lexisnexis homeowners solutions - home inspection index
DESCRIPTION
Current challenges for home inspections.TRANSCRIPT
LexisNexis Homeowners Solutions Home Inspection Index
March 28th 2013
• Industry Overview • Weather
• Shopping
• Home Inspection Index • Current Challenges for Inspections
• LexisNexis Solution
• Summary
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Overview
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Industry Overview
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Industry Challenges
• 2012 U.S. Industry Losses - $57.9 billion • Far above the 2000–2011 average loss of $27 Billion
• Wind & Hail both continue to add a disproportionate component of the CAT and Non-CAT losses
• 2011 Combined Ratio (122%) worst since 2001
• Modernizing Rate Structures • Carriers to continue to evolve their by-peril modeling
• Rating sophistication and segmentation continue to challenge carriers
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Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html#
There were 29,996 severe
weather reports in 2011;
including 1,894 tornadoes; 9,417
“Large Hail” reports and
18,685 high wind events
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Wind/Hail: Weather Reports In The US – 2011
Wind Damage Large Hail Tornadoes
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Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2012_annual_summary.html#
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Wind/Hail: Weather Reports In The US – 2012
Wind Damage Large Hail Tornadoes
There were 22,503 severe weather reports in 2012; including 1,119
tornadoes; 7,033 “Large Hail”
reports and 14,351 high wind events
Shopping Activity
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Actual Shopping Volume Actual
Inquiry Volume up 200% since in Aug’08!
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US Shop Index
Forecasted Shopping Volume
Quote Volume Forecasted to Grow Through 2015!
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US Shop Index Forecast
Inspection Overview
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• US Homeowners Annual Inspection Spending ~ $200M(1)
– Many large carriers allocate 1-3% of annual underwriting expense budget to field inspections (% usually higher for mid-smaller companies)
• Industry Actionable Rate ~ 10-30%(1) (e.g. 70-90% of inspection decisions do not offer new/actionable insights)
– Important to improve actionable rate given carriers’ limited inspection budget
• Large number of carriers using random risk selection, simple home-grown guidelines or business rules engines to order field inspections e.g.:
– Amount of Insurance – Year Built – Historical Loss Experience – Other home-grown guidelines
Current State of Homeowners (HO) Inspection Programs
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Source: (1)Claims Journal, Oct 17, 2011 Note: Actionable Rate is defined as the percentage of inspections that would actually result in finding a state of undervaluation and/or one or more type of condition hazards
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Actionable Rates You inspected both. Which one should you have inspected?
Were your inspection dollars spent wisely?
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Property A • Year Built: 2000 • Roof Type: Hipped Roof • Square Footage: 3,335 sq. ft • Zip Code: 33176
Property B • Year Built: 2000 • Roof Type: Hipped Roof • Square Footage: 3,275 sq. ft • Zip Code: 33176
Home Inspection
Index Overview
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The Solution: LexisNexis Home Inspection Index (HII)
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• Reduce Inspection Expenses: HII can serve as a filter for many of those properties where inspections are not necessarily required.
• Enhance Profitability: Gain risk selection and remediation insight both at point of sale and across an existing book of business.
• Improve Customer Experience: Non-invasive solution (relative to sending an inspector on-site) that provides fast, actionable information and speeds up the underwriting process.
LexisNexis Home Inspection Index is a new non-FCRA (“Tips & Leads”) solution that identifies properties most likely to have an actionable inspection discovery, enabling targeted inspection expenses. LN HII can be delivered real-time/interactive (system to system) or in batch (via a Rule Plan).
Reduce Inspection Expenses
Enhance Profitability
Improve Customer
Experience
HII Is Derived From A Robust Predictive Modeling Approach Leveraging LexisNexis’ Unique Loss and Public Records Databases
Inquiry Data •Name •Address • Coverage A
HII Predictive Modeling Analysis
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Carrier Data LexisNexis Data
[ 99 = non scorable due to insufficient information]
Low Risk
High Risk
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HII Output
Property Characteristics
Public Records
Loss Data
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Optional inquiry fields include: • Year built • Sq. footage • Pool and/or trampoline
indicator
HII can be deployed at Point of Quote, Point of Underwriting or Point of Renewal
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Point of Marketing
Point of Contact
Point of Quote
Point of Underwriting
Point of Renewal
Point of Compliance
Point of Claim
• Flag riskiest properties and help determine the type of inspection needed
• Carrier rank orders results by Inspection Index and determines profitable cut-off against inspection costs
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• Segment property risk and attract most profitable risks
• Adjust price tiers for the best risk segments.
Inquiry • Policy Holder First & Last Name • Risk Address (Street, State, City & Zip) • Coverage A
Interactive Workflow
Batch Workflow
HII Data call to LexisNexis Home Inspection Index (HII)
• HII helps carriers target properties most likely to have condition or liability hazards, allowing them to prioritize and target their inspection budget.
• HII leverages LN’s unique databases including the largest loss history database available in the industry and our 46+ billion public records.
• HII provides carriers with valuable risk selection information which can be combined with the company’s own custom underwriting rules used to evaluate new business.
• HII is easily integrated into a carrier’s workflow, be it at point of quote, point of bind, or point of renewal.
• HII improves customer and agent experience by offering a point of underwriting index which will reduce time and expense ordering inspections on lower risk properties.
LexisNexis Home Inspection Index Unique Benefits
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• Most carriers use simple homegrown underwriting guidelines to decide when to order inspections on new business and renewals.
• However, with the strategic focus on expense mgmt and improved profitability, many forward looking carriers are working/starting to work on optimizing their inspection programs.
• LexisNexis Home Inspection Index leverages LN’s unique databases including the largest loss history database available in the industry and our 46 billion+ public records.
• LexisNexis Home Inspection Index leads to more actionable inspections resulting in:
– Reduced Inspection Costs
– Right Premium
– Loss Mitigation: amending or cancelling the right policies
– Improved Customer – Agent Experience
Conclusions
Increased Bottom Line
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