial lineage has been established through proper master data management. 

The result: enhanced climate resilience with a unified data strategy

The discussion also touched on how the increasing property risks brought on by climate change are placing even more pressure on insurers to develop more sustainable data strategies. In the US alone, there were 18 separate natural catastrophe (nat cat) events in 2022, resulting in more than $1B in damages. Cory mentions how this poses huge risk to both carriers and consumers, especially given recent estimates that 70% of the global population is either underinsured or completely uninsured. He also points to the industry-wide lack of accurate flood data, which must be rectified in order to help carriers and consumers build climate resilience. Since 1996, floods have occurred in 99% of US counties, but most insurers still rely on outdated, arbitrary flood zone boundaries in order to quantify risk and price policies. 

Thomas reflects on how much geospatial data has evolved to support climate risk analysis and mitigation efforts, but also acknowledges the work the insurance industry has yet to do in this area. While SwissRe only published their first public-facing map 25 years ago, they now include geographic coordinates and the estimated risk of insured properties in all policy documents to increase transparency with their clientbase. This helps consumers understand their own climate resilience and be proactive about potential risks, reducing the likelihood of damages incurred by both them and their insurer. However, Thomas and the other panelists agree that risk scoring still needs to be improved across the industry by the introduction of better data management practices, plus the addition of even more relevant datasets to better model real-world conditions. 

To support this point, Alex affirms that insurtechs must partner closely with carriers to develop the data solutions needed for climate resilient insurance strategies. He argues that while there are a huge variety of insurtechs in business, many have neglected the most foundational elements of property intelligence (MDM, geospatial lineage, and geocoding, to name a few). Alex shares his opinion that the industry as a whole is now feeling the effects of this, and better data solutions must be developed through close collaboration of tech and insurance companies. 

Jai chimes in to note the importance - and challenge - of leveraging up-to-date data for climate analytics. In addition to the insurance industry’s noted challenges in data management and lineage, climate data is incredibly difficult to keep current with real-world conditions. Landscapes currently change faster than maps, and Jai argues that carriers and insurtechs should partner together to tackle this critical element of property analytics to drive innovation in the industry. 

Looking ahead: the future of P&C insurance

The session concludes with the panelists reiterating the need for an industry-wide, single source of truth for property intelligence. Though for this to be achieved, they remind the audience that carriers must improve their master data management and geospatial lineage practices to not only increase their analytics accuracy, but also enable and connect all disparate departments with a unified system of record. The panel predicts that a maturity curve will develop over the next few years to distinguish the most innovative P&C insurers, but concede that these complex challenges will take time to overcome. 

This webinar was a fascinating look at how digital transformation is shaping the insurance industry, and how climate change is presenting unique challenges carriers must continue to adapt to using the latest technology. Make sure to check out the full session below to hear the latest industry trends and predictions straight from the thought leaders themselves:

To learn more about how Ecopia is enabling insurers with a single source of truth for property intelligence, get in touch with our insurance team.