Case study
Insurance
Delivering a new dimension in risk management at
Royal Sun Alliance (RSA)
The Challenge
• Managing risk exposure relating
to commercial property
• Better use of capital capacity
The Benefits
• Accurate pricing, greater visibility
of individual risk accumulation,
and greater profitability
• Able to win business that
coarser measures falsely deem
too risky
The Customer
Originating in London, RSA is one of the world’s leading multinational insurance groups. It
specialises in general insurance, and has 17 million customers in 130 countries.
The Challenge
RSA wanted more accurate tools for managing exposure to risk in commercial property,
optimising capacity, handling claims, purchasing reinsurance, and targeting marketing
campaigns.
The Solution
The Esri UK insurance platform comprises hubs (modules) providing spatial support to
business functions. It uses xy coordinates to establish the distance between a building and
a nearby risk, within 1-2 metres of accuracy, spatial analysing the effect. It interoperates
with leading platforms and data formats, in server and mainframe environments. Most
processing is “behind the scenes”, so commercially sensitive data can be managed inhouse and training requirements are minimal.
When a customer calls, the address is geocoded and passed to the perils hub, for risk
scoring. If the accumulation hub finds RSA’s exposure at this location is within defined
limits, the new risk is automatically approved and the accumulation hub data updated. (If
exposure would be too high, the location is flagged for investigation.)
Benefits
Accuracy reduces risk
Postcodes are too vague. Using xy locations pinpoints where each building is in relation to
others, and adding data layers (e.g. crime, flood and subsidence) means risk assessment
and premiums can be more accurately calculated. “Having that much more granular idea
of where our risks are – and where they are approximate to each other – ensures we
don’t overexpose ourselves”, explains Graham Heale, Property Portfolio Director.
Optimised capital capacity
With reliable risk assessment, RSA allocates capital and manages reinsurance more
effectively, freeing capacity to sell more insurance, whilst avoiding over-exposure. “The
greater the granularity of the data, the greater the understanding of risk, and the more
effective we can make our reinsurance purchase”, Heale explains. “This doesn’t mean we
do away entirely with the contingency… but we can be more refined in our purchase.”
Esri UK | Millennium House
65 Walton Street | Aylesbury
Buckinghamshire HP21 7QG
T 01296 745500 | F 01296 745544
E info@esriuk.com | www.esriuk.com
Copyright ESRI (UK) Ltd 2007. Official Authorised Distributor. All
rights reserved. The Esri globe and Esri products, services and
trademarks mentioned are trademarks of Environmental Systems
Research Institute, Inc. Other companies and products mentioned
herein are the property of their respective trademark owners
Competitive edge
Competitors quote high premiums for all properties in a postcode that has flooded, whereas
RSA can give lower quotes for individual properties that have never been affected. “We
were able to make flood insurance available to a wider range of customers”, notes
Heale.
Learn more at: esriuk.com/insurance
Case study
Insurance
GIS has a massive future in my industry; we are really only just dipping our
toe in the water, and I genuinely believe that my organisation is one of those
leading the way.
“
“
Graham Heale, Property Portfolio Director
Faster processing
“Where before we would expect a risk assessment to be performed in, say, seven
days, the response from the new system is pretty much instant, as in most cases no
manual assessment is needed”, Heale observes. Automated risk assessment and batch
processing free up underwriter time for more complex assessments. Heale is enthusiastic:
“We have no reason to assume anything other than 100% confidence. It’s going to be
fantastic.”
Handling major events
Some events cannot be planned for and stretch call centres and computer systems.
When the Buncefield oil terminal exploded, Heale’s team modelled and estimated RSA’s
loss within three hours; “Following seven months of actual physical assessment of the
damage and loss adjustment, the number that we gave is still within 7% of the final
cost”, Heale affirms. Before GIS, it would have taken a week or two to estimate a less
accurate number. Furthermore, “Because the system helped us to gear up quickly, we
were able to send an emergency response vehicle to the scene within a couple of
hours”.
Demonstrate solvency
The Esri UK Insurance Platform can provide assurance to regulators and shareholders
that RSA fully understands the risks it underwrites and complies with legislation such as
Contract Certainty and Solvency 2. “I do believe that… the system may be able to assist
us in our discussions with regulators around how effectively we are managing the risks
in our portfolio”, muses Heale.
Targeted marketing
“The geographical mapping tools can also be used to identify ‘cold spots’, or areas
in which we could write more business without affecting our accumulated risk”, Heale
notes.
Future benefits
RSA has used Esri GIS for many years, and now plans to convert all postcode data into
geocoded data and give web service access to underwriters outside the UK.
Esri UK | Millennium House
65 Walton Street | Aylesbury
Buckinghamshire HP21 7QG
T 01296 745500 | F 01296 745544
E info@esriuk.com | www.esriuk.com
Copyright ESRI (UK) Ltd 2007. Official Authorised Distributor. All
rights reserved. The Esri globe and Esri products, services and
trademarks mentioned are trademarks of Environmental Systems
Research Institute, Inc. Other companies and products mentioned
herein are the property of their respective trademark owners
Heale summarises, “I guess the real ‘lightbulb moment’ for me was the realisation that
it wasn’t the knowledge of topography, or of river flows, or of insurance, or of GIS
that actually made the difference… but it is the combining of all those datasets with
our GIS skill, our mastery of the insurance risk, of actuarial pricing, and of our capital
management capability that has truly made a winning formula for us.”
Learn more at: esriuk.com/insurance