Contact person: Lynne Hasluck
Email address: [email protected]
Contact number: 201-469-2402
The Digital Insurer Insurance Innovation Award
Nominee for The Digital Insurer Insurance Innovation Award: Verisk’s EPIX
Why is the energy industry so challenging to insure?
Energy is one of the most challenging and complex industries in the world to insure. In contrast to other segments of the insurance world, like auto and IoT, health and wearables, the Energy industry is lagging behind the innovation curve.
The energy insurance industry is complex and tightly integrated, with each company and every asset within the energy value chain extremely interdependent. Obtaining information about risks can be time consuming, costly to obtain, and fraught with inaccuracies.
The underwriting and rating process of energy exposures has been for the most part manual and instinctive, driven by experts or specialists that have developed a gut sense for the assets and the risks. This process is approached as an art more than a science.
Without access to reliable, industry wide data, energy insurers are required to make complex and costly decisions based on their individual proprietary data and their team’s expertise. But energy insurance products are becoming increasingly commoditized and the underwriting knowledge and experience gap is expected to widen over the next few years as industry experts retire. Deciding which risks to insure, how to structure capital, and how to properly balance the portfolio to meet company objectives will become harder than ever.
Innovation is critical. To succeed in insurance today, experts and specialists need to be empowered with unbiased knowledge, insights, and analytics. Data and technology will not replace their experience. But it will eliminate information barriers and help them see their real exposures, the connectivity between them, and how they interact within their portfolio.
In the complex energy space, underwriting depends heavily on sourcing, finding, and mining the right information on a risk and then adjusting systems to properly represent these exposures. Insurers spend a large amount of resources in creating engineering reports and making sure the data provided is accurate and recorded in the systems.
If underwriters have access to this risk data through analytics and technology, they can spend more time with their insureds and better understand their individual challenges. This will create the space to develop new products and tailor-made solutions, increasing market penetration and long-term partnerships.
At Verisk, we are continually working on new and better ways to help this uniquely complex segment understand their exposures better and provide insights to make more informed decisions.
In early 2018, Verisk introduced the Energy & Power Intelligence Xchange, or EPIX™, an innovative benchmarking and risk scoring platform that supports more informed decision making about energy risks. EPIX™ helps provide energy underwriters, risk engineers, and portfolio managers with actionable insights on an individual risk and portfolio basis. It was designed to help insurers improve underwriting precision, reduce costs, and increase operational efficiencies.
Providing a better way to research, assess, and underwrite complex energy risks
EPIX currently comprises two modules that reflect how underwriters look at risks and navigate through information:
EPIX™ Asset, the platform’s core application, offers asset and production data on hundreds of companies, including oil fields, refineries, and power plants. Insurers can map energy facilities for different companies, compare risks, and share insights with visualizations of key market data.
EPIX™ Portfolio lets insurers zoom out to see the interconnectivity of assets. Insurers can view exposures to natural catastrophes and supply chain risks, compare existing portfolios to other global risks, and help determine if they have the right balance of energy risks in their book of business—and from there plan a strategy for profitable growth.
These additional EPIX modules are in development:
EPIX™ Experience will be a proprietary database of industry loss events
EPIX™ Operations will offer in-depth insights into how energy companies are managing their assets and operations
Charting a path for long term success with data-driven insights
EPIX provides value in each step of the underwriting value chain, from marketing decisions, risk triaging, underwriting, renewal retention all the way through the portfolio management process.
EPIX™ provides insights through data analytics that can help insurers:
• Streamline the underwriting process to reduce expense ratios
• Bring more precision to underwriting models to improve loss ratios
• Support strategic planning with better commercial information to enhance growth and profitability
• Integrate portfolio- and single-risk modeling and accumulation-management capabilities to help protect capital, solvency, and financial strength rating