Leveraging ESG Data: How We Helped an Insurance Company Build a Risk Assessment Model

Client: Vestjylland Forsikring

Service: Analytics

Industry: Finance

As part of the broader company strategy, Vestjylland Forsikring, an insurance company in Denmark, has two strategic goals: maintain their high levels of customer satisfaction and geographical growth. In working towards these goals, there is a need for better risk insights in their current client portfolio. Our team at ADC Denmark helped them by developing a risk assessment model using ESG data to predict claims behaviour. This provides Vestjylland Forsikring with a better understanding of their client portfolios. Overall, this project serves as an example of how data-driven solutions can be used to achieve business goals and provides valuable lessons for future endeavours.

The Challenge

Vestjylland Forsikring is an insurance company based in Jutland, Denmark. As a company, Vestjylland Forsikring has several goals as part of the company-wide strategy. We focused on two strategic goals: to grow and to maintain high levels of customer satisfaction. In order to achieve these goals, they needed to gain better insights into the risks associated with their current client portfolio. Specifically, they were interested in a deeper understanding of the claim behaviour of their clients to identify healthy clients, unhealthy clients, and potential new clients.

Our team at ADC Denmark proposed a data-driven approach that would leverage Vestjylland Forsikrings historical claims data to identify patterns and insights related to client behaviour. This approach would allow Vestjylland Forsikring to make data-driven decisions and better understand their current client portfolio, and ultimately grow their business while keeping their customers happy.

The Approach

To help Vestjylland Forsikring achieve its strategic goals, we started by facilitating an afternoon design sprint workshop with key stakeholders to brainstorm ideas. We then ranked these ideas and selected the risk assessment model, which uses historical claims data to identify areas of risk within the client portfolio.

Using advanced data science methods, we analysed the data and developed a risk assessment tool to help Vestjylland Forsikring make data-driven decisions. Our approach focused on collaboration and leveraging data to uncover insights that would be difficult to find manually.

Overall, we worked with Vestjylland Forsikring to transform insights into action. By working closely with their team and using data-driven decision-making, we helped them and supported some of their important strategic goals for growth and customer satisfaction.

The Solution

Our solution for Vestjylland Forsikring was a risk assessment model that uses ESG data to predict which clients are likely to issue a claim, for instance on their car or house insurance policies. By leveraging external data sets, we can provide deeper insights into areas of risk, such as flooding risks in certain postal codes and energy labels of houses.

The model provides a better understanding of Vestjylland Forsikring’s current client portfolio and helps identify which clients to target when expanding. Furthermore, by analysing historical claims data, the predictive model helps to identify future claims. This not only helps Vestjylland Forsikring improve their risk management strategy, but also increases their overall customer satisfaction by proactively addressing potential issues.

Impact on Vestjylland Forsikring

The risk assessment model has an impact on Vestjylland Forsikring’s ability to better understand their clients’ risk profiles and adjust their policies accordingly. By using the model, they were able to put their clients into different risk buckets, allowing them to offer more targeted premiums for specific policies.

In addition, the project demonstrates the power of using ESG data to predict claims behaviour, an approach that can be applied to similar organisations. Other insurance companies could use similar research to gain deeper insights into their clients’ risk profiles and make more informed decisions about pricing strategies.

Learnings for ADC

While working on this project, one of the challenges our team at ADC Denmark faced was working remotely, especially with a language barrier. However, this experience prepared us for future remote projects.

We also learned that having access to large amounts of data can improve the accuracy of the model. In this project, we had access to a limited amount of ESG-specific data, so we advised Vestjylland Forsikring to continue collecting data, since there are many opportunities to improve their model in the future.

Furthermore, this project was our first in Denmark before merging with Damvad Analytics. This merger has since given us a foothold in the Danish market and increased our potential to work with other similar organisations in the future.