Divergence in risk helps prove role of data
The wide divergence in loss estimates given by the risk modelling community in the aftermath of the US hurricanes could prompt more re/insurers to invest in their own analytical capabilities and get a better handle on their data.
That is according to Frank Fortunato, the chief executive of CATEX, one of the original insurtech companies, founded back in 1994, which offers a number of data transformation products powered by artificial intelligence.
Fortunato believes the differences have illustrated to the market how difficult it is to assess certain risks. “There is no panacea for this but having a really good handle on your own data is a good start,” he said.
“The recent loss estimates have proved once again how difficult it can be to assess risks accurately. Re/insurers are becoming increasingly sophisticated in their use of data but examples such as this show how important it is.”
Fortunato added that the application of such technology has the potential to be a force for good in the industry in a wider sense. He noted that while Hurricane Harvey could cause economic losses of some $100 billion, only around 20 percent of this will be insured.
“People think the coverage gap is something that exists only in emerging markets but we have seen time and again how big it can become in developed economies,” he said.
“With Harvey, the 80 percent that is not covered represents a huge amount of data that needs to be taken in, analysed and understood. Using data in that way can help close the coverage gap and help the industry at the same time.”
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