Satellite Data Provides a Different Perspective on Risk
Abbey Compton and I examine how satellite technology is providing more precise, in-depth data than ever before in the most recent Insurance News Analysis. Cities are physically warming as a result of new data on excessive land surface temperatures in urban areas.
The way insurers underwrite property and casualty risk may change as a result of this comprehensive, city-specific data. More significantly, it makes way for creative public-private collaborations that try to stop heat-related diseases and fatalities. Imagine insurance companies assisting in preventing heat waves rather than only responding to claims following one.
Additionally, there may be overlap with wildfire risk reduction. We can take preventive measures to prevent disasters, both financial and human, if we can identify which communities are becoming tinderboxes during excessive heat.
Climate Dedications: A Changing Environment
We also closely examined the insurance industry’s changing climate initiatives.
Sustainability projects have not been gaining traction steadily. Due to the departure of a number of significant carriers in recent months, the Net-Zero Insurance Alliance has loosened its formerly stringent emissions-reduction standards.
On the other side of the Atlantic, the Association of British Insurers is encouraging its members to step up their efforts on a number of problems, including biodiversity conservation and carbon emissions. It serves as a reminder that, despite the fact that fossil fuels are frequently at the heart of the climate discussion, the actual environmental risk picture is much more complex, and insurers are anticipated to get more involved.
Social Unrest’s Unpredictable Sparks
An additional risk factor that is becoming more unpredictable? Unrest in society.
Even though France had long anticipated property damage during Bastille Day festivities, the early June protests exploded with startling speed and violence, shocking both companies and carriers.
There have been serious financial repercussions. According to current estimates, claims of between €650 million and €1 billion will be borne by insurance. These incidents highlight a rising problem for underwriters: social and political unrest may be just as destructive as natural disasters, and they can be just as hard to predict.
A Future Predicated on Prescience
All of these issues have one thing in common: standard risk models by themselves are no longer sufficient.
Insurers will require sharper data, greater collaborations, and a more adaptable approach to dealing with issues like wildfires caused by record temperatures or flashpoints of unrest in city streets.
The sector has a potential to not only survive the heat but also take the lead in cooling things down if it has the correct resources and is prepared to change.
