(Image source: U.S. Air Force.)
LexisNexis Risk Solutions (Atlanta) has released a new data score designed to enable insurers to more accurately rate and underwrite local fire responses using predictive analytics. The LexisNexis Fire and Disaster Response Score can help property insurers improve profitability, streamline processes, and reduce expenses by leveraging more robust geographic and fire-specific data sources, a vendor statement says.
“Fire risk in a community is frequently rated using less precise methods of investigation, leaving insurers vulnerable to losses through inaccurate rates,” comments George Hosfield, Senior Director, Home Insurance, LexisNexis Risk Solutions. “The LexisNexis Fire and Disaster Response Score uses advanced predictive modeling techniques and data assets from a host of non-traditional sources to deliver a more accurate local fire response score for underwriting.”
LexisNexis describes the new score as a data-driven approach to fire response scoring that achieves consistent results by incorporating cutting-edge geospatial technology, historic fire department responses and loss data, true drive times from responding fire stations, and other data sources to help precisely model the peril of fire. The vendor says the score also provides the level of risk at the location area, which is an advantage as the LexisNexis Fire and Disaster Response score provides a more granular geographic fire risk than is typically available and used in the industry.
By converting that quantifiable data into actionable intelligence, the solution estimates an average future loss severity based on fire station response capabilities by segmenting risk into 10 different segments. Nationally, the homes at highest risk for a fire are more than 2 times riskier than those considered low risk, based on fire response, LexisNexis reports.
Pricing Fire Risk Critical for Profitability
The vendor notes that predicting fire risk accurately is particularly important because fire claim loss cost are increasing nationwide, according to the latest LexisNexis Home Trends Report. Continuing an upward trend observed since 2013, in 2017 fire loss cost has increased nearly 22 percent year-over-year and fire severity also continued to increase.
“Pricing fire risks correctly is critical for an insurer’s profitability, especially since fire losses tend to be so severe,” adds Hosfield. “Based on research from LexisNexis Risk Solutions, 77 percent of homeowners’ compensation for fire losses is for claims exceeding $100,000. The LexisNexis Fire and Disaster Response Score allows insurers to identify new opportunities for profitable growth while discovering where undesirable levels of risk reside.”