The view from above: space data as an enabler for the insurance industry
According to the Insurance Council of Australia, late last year bushfires cost almost $2B and other natural disasters such as hail, cyclones and floods cost an additional $1B to the insurance industry. With rising costs from the damage caused by natural disasters, the Australian insurance industry faces a pressing need to improve the way it conducts business.
Mining new and existing data is the cornerstone of innovation in insurance. Organisations that do not effectively manage and exploit their data assets risk losing market share, reduced customer satisfaction and being left behind by their competitors. Many Australian insurers recognise the need for innovation and are implementing comprehensive strategies to better use their existing data. Now it is time to start considering additional, currently unutilised data.
A new data asset sourced from satellites.
A recent KPMG study, highlighted data from drones, satellites and IoT sensors could help transform risk identification, loss mitigation, damage assessment and improved safety.
Earth observation satellites collect data in various wavelengths (for example, microwave for moisture detection, infrared for heat detection, optical for images of the surface and even radio for wireless signal detection). The spatial resolution (well under 1 metre) and temporal resolution (several times per day) is constantly increasing with improving technology and more satellites providing data that enable more use cases.
Launching satellites is now more affordable thanks to the CubeSats produced by a growing body of satellite operators. As a result, insurance companies can simply acquire data from these operators as well as leverage aggregator companies who combine datasets across space and ground infrastructure.
For example, Swiss Re uses CatNet, a software overlaying satellite images of severe weather onto Google Maps, to zoom in and assess the extent of a natural disaster soon after it occurs. Satellite imagery can help insurers (and re-insurers) prevent claim inflation, confirm the date repairs are completed and forecast the volume of anticipated claims. Organisations such as McKenzie Intelligence Services and Lloyd’s use satellite images to analyse the impact and damage prior to physical inspection in order to reduce the time spent by adjusters in disaster-affected areas.
Space data: an opportunity to change underwriting and risk pooling.
High-resolution aerial imagery and integrated geospatial tools can assist in underwriting insurance claims. Integrating computer vision with geospatial imagery helps detect whether any property modifications were made that would increase risk thus reducing the need for time-consuming and costly physical inspections. This data will enable more personalised risk pooling and pricing.
Global climate change combined with an increasing number of natural disasters, calls for an industry-wide initiative to utilise space data assets to address the growing pressure on profits. Last month the Frontier Development Lab in Australia assembled a team of data scientists and researchers to build accurate maps of fires from the moment they ignite using data (including satellite imagery) to better mitigate fire-related risks.
Insurance organisations can collaborate with research institutions who have already developed a deep understanding of the natural phenomena causing material damage. Combining the analytical capabilities of research institutions with the access to high-resolution satellite data and computing power of insurers could lead to further advancement of commercial-grade solutions.
Stanford researchers recently used the data from the European Space Agency’s Sentinel satellite, capable of detecting microwave radiation, to measure the moisture content of the scrublands, the main fuel source in wildfires. Their models can forecast upcoming fires.
To be successful, these collaborations will require business integration to change decades of organisational culture. Specifically bringing together deep technology expertise with sector understanding is critical in exploring this new frontier.