The bespoke platform, developed in conjunction with the UK’s leading GIS technology provider, ESRI® UK, utilises market leading pricing models to provide detailed insight to the risk of insuring any given property in the United Kingdom. The technology allows underwriters to access geographic risk data giving them an instant and unique picture of each risk, at an individual address level using Ordnance Survey mapping and addressing data. Intricate maps displaying key information about risk of loss from fire, flood, subsidence, theft and windstorm enable underwriters to put their best price to market and accurately assess higher risk business.
The peril data used in the mapping tool is overlaid with over 20 years of internal data from across the Direct Line Group. This is used to validate all the perils information and underwriting guidance held in the system giving underwriters not only a comprehensive understanding of the property’s exposure to risk, but a clear picture of its claims history and the group’s past and current exposure in the local area. This enhanced ability to right price business with high accuracy is expected to enable NIG, part of Direct Line Group, to write increased volumes of low risk business and is expected to improve the performance of the Commercial Lines portfolio significantly.
Personal Lines brands benefit from making use of the same market leading data brought in by the new geographic platform, using the same spatial analysis software to create pricing models without the need to access the front end tool. Already Direct Line Group has shown a significant improvement to the risk profile of the personal lines portfolio by using the new flood model.
Modelling at a resolution of 5sqm for the whole of the UK, the Direct Line Group system provides a highly detailed view of risk, so output can be used to corroborate or highlight differences from reinsurance models too. The end result is a process that is far more rigorous than has been previously achieved. The platform also has the ability to control and alter this risk profile to match appetite and alter both the reinsurers view of the portfolio’s likely performance and ultimately the level of capital needed to support the business.
Head of Commercial Analysis & Packages David Cahoon said, "This development has given NIG and Direct Line Group Commercial a step change in underwriting capability by combining geographic and non geographic assessment factors, and also developing new rating variables that are very different to those used traditionally by the insurance industry. Geospatial tools are at the heart of how we are developing more sophisticated risk selection and pricing techniques.’
Direct Line Group’s plan is to continually update the platform, firstly by consolidation and development of existing systems to improve risk management of the Commercial and Personal property portfolios. This constant evolution will continue through refinement of the peril models and the integration of new data to the system; for example potentially expanding the GIS itself by remotely feeding information from the survey teams directly into the system. David adds ‘Then there is also the development of usage of GIS in new departments, to deliver benefits in areas such as Marketing, Claims, Reinsurance, Capital Modelling and Fraud.”