How satellite technology is transforming the re/insurance industry’s response to flood


How satellite technology is transforming the re/insurance industry’s response to flood

With its own constellation of satellites poised to give a rapid assessment of flood damage, ICEYE is set to transform the way the re/insurance industry responds to cat events. Ahead of his participation in Claims Innovation USA, Charles Blanchet, ICEYE’s vice president of solutions, explained how it works.

A perennial challenge facing the re/insurance industry is how to assess the scope and damage of cat events such as hurricanes and floods in a timely and accurate manner. While insureds are often in urgent need of assistance, damage assessment can take weeks—which, in addition to being a problem for policyholders, causes financial uncertainty for insurers.

For ICEYE, the solution is in the sky. A young company focused on finding new and novel uses for the data gathered from its growing constellation of satellites, it has selected flood as a primary area of focus after discussions with the insurance industry revealed huge possibilities in this area.

One of the key benefits of using satellites for damage assessment is the speed with which they can respond. An additional benefit that comes with ICEYE’s synthetic aperture radar (SAR) satellites is that they can operate at night and through clouds.

“We can send our satellites somewhere fast,” says Charles Blanchet, vice president of solutions for ICEYE.

“Floods are spontaneous—they happen in a very short amount of time and there is usually cloud cover. We chose to focus on flood first not only because it’s the biggest peril in insurance, but also because of its perfect alignment with our strengths.”

The aim is to combine the data from ICEYE’s satellites with data from other sources in order to gain a comprehensive understanding of the damage. Weather data, river gauges, elevation data and optical imagery all have their part to play in producing the final spreadsheets that are provided to the insurance industry.

“We democratise the data, taking it from microwave technology on to spreadsheets that the insurance industry is able to use,” says Blanchet.

“What’s unique about us is that we control the entire value chain from manufacturing the satellites to producing that spreadsheet—and that is what is making it possible for us to tackle flood,” he explains.

“There are hundreds of space analytics companies out there trying to do the same, but they are not going to be successful because they don’t control the source of the data. We are bringing the insurance industry a satellite constellation that serves their specific needs—it’s a transformative capability for the industry.”

Another key point is that this solution is affordable, says Blanchet. ICEYE found a way to establish a satellite constellation for 10 percent of the projected cost and is able to pass on these savings to its clients. Additional savings come from the fact that the data provided by ICEYE cuts the cost of assessing claims.

“Insurers want to pay people and get them back on their feet quickly but 10 to 20 percent of money paid out for flood is damage assessment,” says Blanchet.

“This is contributing to the gap between those who can afford insurance and those who can’t. If we can make it possible to bring that cost down to 2 to 5 percent of the money paid out for a flood, margins go up and people who couldn’t buy insurance before can now get it—and people are paid faster.”

Bridging the gap

The longer-term vision is to work with governments on sharing data in a way that is beneficial for both the governments and the insurers.

“The aim is to bridge insurance and government and create a place for them to share ideas and innovation—that’s when you start saving lives,” says Blanchet.

“You start that conversation through data—the government has probably a third of the data needed to see this vision forward. An example is high quality digital elevation models: we and the insurance industry need these.

“When a disaster happens, the government and insurance industry spring into action—and if we can create a place through data for them to collaborate, that’s when really amazing things are going to happen.

“When we talk to our insurance clients about this, they are very excited about the concept.”

This is not a big step for ICEYE as it is already working with governments, selling them data for national security and other uses.

“We have the technology and we have the talent who know how to orchestrate and work with these complex organisations,” says Blanchet.

When it comes to the re/insurance industry, ICEYE is currently working with Tokio Marine and a large European reinsurer to develop its offering.

“We are very lucky in that we have an insurer and a reinsurer who share our vision of using this technology in their industry,” says Blanchet.

“They are using the technology today, mobilising field resources, and assessing the extent of damage—the vision is to automate claims. We need to get the accuracy to a level where our data is fed to the insurer and they can pay out promptly.”

He added that ICEYE’s clients are already appreciating the speed with which they can obtain crucial data about cat events.

“With Hurricane Laura we were able to tell our clients the extent of the disaster nine hours after it happened, as opposed to the usual three weeks to a month,” he says.

“I want to show people what’s possible,” says Blanchet. “We can change the industry and improve re/insurers’ relationships with their customers.

“We can drive up profit margins, simplify business operations and make it possible to offer insurance to people who didn’t have insurance before. Plus, we can simplify business operations.”

Looking to the future, ICEYE is eyeing more than just floods: it intends to work with the re/insurance industry to address other perils.

“Once we get the flood up and running, come February or March 2021, we will be thinking about the next peril,” Blanchet says.

“We are currently discussing earthquake, wildfire, wind damage and road availability—and our clients are going to have a big input into deciding what we take forwards first.”

Blanchet is one of the speakers at Claims Innovation USA, a virtual event covering innovation in the claims world and taking place between October 26 and 30. Full details can be found here:

ICEYE at Claims Innovation USA

Charles Blanchet, ICEYE’s vice president of solutions, explains why the company is taking part in Claims Innovation USA and what he will discuss.

Why did ICEYE want to be involved in this event?
We have been very focused on our two initial clients, Tokio Marine and a large European reinsurer. We saw the event as an opportunity to engage with a broader representation of the industry.

What solutions does ICEYE offer the insurance industry?
Observed (not modelled) flood depth and extent data within 24 hours.

How is your offering evolving? What partnerships and use cases do you have?
This year, the ICEYE Flood Team grew from zero to 22 members. Next year, the team will grow by another 20. We are acquiring lots of global data to support the targeting of floods and our depth analysis. In 2021, we aspire to capture all the floods that the insurance industry is interested in.

How might your solutions revolutionise the future of how flood risk is handled?
We will decrease the time, cost, complexity, ambiguity, and variability seen in today’s claims process. We aim to help the insurance industry understand floods globally so we can close the protection gap. Our solutions will enable parametric offerings.

What other areas of the industry might your technology be applied to?
We are currently exploring wildfire, wind, and earthquake damage assessment.

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