RiskGenius Insights

What if it were possible to approach the language of an insurance policy as though it were a statistical measure? 

The idea is not so crazy. I would even bet that you have probably seen evidence of this in other unlikely spaces that you now take for granted. For example, look at baseball. Statistics revolutionized baseball following the sabermetrics movement. If you are have seen or read Moneyball, you are undoubtedly familiar with this concept. The Oakland A’s, a team with fewer resources than the biggest teams in Major League Baseball outperformed many of these teams by adhering to a steadfast approach to data and statistics.

While it may be the most popular example, Moneyball didn’t just happen. In fact, six years before the 2002 Oakland A’s made their magical run in the playoffs, the publication Baseball Prospectus helped popularize the sabermetrics movement

“That first year, (Baseball Prospectus) charged $20 for a statistics guide produced on a photocopier. It printed around 300 copies and sold about 170 to fellow statheads, even though the book was missing the St. Louis Cardinals. ‘It was terrible,’ recalls Kahrl, ‘but it nevertheless didn’t discourage us.’ Within a few years Brassey’s Inc. published the guide, which grew to about 3,000 copies. By 2007 it reached The New York Times bestseller list, topping 70,000 copies at $21.95 a pop.”

After I learned about the creative and revolutionary application of statistics to new and untapped domains where statistics had minimal impacts, I’ve wanted to create my very own “Baseball Prospectus.” Now is that time. 

I present to you… 

Insurance Prospectus

I don’t think it’s going to be terrible, but we should all go into this with eyes open. 

Here’s the description of Insurance Prospectus: 

Insurance Prospectus uses analysis of insurance to tell new and compelling stories about insurance policy language. By looking at the wordings, history, case law, and emerging trends, Insurance Prospectus provides novel insight about the various relationships between insurance concepts and history, business, and economics.

Our general value proposition is that the insurance industry has the same potential to be revolutionized through statistics that baseball did in the early 2000s. Smaller organizations can be competitive with larger organizations with a ruthless commitment to anomalous strategies and against conventional wisdom (like, for example, the 2002 Oakland A’s). Larger organizations can become even more dominant by deploying teams of analytics professionals (like, for example, the 2004 Boston Red Sox who adopted the Sabermetrics approach after the A’s). And, unlike in Major League Baseball, the entire insurance industry has the potential to be revolutionized by new players who are much more agile than the incumbents they are going up against.

(As an aside: yes we know that actuaries provide a very important role for the insurance industry)

The future is going to be very exciting in this space.

We have the technology.

Our  general outline for publishing content in Insurance Prospectus is as follows: 

  • Blog posts about interesting statistical trends in the insurance space
  • Podcasts exploring the way the insurance industry has developed with industry experts
  • White papers published on a collection of content after the requisite amount of research has been devoted to identifying, testing, and adapting different hypotheses.

Some of the topics that we have identified to start with include: 

  • (Silent) Cyber Insurance
  • Emerging Risks
  • Social Inflation
  • A History of Wordings
  • New Analytical Models for Insurance

You will learn about each of these topics and what they mean to Insurance Prospectus in subsequent posts. But you may be wondering “where is the prospectus in Insurance Prospectus?” Thankfully, Bryan Wilson pointed out the definition of “prospectus” to me: 

“a printed document that advertises or describes a school, commercial enterprise, forthcoming book, etc. in order to attract or inform clients, members, buyers, or investors.”

As we begin to collect and aggregate all of the posts, podcasts, and whitepapers, we will create a printed version of the year’s Insurance Prospectus. We will print physical copies of the Insurance Prospectus, on demand,  for anyone interested in receiving a curated version of our monthly musings. 

Now you may be wondering, who the heck are these people? Thanks for asking. My name is Chris Cheatham. I founded a company in 2015 called RiskGenius. Our mission is to help insurance professionals deliver the right coverage impossibly fast. We do this by employing advanced technology (like machine learning algorithms) to read and understand and insurance policy and create structured data from it. Before RiskGenius, I was an insurance claims attorney. 

The guy who edited this, Bryan Wilson, is a former RiskGenius employee that I hunted down out of law school to join our team because of his ability to translate complex concepts from law (including insurance) to computer science and back. He is now living in Airbnb’s, traveling around the U.S. and Europe speaking at conferences, hosting workshops, and seeding new-fangled ideas like this into the minds of at least a few people as the Editor-in-Chief of the MIT Computational Law Report. When I told him about this project, he had some great ideas and we started collaborating again and here we are. 

With that, I am going to move on from this introductory post and start researching and writing again. I leave you with my favorite quote: 

“Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too.” 

  • William Hutchison Murray

If you have general questions or you are interested in writing, click subscribe or email us at [email address].

Acknowledgement

The description of Insurance Prospectus is inspired by Nate Silver, early manager of Baseball Prospectus, and FiveThirtyEight.com.

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