Better imagery helps insurers handle rapidly changing claims

Risk profiles of insured properties evolve over time and it can be challenging for property and casualty insurers to update policies to keep pace with normal year-to-year changes. Climate change adds a substantial wrinkle to the equation by increasing the frequency and impact of natural disasters. Access to visual data will be critical for P&C underwriters and adjusters to help their customers recover quickly from disasters, as well as to mitigate and adapt to future changes that impact the claims environment.

The future viability of insurers will hinge upon how they handle the challenges posed by climate change and an evolving world. Challenges include:

• Rising sea levels threaten major coastal cities. Municipalities, such as Miami, are undertaking large-scale infrastructure projects just to remain livable. This means insurers need better and more current data about flood risk so they can develop models to help with loss prevention.
• Non-coastal areas are facing other adverse climate effects. Droughts have affected the far West, the Northeast, and the Chicago area while flood-inducing rains have done significant damage in Southern California, Eastern Kentucky, and Northern Texas. Barge traffic on the Mississippi has been impeded by low river levels. Some zip codes have become hard to insure, as droughts and lower soil moisture, combined with higher temperatures, have created areas that are newly prone to wildfires. And erratic weather patterns have led crop insurers to seek better data on soil health and moisture content.
• Populations are shifting rapidly. Some cities are shrinking while some are growing rapidly, meaning residential patterns are changing. More people are living full-time in what were once “vacation” sites, and thanks to new communications technologies, many people are now living and working in what had been remote locations. Consequently, insurers will find it harder to map and model urban areas without better data sources and more frequent updating.

All this is driving mounting losses: $480BN was incurred by U.S. P&C insurers in 2021, according to the National Association of Insurance Commissioners. To decrease this trend, there is an opportunity for carriers to take action on preventative measures to reduce asset risk. This can be achieved by getting the right imagery, with the right degree of resolution, on a timely basis. This imagery can help insurers respond more quickly and effectively to disasters, but it can also help them advise customers on how to keep small problems from becoming large ones. One example: spotting and replacing missing roof tiles before a weather event can head off many thousands of dollars in damage.

Using data for greater accuracy

With this kind of input, the feedback loop between claims and underwriting becomes stronger.  Underwriters have more recent and more accurate data upon which to base their decisions.  They can assess risk more accurately, set appropriate pricing, and ideally help customers reduce potential damages and claims altogether. And they can do this at scale, for portfolios of properties spanning not just urban areas but rural and remote areas as well.

This has major implications, not just for claims but for the entire customer relationship. With earth observation and analysis significantly reducing in-person inspections, claims can be assessed and paid quickly, increasing customer satisfaction and retention while reducing operating costs. And, with access to frequently refreshed images of the “before” as well as the “after” of an event, the opportunities for fraud in the wake of a weather-related event also decrease dramatically.

An increased focus on environmental, social, and governance issues, particularly their long-term impact on many aspects of insurance, is compelling carriers to consider how to operate in a more environmentally sustainable manner, and to do so whilst continuing to improve their competitiveness. Zero-emission autonomous robots called Swiftys, created and operated by Near Space Labs, are able to capture high-resolution, high-frequency imagery from the stratosphere to provide property and casualty insurers with the necessary imagery to better respond to the evolving underwriting and claims environments.

According to McKinsey, one of the biggest changes in claims over the next 10 years will be the shift away from claims handling to claims prevention and mitigation. Earth imaging will play an important role in this shift. High-quality geospatial data is already helping insurers assess the condition of the properties they cover and determine the extent of damage incurred as the result of events such as storms and wildfires.

Looking forward, we envision that insurers will increasingly devote resources to proactively reach out to policyholders with data-driven suggestions on ways to avoid loss; for example, customers may receive notifications to remove cars in locations that might be affected by floods. With a better understanding of risk, insurers can drive more competitive policies, get ahead of devastating losses and reduce claims, and focus on serving their customers to increase overall satisfaction and loyalty.

The next phase of evolution for claims will be the incorporation of better data — not only from innovative imaging but from other emerging sources  — into ever-more sophisticated analytical models that guide not only how properties should be underwritten but provide direction into where and how properties should be built. With this kind of data, carriers can help society respond to the challenges posed by climate change and ease the movement to a sustainable, ecologically friendly future.

Matthew Tucker is vice president of sales for Near Space Labs. Contact him at matthew.tucker@nearspacelabs.com.

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