It’s Now Time for our Data to Catch-up
When I was a young risk manager with The Rouse Company and technology was just coming to the forefront, I invested significantly in data collection related to our risks, which became my guiding light for our portfolio strategies and communication with our insurance markets. Back in the 70’s and 80’s, liability drove most of the cost in shopping malls. Despite not being able to exactly forecast the benefits, my trust in better data paid off in a number of ways including a reduction to our total cost of risk and equally as important, a shared perspective and common language both throughout the entire organization. This allowed both financial and operations leaders to understand and act on our own information as well as translating real estate risk management into insurance-relevant language. In retrospect, while the 43% reduction in our cost of liability risk (over my last ten years) was impressive, what I remember most was being seen as a data-driven executive with strategic insights--an important part of my maturation as a professional.
For today's risk managers, Archipelago’s technology reduces the investment necessary for real estate owners to capture, utilize, and leverage data on their properties--from optimizing insurance purchasing to more effective capital allocation in the design of new buildings and the "CapEx" decisions on existing ones. At the same time, the hardening market creates more need for differentiation, trust and access to capacity--increasing the potential benefits associated with better data and stewardship.
Later in my career, I became a broker and ultimately, led the Real Estate and Hospitality practice for Willis Towers Watson. In this capacity, I saw CAT modeling transform commercial property insurance. As the models matured and advanced, reliance and acceptance grew significantly over the years. With hundreds of billions of dollars at risk, much time, effort and research was poured into multivariate algorithms.
At the same time, the schedule of values (SOV) has remained essentially unchanged. Delivered via spreadsheet and static--once data enters the SOV, it rarely is revisited or updated. I was always struck by the difference in sophistication between the process to gather the SOV data relative to the process to model the SOV data.
Archipelago empowers real estate owners to take control of their own data, ensuring that the quality of their buildings and stewardship is accurately reflected in the modeling by their markets--a long-overdue missing piece to the property insurance process.
Written by Steve Sachs
Steve Sachs is the Principal at SWS Risk Management, an Advisor to Archipelago, a data and analytics firm, and has more than 50 years of risk management and insurance industry experience, including extensive work in the commercial real estate sector.