It’s that time of the year again. No, not Christmas songs back-to-back on Chorley FM, but downpours, drizzle, blustery showers and all the other forms of rain that Britain enjoys each winter. For many, it’s no fun at all as rivers burst their banks, or drains fail to funnel away surface water and homes and businesses suffer flood events.
For decades insurers have essentially reacted to these floods, which can be difficult to predict locally even when there is a history of flooding near a particular section of a river. But technology and sifting data is changing all that, in fact many new insurtechs are trying to build eco-systems that not only predict floods but help prevent more serious losses of life or property. Insurance Edge took a look around to see what’s new in flood insurance and what the future might look like too.
CAN FLOOD CLAIMS GO PARAMETRIC?
Heikki Vesanto, Manager GIS Data Science, LexisNexis Risk Solutions UK & Ireland offfered some insights;
“Accurate, real-time perils data is already being mapped and visualised, helping to transform the traditional property insurance market, by allowing greater engagement with customers prior to a storm so that they can take action where possible to mitigate the risk.
From a parametric perspective, the cost of managing claims would be reduced as insurance payments are triggered by an event exceeding a parametric threshold and payment is usually made within days. For UK storms or floods, the thresholds or ‘triggers’ for a payment would need to be carefully considered. Typically storm or flood events cover large areas, so defining specific properties actually at risk and eligible for the parametric payout would be difficult. For example, it could be narrowed down to a certain wind speed that has a possibility of causing damage and the threshold might also vary based on the construction type and materials. Determining those thresholds would require deep and broad analysis of claims from previous extreme weather events.”
Of course having data is like having 1000 news stories from Google, it depends on how you rate that data in terms of importance, reliability, cross-checking and ultimately having news that you can use. For example understanding a real-time flood event;
“Visualising an approaching storm or the flow of water in a flood, using near real-time data is now possible through geospatial data visualisation tools, such as LexisNexis® Map View. This technology enables insurance providers to understand how and where policyholders could be impacted so that they can be warned in good time to take action such as moving their car to higher ground, away from trees or under cover in the case of hailstorms, helping to limit the impact of an extreme weather event.
Geospatial data visualisation tools allow insurance providers to harness multiple data sets including storm tracts and real-time flood warning data direct from the Environment Agency. With the ability to upload their policy data, they can quickly assess their potential exposures and constantly monitor the situation as a storm or flood progresses, understanding for example where road closures have occurred or flood defences have been breached, putting them in the best position to mitigate that risk and support policyholders.”
You can read much more about LexisNexis flood mapping, how tech devices are changing home/Commercial insurance, drone video footage and more, in a feature IE published earlier in 2020.
WILLIS TOWERS Q&A
IE fired a few questions over to Willis Twoers Watson, one of the big names in catastrophe event insurance, and Evariste Yeung, Head of Insurance Technology Sales for Asia Pacific, Willis Towers Watson offered some comments.
- Maps meet apps – can accurate, real time mapping transform flood and storm insurance into a parametric, automated system for lower value claims?
This will definitely help. In fact some insurers are deploying drone to flood area to help assess and monitor the situation. The challenge here for parametric insurance is the actual economic loss. There are occasions where the flood can be severe but minimal damage is incurred, resulting in pay-out (according to parametric numbers) but no significant loss to the insured. Some regulators are very cautious in this area as it creates economic gain.
- Moving cars before storms or floods hit is the best way to reduce many domestic claims, how can insurers and brokers use tech to alert consumers?
This is a positive approach but only if the insurer’s prediction is better than weather forecast agency and the notification is well in advance.
- Can commercial insurers use more IoT devices to quote and price risks better, and help FNOL process better?
Yes indeed. For example, insurers are trying to setup devices surrounding pipes/plumbing to receive early signal of water leakage to have FNOL (almost real time, rather waiting for a person to discover the leakage) and minimal water damage as it is reported so quickly. The other potential is monitoring health status of seniors with smart watches (with insured consent to share data). Nowadays smart watches are collecting many vital health information and it can serves as both tracking (location of the senior) and also feedback of health status of the senior.
IE thinks that is a really important point, since vulnerable older people are arguably most at risk during flood events due to restricted mobility. It’s something that many insurers can build into a home insurance policy where there is a granny flat, as well as in the Commercial sector where over 55s housing developments are being built in partnership with Housing Associations, built privately, or even by insurers like Legal and General for example.
LOSS ADJUSTMENT IS GETTING QUICKER
Alistair Steward at QuestGates gave IE some background on how loss adjustors are coping with flood claims, in particular speeding up the settlement process.
“QuestGates developed a bespoke in-house tech platform in late 2018 to better connect all stakeholders involved in managing a claim, track actions (or inaction!), creating a transparent overview of who is doing what and by when … basically leaving no place for anyone to hide. This combined with some other process enhancements and new roles in the business have all served to help slash the claims lifecycles in these major events, reduce indemnity spend and improve the customer experience.”
QuestGates did some evaluation of their response to a weather event earlier this year when storms Ciara and Dennis struck in Feb, and compared that to their response to a major event in December 2015. This new technology and the system of connecting stakeholders has had a significant impact on settling flood claims a lot quicker.
ESCAPE OF WATER IS THE BIGGEST LITTLE PROBLEM IN THE MARKET
Chatting with Krystian Zajac, CEO and Founder at Hiro, IE learned that the plain old escape of water from domestic pipes is the biggest series of claims that insurers have to deal with. Hiro are building features into their app that empower consumers and save insurers – an eco-system of prevention, rather than claims management;
“Our Hiro app can integrate the IoT devices in the home, like a smart speaker, Ring doorbell, CCTV or something like a leak detector. Once customers sign up to the monthly subscriptuion plan that unlocks the app marketplce, so they can get discounts on technology that monitors their home. So the policyholder replaces a conventional stopcock with a smart enabled one, which means that any variance in water flow can snd an automated alert to them. Whether they’re at work or on holiday, some action can be taken immediately. This type of prevention is perhaps the single biggest step forward in reducing the escape of water cost centre.”
And on that forward thinking note we wrap up this feature. More flood tech features in 2021.