Over the last several months, the Coronavirus has shaken our personal lives, the economy, and how we interact with our customers. This is true for the Insurance industry. Insurance companies play a pivotal role during times of economic stress by helping companies and households manage risks and cushion against losses.
The federal and local governments have started to take more action by placing more restrictions on day-to-day business operations including international travel, port operations, shipping, food service, entertainment and trade.
As a result, there have been significant challenges throughout the United States as businesses begin to assess their current and future losses sustained due to Covid-19. Insurers are responding to the widening COVID-19 pandemic in several different ways. Carriers are facing issues as claims payers, employers, and managing investment portfolios. Each has a new set of challenges for the Insurance Industry.
The free COVID-19 U.S. Business Risk Index below was developed by Experian Business Information Services to help businesses better understand the impact COVID-19 may have on their commercial operation based on several key factors. This methodology combines business risk, anticipated impact on business industries and real-time COVID-19 case data to help businesses better simulate various impact scenarios down to the state level to help develop enterprise strategies.
The risk index is used as a comparative benchmark across states, counties and industries. Industry classification is used to assess the business’s level of impact exposure due the nature of the business. For example, Insurance carriers need to identify the industries and lines of coverage in their portfolios that are most exposed to the impact of COVID-19. Part of this process will include modelling claim exposures and profitability impact. This is likely to include Business and Supply Chain Interruption; Surety and Credit Insurance; Travel related insurance, Event Cancellation insurance; Workers Compensation and Employers’ Liability.
The risk index represents the credit risk, industry risk, and Covid-19 risk on businesses across the US. The impact layer allows users to easily change the severity of the impact related to the combination with the credit risk, industry risk, and Covid-19 risk across regions and industries.
This dashboard is meant to be a directional tool for assessing which industries and geographies are most likely to be impacted and how severe the impact will be. The risk index is not designed to be interchangeable with a traditional credit risk score. The risk index is intended to be used independently to gain insights around the potential impact of the current events on future business credit health at summarized levels including region and industry. The risk index has four different assessment scenarios ranging from low to severe. If the expectation is that various industries are affected differently, but the impact overall is minimal, then the minimal scenario should be applied. Select the other scenarios to amplify the impact.
Businesses are beginning to deeply analyze their enterprise processes and seek good reliable data to better identify their targets. Experian can help bring predictive credit and firmographic data in conjunction with alternative data sources to better identify businesses more likely to be affected by the Coronavirus outbreak.
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