Bringing hazard data to the catastrophe front line

Charles Blanchet explains how a lack of actionable hazard data is limiting response capabilities and details how ICEYE is working with the industry to help bridge this data gap.

How significant a challenge for the insurance industry is the lack of access to hazard data in the aftermath of a major catastrophe?

The insurance industry remains hungry for more and better hazard data across the peril spectrum. There is a clear requirement for reliable, consistent and accurate sources of such information – ideally from neutral providers and for all events globally. 

This is particularly true of complex, high-gradient perils such as flood, for which there is no global source of actionable hazard data. Even where flood hazard data is available, it is incomplete and can take months to compile. 

Remote-sensing capabilities can play a pivotal role in providing access to such information. However, efforts on this front to date have come up short, primarily due to the inability of providers to convert and deliver relevant data to (re)insurers in a timely, easily ingestible and cost-effective manner. 

This major data shortfall creates multiple market issues. It is driving up costs, hampering responsiveness, degrading service and creating significant inefficiencies across every aspect of disaster response and claims management.

How does this data deficiency impact the ability of insurers to respond? 

Hazard data needs to be delivered in a format that is easily operationalised, and within a timeframe that transforms the efficiency of the industry’s response to a loss event. 

The current data shortage restricts the effectiveness of the industry’s response to catastrophic events on at least three fronts: claims management and settlement; reserving and reporting; and third-party resource allocation. 

In the case of flood, the lack of reliable, consistent and verifiable methods to measure and report flood depth globally has also limited the development of parametric solutions, which in turn is hurting the industry’s ability to respond more effectively to catastrophes. 

Without fast, accurate and actionable hazard reporting, policyholders can be exposed to slow and uncertain payouts, while post-event loss estimates are extremely challenging, exposing insurers and reinsurers alike to potential loss creep.

ICEYE has been actively working with the (re)insurance sector following recent major flood events to provide hazard data. Can you explain firstly how you generate the data?

ICEYE’s primary role currently is to offer a reliable, globally consistent and verifiable method to measure and report flood depth and extent, wherever and whenever a flood occurs. 

To this end, we own and operate the only satellite constellation deployed solely to monitor catastrophic events for the (re)insurance industry. Our always-on, global flood monitoring capability is maintained by a team of meteorologists, data specialists and insurance executives. 

We target the exact locations necessary to capture peak flood depths, consistently and reliably generating high-resolution depth data in a format which can be easily operationalised by (re)insurers. 

Our synthetic aperture radar technology captures flood data at any time of day and in all weather conditions. This is combined with auxiliary sources – open-source imagery, river/tidal gauge data, ground sensors and elevation models – to create easily ingestible hazard data within 24 hours of a flood’s peak. We can produce flood depth and extent data at the individual building level across the entire area affected. This is delivered as a pure data file that can be mapped to the (re)insurer’s exposure database.

How will this speedy access to more granular information help enhance the industry’s ability to respond to such losses? 

Having access to hazard data in the immediate aftermath of an event in a format that can be consumed quickly has the potential to be transformative for the insurance ecosystem. It can enable faster, fact-based event response, support more efficient claims management processes, accelerate loss assessment and improve reserving. 

By integrating flood hazard data, (re)insurers can transform their claims management capabilities. It creates opportunities for greater automation, improving the allocation of third-party resources, reducing claims-related expenses, minimising loss creep, dramatically improving settlement times and ultimately enhancing the overall customer experience. 

Moreover, these kinds of solutions can also help the market deliver on the promise of parametric insurance. Insurers, intermediaries and reinsurers are already using our data to structure innovative coverages and our flood monitoring service to trigger settlement.