ITV and the Quest for Accuracy

Can better data overcome the industry’s $11 billion Insurance to Value (ITV) issue? An industry stakeholder says that it can—and that more of it can help insurers, brokers and other players hone in on a true ITV solution.

Deteriorating ROI property results and media attention have thrust the ITV issue under a stark spotlight in the past year. With data problems—lack of standards, inaccurate consumer data and other data gaps compounding ITV on one hand, the growing amount of data on Canadian properties on the other—including field data and loss claims files—is guiding at least one stakeholder in its efforts to develop an ITV solution, Greg McCutcheon, president of RMS, said during a speech at the MarS Innovation Centre in Toronto November 23.

“Insurance compan[ies] and brokers do not have the data elements necessary to generate updated valuations on their in force policies and statistics continue to suggest that 70% of existing policies are underinsured by 33%,” McCutcheon said.

RMS’s ITV solution—iClarify--backed by the Economical Mutual and the IBAO—will begin beta testing in the coming weeks, and brokers in Ontario will be the first to access the tool’s multi-sourced data, which stems from streetscape photos, satellite images, claims history and neighbourhood profiles.

The quest for accuracy is a major challenge, McCutcheon told the attendees, noting that with so many factors affecting value, it’s virtually impossible for ITV tools to be 100% accurate. “In other words, if a solution can generate values within 10-15% of the actual replacement cost of a total loss that is far better than where we are today.”

Some of the other issues complicating the matter include lack of standardizations for quoting or minimum data input, consumers supplying inaccurate data, and a lack of clear information on fluctuating claims costs. Inflation guard practices also lack a consistent and scientific approach for in-force policies, he said. “Many argue it is a 30 year old problem.  One thing is certain, it is a very costly problem,

He called on other industry members not to use ITV as a competitive tool. “It is time to start competing on individual company and broker value propositions not on insurance to value. We are excited to hear this message resounding loud and clear from the IBC ITV committee,” he said.