Flood prediction is one of those mysterious arts that still poses a challenge for the insurance sector. Localised rainfall can often cause a flood, but this is incredibly difficult for the Met Office to narrow down, to an almost granular level.
IE magazine wanted to learn more, so we had a demo of the new Flood Maps Data tool developed by LexisNexis, hosted by UK and Ireland Director of Vertical Risks, Jonathan Guard.
IE: For many years now the best data that insurers have had regarding floods is the previous claims history, but all that is changing.
JG: It certainly is developing rapidly and one way that insurers can get much better insights into the overall risk for a property is by overlaying data from different sources. So, it goes way beyond claims history because it takes the Environment Agency history of various flood events, overlaying the outline of buildings, not just streets or postcodes. So far so good.
As a result of the Flood Maps Data tool we can now assess about 40 separate risks, everything from the stock value held at commercial premises, to previous fire, theft or car related claims in that area. You can then put in your policy book valuations over segments of the map. Say, choose an area that is one mile, or maybe just 300 metres, around the actual building. Then you can see your exposure in a particular area and understand how an event at one building, may well impact upon others nearby.
IE: So that is especially valuable in assessing commercial risks, because you can see how some buildings could be closed – even if they’re not flooded?
JG: Exactly. That has a potential impact in terms of Business Interruption of course and given that some serious floods may take a few weeks to deal with, the insurer or broker needs to gauge that risk at a glance.
IE: Let’s assume there’s a big storm coming, and the Met Office are warning people in a particular part of the UK that they face a mix of strong winds, big rainfall, plus already swollen rivers. How can the Flood Maps Data tool help?
JG: Firstly, you can plot your policyholders by location, and then by book value, within a given area. So, you start getting in touch with the high value customers who face the biggest losses. Then you can segment by other risks, say overlaying cars parked overnight at a particular address, and advise the owners to move them to higher ground.
As well as segmenting all this data by geographical radius, you can also slice it up by blocks too. So you can see if streets may be liable to flooding at one end near the river for example, or see if one half of a warehouse is especially prone to suffering from a backed up on-street drain.
One of the big benefits we have seen for brokers and insurers is that they have seen customer retention rates increase, because policyholders can see that the insurance company is actually being pro-active and trying to help. It is always good to have someone on your side, that tends to be remembered at renewal time.
IE: Does this go much wider than Flood risk; say inside major cities affected by protests or civil disturbances?
JG: It does yes. You can get a route map of a planned protest or demo from the Police for example, and then do exactly the same overlaying of data, policyholder asset values and previous claims history. So again, you can advise your policy book to take precautions, secure premises, or perhaps close them that day, cover windows etc. Again, you can use the tool to zoom in, and out, checking the other risks that you insure in adjoining streets.
In short it gives you a much deeper picture and we are finding that insurers are really finding this real-time information very useful. It gives you a channel of communication with the policyholders that goes beyond basic renewal notices or similar admin – you are a helping hand.
IE: Will there be more use of technology like drones to make more sense of the data during an event, so that can be analysed for future reference?
JG: Without a doubt yes. If you take the dam incident in Derbyshire in 2019 when that almost gave way, drones were vital in understanding how the defences where being applied, where the greatest risk would be in terms of water moving downstream into the nearby town of Whaley Bridge. Drone footage gives you a superb amount of detail in terms of the properties that might be affected, vehicles parked, outbuildings, shops and offices etc.
We can see technology providing insurers with more raw data in the future, and more tools that sift and segment that information, because that is where the true value is. Understanding risk is all about matching up real-time data with what you already know as an insurer. We can really understand more about the multiple risks involved in any major event now.
IE: Jonathan thank you, educational stuff.
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