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By arming risk managers with advanced analytics technology that typically has been reserved for underwriters, the team at EigenRisk Inc. aims to help corporate risk managers make informed, data-driven decisions when it comes to protecting their assets from natural catastrophe losses.
This capability has earned EigenPrism a 2016 Business Insurance Innovation Award.
Ann Arbor, Michigan-based EigenRisk's technology platform, EigenPrism, “essentially levels the playing field” between risk managers and brokers or underwriters by giving risk managers insight into their exposures that they can use in pricing negotiations, said Eduardo Hernandez, the firm's Miami-based co-founder and head of business development.
The analytics and risk modeling platform, launched in August 2015, unearths data typically buried in Excel spreadsheets and displays it so the risk manager can see which assets are exposed in the event of a natural catastrophe. The tool is also available to brokers and underwriters.
“When there's an event that's happening that makes the news — there's a big tropical storm or there's a major earthquake — risk managers want to know, "Does it affect me or not?' and we help them to get the right answers,” said Deepak Badoni, Toledo, Ohio-based co-founder and president of EigenRisk.
In addition, the game-like technology — the creators say clients have said it's “fun” to use — allows risk managers to run what-if scenarios by dragging historical catastrophes, such as hurricanes or earthquakes, across a map and imposing them over the firm's assets to predict the risk exposure and, in turn, make better decisions.
“Today, the risk management discipline is more reactive, where when anything happens, people rush to figure out, "Where are my losses going to be?'” Mr. Badoni said. “We're turning this around on its side” by allowing them to model risk beforehand.
Mr. Badoni said the platform answers questions that risk managers want to know, such as, “What are my worst-case scenarios? What should I plan for? What should I buy insurance for? Do I have the right limits? Do I have the right deductibles?”
These answers arrive in seconds with EigenPrism, whereas without the technology, “it might take them days or weeks to get those answers,” he said.
“As a risk manager, having that real-time data and that intelligence will make them look smarter in front of the board when they're making decisions on how much risk to retain and manage and to purchase,” Mr. Hernandez said.
For example, one of EigenRisk's clients, Miami-Dade County Public Schools, used the tool for its property renewal and discovered that 20% of the school's locations were plotted incorrectly when using traditional modeling.
“They were in the water,” said Michael Fox, Miami-based district director of risk and benefits management with Miami-Dade County Public Schools.
Using EigenPrism, the school system modeled 1992 Hurricane Andrew as a worst-case scenario and found that the ground-up loss was $622 million, compared with the $826 million traditional models had calculated, Mr. Fox said.
“When you utilize EigenPrism's capabilities ... it's a valuable tool to help shape our view of risk,” Mr. Fox said.
Alastair Malcolm, founder and CEO of Faversham, England-based XS Reserve Ltd., is no stranger to innovation, having been at the forefront of the development of excess-of-loss credit insurance coverage some 30 years ago.