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How data visualisation is helping the insurance sector understand environmental risks

How data visualisation is helping the insurance sector understand environmental risks 30

By Heikki Vesanto, Manager GIS Data Science, LexisNexis Risk Solutions UK & I

The U.K. commercial property insurance market is facing a mix of challenges as we head into 2021. Recent research by YouGov[i] highlights the dramatic changes we are likely to see in office use, with only 7% of people surveyed wanting to return to the office full time. Empty or underutilised office space as a direct consequence of the pandemic will clearly change insurance risk, but potentially the biggest, long term impact on this market is climate change and severe weather.

Extreme weather is considered to be the top global risk by likelihood over the next ten years, according to the World Economic Forum’s Global Risks Report [ii]. As we head into winter 2020/21 – mindful of the flooding and storms which impacted the UK in March[iii] and how a repeat event might play out in further lockdowns, preparing for further extreme weather events is likely to be a big priority for insurance providers.

A shortage of data to assess insurance risk is not the problem. The challenge is actually the huge volume of data at the disposal of commercial property insurance providers and how that can be pulled together to create a comprehensive and up to the minute understanding of their book of business and where they can write new risks.

For example, insurance providers need data on the characteristics of a property; its location; the individuals behind the business; the crime and environmental risks including near real-time data on flood and river flows direct from the Environment Agency. Then, there is the customer and policy data already held by the insurance provider.  All this data needs to be effectively managed and deployed where it can be used throughout the appropriate insurance process – marketing, pricing or underwriting and in the timely management of claims. It needs to reveal where exposures and accumulations exist in an instant and show where there is capacity to write more business.

Based on the fact that visual imagery is more intuitive and speeds up the ability to assess risk, geospatial data visualisation tools such as LexisNexis® Map View have evolved to address the insurance market’s need to make quick sense of all this data. Map View is enabling complex property data to be analysed, aggregated and visualised in map form for use within the insurance continuum.

In its simplest form, it allows insurance providers to upload their own policy and claims data and visualise the risks for a whole book of business, a geographical region, a postcode, an address or a single property outline, pulling on a wide range of data including live feeds from the Environment Agency. Insurance providers can filter down to the risks most of interest, focus on one property for underwriting purposes or a whole block of properties in the path of a coming storm.

No need for a science degree, these tools are designed so that insurance providers can quickly and easily see the predicted risk from an environmental event in the future, a known risk on the very near horizon, or one that has just occurred. Risk can be assessed at a glance or via a constant monitor put in place that automatically flags new risks coming up across a whole commercial property portfolio. Being able to view a whole portfolio also means that insurance providers have the ability to review past claims helping to price and more importantly mitigate future claims and potential losses.

Visualising an approaching storm, understanding which policyholders could be impacted, where on the ground resources need to be located, and how far the insurance provider will be exposed or underwriting capacity could be increased is now possible at any time of day or night through geospatial data visualisation tools.

As well as upcoming storms, it is possible to visualise areas currently experiencing a flood event, or a protest march that has the risk of damaging properties, or calculate how fire might spread from building to building in an urban location. This enables the Estimated Maximum Loss and Potential Maximum Loss can be calculated based on ‘live’ data.

In an extreme event, rather than waiting days or weeks to assess the exposure as was previously the case due to data being stored in disparate silos or data not being geo-coded and lack of the right resource, today insurance providers can understand the impact of a climate event in almost real-time.

This level of insight not only aids underwriting, pricing and claims management, these tools provide the ability to help insurance providers target areas where they can sell more business in large cities and automatically identify where they have areas of high concentrations of Sums Insured. This intelligence is vital for reinsurance calculations.

Insurance specific geospatial data visualisation tools will continue to evolve, helping insurance providers maximise the increasing availability of ‘live’ and new data sources, ensuring information is presented in the most meaningful and actionable way.  They are allowing insurance providers to assess location and property risks, price with pinpoint accuracy, manage their portfolio and take immediate action to limit their losses in an extreme weather event. 

[i] https://www.insider.co.uk/news/uk-office-workers-want-continue-22979780

[ii] https://www.weforum.org/agenda/2020/01/top-global-risks-report-climate-change-cyberattacks-economic-political/

[iii] https://www.abi.org.uk/news/news-articles/2020/03/insurance-pay-outs-to-help-customers-recover-from-storms-ciara-and-dennis-set-to-top-360-million/#:~:text=Initial%20ABI%20estimates%20show%20payouts,for%20flood%20and%20wind%20damage.

 

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