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: