Financial Stress

How an insurance firm uses D&B's Failure Score

D&B data gives MSILM a clear picture of risk and the market

Mitsui Sumitomo Insurance (London Management) Ltd (MSILM) focuses in the UK on commercial businesses, offering insurance solutions within the property, construction, casualty, marine, fleet motor, aviation, and professional indemnity sectors. It is an integrated underwriting, risk management and claims management provider. Now, in order to expand, MSILM has enhanced technology and its own data processes.

"The insurance industry has tended to be slow to adapt to new technology and new processes," says Richard Thomas, Director of Commercial at MSILM. "Even to the extent that the industry has its own trade classifications for businesses that do not match the Standard Industrial Classification (SIC) codes that the majority of the commercial world uses. This makes it particularly difficult to analyse portfolio information in a meaningful way." In order to improve the process around underwriting MSILM was keen to use technology to develop a more codified process.

For reliable third party data MSILM turned to D&B. D&B provides MSILM with an integrated data feed directly into the new underwriting platform. The system takes D&B's data on a business's name and address as well as the D&B Business Failure Score. It then combines this with information from other sources to automatically rate the risk.

"We needed a rigorous approach to the way we structured the data within the underwriting platform," says Thomas. "The way D&B delivers data to us is critical for the success of the system. In particular incorporating D-U-N-S Numbers means we can easily confirm all the details we hold about a company. And crucially we can also see where the business sits within a corporate structure and if there are any opportunities to cross or up-sell.

For Thomas, one of the crucial differences D&B makes to their process is with the D&B Business Failure Score: "There has long been a theory in the insurance industry that there is a correlation between the financial stress on an organisation and the likelihood of losses arising. Until now this has relied on using the information contained in company accounts which gives a picture of an organisation's financial stress when those accounts were filed.

However, with the D&B Business Failure Score we have an almost live view of the financial stress on any particular company. This means we can then price our services much more accurately." For many potential clients it is a clear yes or a no whether we would want to insure them. But for the majority group in the middle - the maybes - D&B's data is enabling us to make better decisions, about firstly whether we want the business, and then about the price. The quality and accuracy of D&B's data makes this possible."