Long-term data strategy will allow for making the most of the information: OMIA’s Taylor

|”Thick fluffy clouds float over older-style houses. 2 minutes after this photo was taken, there was a very big storm.”

Mutual insurers need a long-term plan to ensure they meet the twin goals of capitalizing on the opportunities that data offers and continue to staying true to serving customers, the head of the Ontario Mutual Insurance Association (OMIA) suggested Thursday.

“You can’t just get data from your own risks,” OMIA president and CEO John Taylor said in an interview following the association’s Annual General Meeting, part of its 135^th Annual Convention this week in downtown Toronto.

“You have to have a long-term plan that builds out a structure as to what you think you’re going to need in five years, not what you need today,” Taylor said.

Noting that member mutuals are now collecting a lot more data, “we’re trying to get it aggregated in a central place where it will be more easily compared and collated against outside sources of data,” he explained.

“All of insurance, for the first time, is pulling external data in a highly effective, real-time way and using that to make underwriting decisions in the blink of an eye,” Taylor (pictured left) pointed out. “That’s what we’re aspiring to and moving towards.”

That said, “you still have to value policyholders, understand your business, understand the risks you’re taking on. I think it’s finding a balance in terms of the use of data with also maintaining availability for policyholders and consumers.”

Mutual insurers typically have smaller trading areas, a fewer number of risks and a relatively stable group of risks, Taylor explained. “We have a better opportunity, probably, to understand what those risks are, whether we have data or not,” he said.

“So what we would look for is an ability to take data to enhance what we already understand about the risks we insure,” he added.

During his president’s address, Taylor told convention attendees “it won’t come as any surprise to you that data is an area we increasingly focus on. And that focus can come through many different lenses.”

Increasingly being used for a widening range of business activities, “data is also arriving from a diverse number of sources,” he noted.

The OMIA Data Strategy Committee – which is composed of representatives from member companies from across Canada, as well as from OMIA and Farm Mutual Re – “works with the belief that data is an investment,” Taylor said.

Emphasizing that better data leads to better decisions, the approach illustrates that “data enables decision-making and that good decisions are based on the most complete information,” he told convention attendees.

The committee “has expanded the data to be collected from individual company systems with a massive project to capture more data points,” Taylor reported.

With a zero error goal, “our focus is on prevention as opposed to correction, and on ways to clean data at the front gates,” he said.

“I think the poster child for data usage and risk selection of pricing is water coverages,” he told Canadian Underwriter this week.

Water coverage to deal with severe weather remains on mutual insurers’ radar this year, as it did in 2016.

“I think every insurer is going through finding what that model is to be able to provide it and still be able to collect adequate premiums so that losses get paid,” Taylor pointed out Thursday.

Currently, most mutual insurers are offering water coverage. “I think they’re still refining to some degree some of it,” he said, “but I think they’ll continue to roll that out in 2017.”

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