Managing risk better is one of the most critical ways that insurers can leverage technology to create new value. The increased availability of data creates opportunities for insurers to use analytics to select and price risk more effectively, as demonstrated by Neptune Flood, a winner of a 2020 Novarica Impact Award in the data category.
Neptune Flood, an InsureTech founded in 2017, developed a digital rating and quoting platform for automated risk assessment. The platform is built on an AI-enabled rating engine that invokes third-party data and analytics to rate and underwrite policies rapidly.
The rating engine and user interface were developed concurrently over two and a half years, beginning in 2017 using a team of just seven resources. Neptune also developed a commercial policy administration system in only 120 days to support the sale of their policies.
The company attributes its success to clear prioritization and excellent team communication facilitated by daily Agile scrum sessions. The team prioritized creating the automated quote and bind process, deferring less urgent enhancements, and maintaining focus on the product’s key functions.
The company’s digital rating engine enabled rapid expansion to 42 states. Neptune experienced 400% growth in 2019 and is now the largest private flood MGU in the US. They also report that the platform’s real-time aggregation methodology and high-quality risk selection have led to a low loss ratio.
Neptune’s case study shows that analytics can be a valuable tool for managing risk better. This makes intuitive sense, but it’s often hard for insurers to put into practice: Over the last five years, managing risk better is the least common Lever of Value for Impact Winners.
It can take a long time for insurer IT organizations to achieve maturity in advanced analytic technologies—and once they do, they often must still convince business partners to act on the insights those analytics provide. Vetting and using third-party data and working effectively with analytics providers can also be challenging. However, as Neptune’s win indicates, it can also generate significant value.
Earlier this month, Novarica announced the winners of the ninth annual Novarica Research Council Impact Awards. These awards recognize insurance technology projects that demonstrate real business impact and are selected by insurer CIO members of Novarica’s research council.
Over the next several weeks, we’ll continue taking an in-depth look at each of the eight winning case studies. Case studies for all winners and 20 other IT projects considered for the Impact Awards appear in this year’s Insurance Technology Case Study Compendium. More than 100 case studies from the last five years are available in Novarica’s research library.
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