Cyclones, and storms, and floods
As the fallout continues from natural disasters striking Australia’s west (cyclone) and east (floods) coasts, insurers are increasingly looking towards technology to improve premium pricing and claims management.
Natural disasters have ravaged Australia for millennia, with incidents predicted to increase in the years ahead. Bushfires, cyclones, hailstorms and flooding are prevalent across the nation, with each event bringing destruction and damage bills. In the last two decades, the 10 costliest natural disasters have amounted to losses totalling $15.61 billion, according to Moody’s.
With a marked increase in the frequency and severity of natural disasters, the events have become increasingly damaging and the losses higher. As a result, insurers are exploring ways to respond to the heightened risks of natural disasters.
Historically insurance has been built around protecting policyholders from loss, now the focus is moving towards preventing loss in the first place.
While the Building Stronger Homes Roundtable is bringing together insights, data and experience from builders, insurers, academics and government to improve the resilience and insurability of Australian homes, the insurance industry is also embracing technology.
Insurers have long used mapping to identify disaster-prone areas (fire, floods, cyclones), they are now looking at advanced catastrophe forecasting and monitoring, including using drones and advanced sensors to obtain more detailed information and aid risk assessment.
Artificial intelligence (AI) and visualisation tools are being used to develop easy to understand exposure and coverage maps to help policyholders select the appropriate coverage.
More advanced modelling, including catastrophe (CAT) modelling, which uses computer-assisted calculations to estimate the losses that could be sustained due to a catastrophic event, is enabling insurers to analyse the risk exposure and helping policyholders understand their own risk. Better predictive modelling means insurers can offer improved guidance on coverage based on a better understanding of risk for potential catastrophes, as well as the risk from an actual catastrophe.
When it comes to many weather-related catastrophes in high-risk areas, some insurers are looking at mobile apps to provide information such as preparedness guides, tips and tools to augment government and media notices. Recently, insurers have introduced risk tracking tools. For example, there is a flood risk tracking tool that assesses the likelihood of a specific address flooding, showing the exposure hazard at the premises from a coastal or river flood. Another provides real-time, area- and property-specific flood forecasts, maps, and analysis to improve all phases of emergency management: before, during, and after flooding. Using hourly updates of weather, coastal, and river system data provides real-time forecasts and accurate flood-impact reporting at a street view level, enabling insurers to assess the exact, individual impact of a flood on each property they insure. Insurers are also developing interactive web platforms that offer data-driven analytics to support strategic risk prevention planning.
Internet of Things (IoT) capabilities are being leveraged to help mitigate risks for certain insurance lines. For example, using drones to conduct property assessments or sending out imminent event warnings to car insurance policyholders to prepare by identifying vehicle location and sending reminders to move vehicles under cover before major storms.
Tech is also being tapped to improve processes post-disaster. Drones are frequently deployed to assess damage quickly, especially in areas where loss adjusters have difficulty gaining access.
Insurers are also using robotic process automation to support faster claim processing and free up employees for more complex customer service. Drone assessment data is being integrated into the claims process too. By combining drone damage assessment with improved AI techniques, much of the assessment can be automated. Where drone risk assessment was also undertaken, the process can be even more automated by enabling the risk assessment data to be compared with the damage assessment data.
Ultimately, by tapping the tech, insurers will be able to better predict and price extreme weather risks and streamline the claims process.