Outdated systems are leading to incorrect premium calculations for commercial clients, according to MSM Risk Management

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Almost one hundred percent (98%) of risk and underwriting professionals think that the way premiums for commercial risks are calculated is wrong, according to MSM Risk Management.

The way risk analysis reports are compiled is outdated and prevents insurers from undertaking effective risk engineering, warned MSM.

The statistic, which emerged from a research project involving 100 risk professionals across UK insurance companies. The evidence showed that 98% of them who believe premiums might not be correct. Seventy-two percent believe they could be too low.

“There are often anomalies between different systems used by insurers, brokers and risk engineers for example, meaning that data is being transferred from one system to another and is not accessible to all risk professionals with a stake in the process,” said Thomas Coles, managing director of MSM Risk Management.

“This is not only time-consuming but also introduces the possibility of certain information being lost in translation.”

Insurers could be compromising vital competitive advantage and profits with premiums that are too low, said MSM. Commercial clients could be notably underinsured leaving their businesses exposed in the event of a claim.

“It is vital that insurers, risk professionals and underwriters implement effective systems with which to input, store and access their risk engineering data,” said Coles.

“This can eradicate unnecessary duplication of work, minimise the loss of competitive advantage and provides a detailed analysis of trends and problem areas which in turn can provide intelligence with which to create new insurance products. Both insurers and customers can benefit.”