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Using Non-traditional Variables to Improve Risk Assessment in P&C Insurance

 

Insurers must explore non-traditional variables to improve risk assessment

Traditional risk assessment tools are no longer adequate to assess risk in property and casualty (P&C) insurance. This coupled with the advent of digital technologies has resulted in the emergence of non-traditional risk assessment methods in insurance. Leveraging non-traditional rating variables to assess risk will enable a sounder understanding of underlying risk in P&C insurance. That said, non-traditional risk assessment methods are especially suitable for auto insurance risk assessment. This can be attributed to the digital connection points in the vehicle ecosystem that provide a fund of information on various parameters that form the basis of non-traditional rating variables.

While the case for adoption of new risk management techniques in insurance is clear, before embarking on implementation, insurers must:

  • Seek regulatory approvals and ensure compliance with local regulations
  • Choose the right non-traditional rating variables after a thorough evaluation of risk
  • Identify specific functions where non-traditional rating variables can deliver significant advantage
Saravanakumar S

Domain Consultant, Guidewire Centre of Excellence, Banking, Financial Services, and Insurance, TCS

Suresh Srinivasan

Domain Consultant, Guidewire Centre of Excellence, Banking, Financial Services, and Insurance, TCS

Satish Kumar Pasumarthy

Senior Business Consultant, Insurance Industry Advisory Group, Banking, Financial Services, and Insurance, TCS

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