Meteorologists and insurers forge a new partnership
Insurers are turning to meteorologists to gain a deeper understanding of weather’s impact on customers and their property.
U.S. severe convective storms have grown to represent a 10-billion-dollar annual peril for the insurance industry, and their accurate prediction remains a challenging task. In addition, we now live in a world where these extremes are changing in frequency and location. For example, recent research has shown an upward trend for tornadoes in the Mid-South, and a decreasing trend in the notorious “Tornado Alley” of the Great Plains. Changes in the climate, along with changes in the human-built environment, are drastically shifting the landscape of risk associated with natural hazards.
Weather impact on property & casualty
Organizations and businesses are turning to meteorologists to gain a deeper understanding of our evolving world, and property and casualty insurance is no exception. Insurers like MetLife Auto & Home recognize the growing impact weather is having on its customers and their property. From large hail damaging cars and roofs to hurricane winds and water devastating homes, as insurers, we see first-hand the physical and emotional toll weather has on our customers.
Preparing for the storm
To prepare for inevitable weather events, insurance carriers are engaging atmospheric science experts to find innovative ways to get ahead of weather incidents. Last summer, MetLife Auto & Home approached Northern Illinois University (NIU) to learn more about emerging weather forecasting methodologies. What if, for example, meteorologists could give accurate forecasts for tornadoes and hailstorms two or even three weeks in advance? In addition to the large annual economic losses, particularly bad years can lead to casualties in the thousands.
Long-range forecasts for these events could lead to better mitigation and preparedness strategies for emergency managers. Insurance companies could anticipate periods of significant potential losses. Planners and administrators could plan and rehearse procedures for future active periods of severe weather. There are numerous advantages to businesses and homeowners who are more “weather aware.
Since teaming up with Northern Illinois University and assistant professor, Dr. Victor Gensini, MetLife Auto & Home has launched a proprietary weather portal hosted by NIU. The website provides leaders and associates with the ability to model severe weather projections over our policies in force to gauge the potential needs and demands of our customers from 24 to 72 hours in advance. Also, the portal provides live radar and recent hail events, including severity with updates posted every 30 minutes. We want to be there when our customers need us the most, and our work with Northern Illinois University supports our critical mission.
While the initial focus of our partnership with NIU has been catastrophe response and preparedness, our overall strategy is more comprehensive. John Meyer, from MetLife Auto & Home’s product operations team, played an integral role in taking a holistic approach to the relationship with the university. Our vision is to embed weather data and analytics into the design of new product offerings, pricing and growth strategy. We believe there is additional opportunity to enhance fraud awareness leveraging the weather-related data in the triage process. A priority for our organization is the development of a notification and weather information solution for our customers. We are committed to promoting preparedness, enhancing real-time warnings on severe weather, and the ultimate safety of their families.
Looking ahead
Compared to 70 years ago, the science of meteorology has made significant advances. Today, day-seven forecasts are as reliable as day-three predictions were back in 1980. Over the past five years, researchers have made great strides in anticipating severe weather weeks in advance. Looking ahead, there is little doubt that weather disasters will get more frequent in the future (due to both changes in climate and changes in human exposure). Insurance companies must adapt to these changes and seek expertise from applied meteorologists and climatologists to remain competitive and better serve our customers.
Tim Bowen is assistant vice president, MetLife auto & home. Contact him at tbowen@metlife.com.
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