What s your 5-year vision?

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1 What s your 5-year vision? Does your strategic plan outline how your company will mitigate the effects of increased and volatile losses from natural catastrophes? Will it help you achieve your target growth and retention rates? Does it contribute to a stable combined ratio year after year? Will it help you offset record-low interest rates and investment yields? Does it include the use of analytical insight to implement change quickly? Are you positioned to innovate?

2 Today s property insurers face significant challenges.

3 Consider these trends Between 2000 and 2010, direct written premium for homeowners insurance increased almost 50 percent but the number of homeowners insurers decreased by about 20 percent.* Direct Written Premium, DWP ($M) $ Number of Insurers Direct Written Premium, DWP ($) Number of Insurers Source: A.M. Best data set, ISO analysis Trends generally show that in more recent years, insurers have earned less in premiums than they paid out in claims. From 1975 through 2011, the property/casualty industry saw a cumulative underwriting deficit of $495 billion.** And the complexities of today s economic environment make an already competitive marketplace increasingly challenging. Carriers have to contend with a difficult landscape: Foreclosed properties and the resulting moral hazard are an emerging concern. Most policyholders don t understand the concept of replacement cost. So when the market values of their homes decrease, they expect to pay lower premiums. Ten percent of U.S. water supply systems that Verisk surveys are insufficient for effective firefighting. How can you ensure your underwriting profitability? Perhaps it s time to rethink your partnership strategy. A LOOK AT U.S. CATASTROPHES These numbers tell the story: More than 65 percent of all catastrophe losses in U.S. history have occurred since Between 2000 and 2010, catastrophe losses amounted to $193 billion an increase of 117 percent over the previous decade. Wildfires have burned more than 7 million acres each year since 2010, more than twice the annual average in the 1970s, 80s, and 90s. Hail caused more than 4.5 million claims, resulting in $32.1 billion of insured losses between 2008 and **Source: A.M. Best Dataset, ISO analysis **Source: A.M. Best, ISO, Insurance Information Institute 2

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5 Innovate or get left behind The reality is harsh, but it s also very clear: Companies that can t underwrite their business profitably are at risk for downsizing or acquisition. Given the current market challenges, your company s growth will depend on a willingness to act with analytical insight and boldness. Today s leaders are masters at capturing information, analyzing it to achieve their business goals, and implementing change quickly. Innovation is the key to: optimizing underwriting decisions generating profitable growth retaining the right customers optimizing the money spent on underwriting expenses making more profitable risk selection decisions using staff more effectively enhancing the customer experience identifying cross-selling and up-selling opportunities increasing perception as a market leader detecting and preventing fraud automating key processes increasing the quote-to-bind ratio Fortunately, carriers don t have to do all the work themselves. The right tools, technologies, and analytics can help. Verisk Insurance Solutions Underwriting: Data, analytics, and decision support services to help you innovate now and thrive down the road Verisk Insurance Solutions Underwriting offers a complete suite of tools to help you throughout the underwriting cycle from point of quote to policy monitoring and renewal to portfolio management. We re uniquely positioned to offer end-to-end solutions. No other strategic partner has such a unique and all-encompassing perspective of our industry. We offer a powerful mix of insight, technical expertise, and coordinated service. We can help you make the complex simple. Our sales professionals, technical experts, and consultants stand ready to help you select the combination of underwriting information best suited to your needs. We ll show you how to use our insights to achieve your objectives. And we ll give you the technical support you need to tailor our products and services to your specific requirements. 4

6 Analytics: At the center of everything we do The value of data lies in the knowledge it reveals about customers. That s why analytics is at the center of everything we do. While comprehensive data collection is important, even more critical is the ability to analyze that data and to develop insights that support strategic decision making. Our analytical insight can help you execute the right strategies in key market segments and across distribution channels. It can and should drive the entire underwriting process. We ll help you transition from risk selection to risk management. And we ll help you optimize your portfolio by selecting the best risks, reducing underwriting expenses, and ensuring your portfolio is insured to value. Portfolio Analytics, Management, and Optimization Policy Monitoring and Renewal Data + Analytics = Insight Point of Sale 5

7 Point of sale Get the most comprehensive set of data in the industry at point of sale: prefill key underwriting data to streamline the quoting process access more accurate data optimize your portfolio one risk at a time find existing and prior losses estimate replacement costs assess catastrophe risk potential determine foreclosure status assess crime potential determine territory rating determine premium taxes examine credit histories and scores identify cross-selling opportunities determine the need for property inspections Policy monitoring and renewal Monitor your policyholders and make sure you re retaining the right customers: protect against natural deterioration of profits and retention monitor changes in property and policyholder risk conduct postissuance checks on prior losses update property characteristics determine foreclosure status update replacement costs reanalyze catastrophe risk potential reassess other underwriting data elements conduct real-time impact analyses alert third parties to changes in policyholder status Portfolio analytics, management, and optimization Analyze and understand how each risk relates to your entire portfolio: get intelligence to drive your underwriting process ensure policy data is up to date and portfolio is insured to value benchmark your performance against the industry and your peers gain insight into other business functions, such as marketing, sales, and operations analyze for trends and identify causes of loss identify combinations of property characteristics that historically result in the best premium/claims loss ratio 6

8 Find out more Visit for additional information about the marketplace and emerging issues affecting our industry. To find out how Verisk data, analytics, and insight can benefit your company, call Verisk Customer Support at or send to 545 Washington Boulevard Jersey City, NJ Insurance Services Office, Inc., ISO, the ISO logo, Verisk Analytics, and the Verisk Analytics logo are registered trademarks and Verisk, Verisk Insurance Solutions, and the Verisk Insurance Solutions logo are trademarks of Insurance Services Office, Inc. Property Claim Services and PCS are registered trademarks of ISO Services, Inc. AIR Worldwide and the AIR Worldwide logo are registered trademarks of AIR Worldwide Corporation. Xactware is a registered trademark of Xactware Solutions, Inc. All other product or corporate names are trademarks or registered trademarks of their respective companies. VISU018 (5/14) z14153