Insurers use data to help customers during storms and floods

Insurers are using rapidly evolving data tools to predict and possibly prevent storm-related losses, an effort they hope will yield benefits during this year’s hurricane season.

The past six years have seen above-average hurricane activity in the Atlantic, a streak of bad luck for communities in the way. This year’s season, normally defined as June to November, is expected to be another busy one.

Though scientists are divided on how climate change might affect hurricane numbers, warming is expected to increase storm surges and rainfall, leading to more flooding.

Insurers and data providers to this sector have invested in data analysts and climate scientists to develop and refine advanced models that can help spot potential damage long before bad weather hits.

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A street could be flooded while an adjacent building remains dry, so small inaccuracies in old databases can give a misleading impression of a particular site’s vulnerability to flooding, said Dr. Kelly Hereid, a climate scientist who heads the Department of Disaster Research and Development in Boston. based in Liberty Mutual Insurance Co.

A Liberty tool uses a combination of aerial imagery and machine learning to define building footprints and provide a more accurate picture of risks, which can then be shared with clients to strengthen their defenses.

“What was available 10 years ago has changed really dramatically compared to what’s available today,” said Dr. hereid. “There is a huge ecosystem of improved flood analysis tools.”

Understanding the risk and taking proactive measures can make a world of difference for organizations. After Hurricane Harvey in 2017, Dr. Hereid, the staff at the MD Anderson Cancer Center in Houston were able to walk and kayak through flooded streets to a working facility. The cancer hospital had installed sluice gates for this after previous floods enabled continued operation although the area was flooded with water.

It is widely believed that warming skies and oceans as a result of climate change are making things worse. Munich-based insurer Allianz SE found that hurricane rains are a major factor in Ida’s destructive and, in some cases, deadly effects probably 11% more intense than before the industrial age.

Last year’s season, Hurricane Ida swept through the Caribbean into Louisiana before dumping massive amounts of rain in scattered locations. which causes an estimated 36 billion US dollars in insured losses, Allianz said in a recent report.

Better modeling has also helped the insurance industry remain solvent despite suffering severe weather-related losses in recent years, said Mark Anquillare, president of Verisk Analytics inc,

a risk analysis company that provides large insurers with advanced modeling.

Verisk databases, which store information about commercial real estate, for example, can distinguish between 14 types of restaurants – from a pub to a place with white tablecloths. Such granular data can provide insights into the risks an insurance company faces in a particular area, Mr Anquillare said.

“All this data and all this analysis, which is constantly improving, has made the industry better,” Mr. Anquillare said.

Cole Mayer, Senior Structurer at Swiss Re,

a Zurich-based insurance and reinsurance provider, said more advanced modeling has helped with some of the company’s more complicated products. These include parametrics, an increasingly popular type of disaster insurance that acts as a kind of bet on future weather.

For example, a parametric policy pays off quickly if the wind speed at a certain location exceeds an agreed speed, without the company having to keep time-consuming proof of its losses.

“This data is getting better and better and more detailed every year,” Mr. Mayer said.

The insurers said their client companies have made changes to act quickly if their regions are hit by hurricanes or floods. One Allianz customer, for example, is providing temporary on-site housing for key workers whose homes could be damaged by flooding, said Thomas Varney, head of risk advisory for North America at Allianz.

Another large customer has placed generators in various locations to provide backup in case a storm disrupts power, Mr Varney said.

In this warmer, wetter world, insurers have sought to work more with customers to stay ahead of their climate risks, a practice that has the added benefit of reducing the size of insurers’ ultimate payouts, said Dr. Hereid by Liberty. Customers are thinking more about the big picture and how climate change may affect their bottom line, she said.

“We as a society have a lot to do to recognize that the climate of the past will not be the climate of the future,” said Dr. hereid. “We have to adapt today.”

write to Richard Vanderford at

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