Time to (really) get to know your customer

Rob Sloan, senior director – marketing, insurance solutions at Moody’s, on the importance of obtaining the required data.

From an underwriting request for a single business property to a reinsurance portfolio covering risk for millions of companies, it has always been imperative to understand who and what you are underwriting for commercial lines of business.

Getting data for a residential property can be difficult enough, but for a commercial property or a chain of business locations, many more factors come into play when looking to obtain the required data.

First is the basics: do you have the correct addresses, and do those addresses match up to locations in your modelling and underwriting systems? Are the company names correct? Do you understand the property you are underwriting – the business usage, special requirements such as particular hazards that need to be accounted for?

Once you have identified the business, you then need to know about that business. Is it a start-up or long established? Does it have healthy turnover, and other vital business indicators? Publicly quoted businesses are obliged to publish extensive company data, but this requirement is not the same for privately held businesses.

A mix of regulatory and reporting requirements means that you have done due diligence in terms of know your customer checks – whether they are involved in prohibited business, or the directors are on sanctions lists, for example. Insurers in various regions are also required to report on the climate impact of the business they are underwriting – how can you make assessments that are useful to your business as well as meeting regulatory requirements?

Businesses of all types and sizes are starting to embrace the Partnership for Carbon Accounting Financials (PCAF) accounting protocols to standardise reporting of greenhouse gas (GHG) emissions.

PCAF developed the Global GHG Accounting and Reporting Standard for the Financial Industry, the first-ever global, harmonised and transparent methodology for measuring GHG emissions. Written by a diverse, global team of financial institutions for financial institutions, the standard combines deep industry insight with the rigour of the GHG Protocol, the supplier of the world's most widely used GHG accounting standards.

Steering around regulatory requirements with regard to underwriting could be a recipe for higher costs, incompatible data and processes that slow down your business agility, but there are many data flows designed to work in tandem with underwriting systems that can deliver required insights at speed and support your range of requirements.

Moody’s Insurance Solutions is helping a range of insurance clients across a range of data requirements and processes to ensure compliance that is future-facing and can grow with the need for greater insights – from the business basics, to climate, sanctions and beyond.

Rob Sloan, senior director – marketing, insurance solutions, Moody’s