Boost climate expertise in your organization using dynamic weather data

08-06-2022

It would be an understatement to say that climate change is a challenge for the insurance industry. Not only are today’s weather-related claims increasing in volume, intensity, and cost, the acceleration of climate change itself means it is a constantly shifting landscape. Finding the right data to inform strategy is not a given, even in a sector with analytics expertise.

But just as governments and climate-focused institutions around the world are working to slow the rate of global warming (with, it must be said, limited success so far), insurers must also find ways to protect themselves and their clients from any avoidable risk. For some, this may mean reviewing how they ingest data and process it to inform their end-to-end process, from onboarding to claims management.
This is not just an exercise in managing risk exposure; it’s a competitive requirement. Disruptors with access to artificial intelligence (AI) and machine learning (ML) expertise are already forming, ready to take on legacy operators. The time to act is now.

To find out how best to manage new weather information and use it effectively across the business, Intelligent Insurer talked to Daniel Tatro, solution architect, insurance practice at Precisely. He reveals the challenges insurers have faced to date and explores the steps carriers and their clients should take to understand their weather risk. This article is published ahead of the Intelligent Insurer webinar titled “Find out how to boost climate expertise in your organization and inject dynamic weather data into your risk assessment framework” to be held on June 9, 2022.

Why is it so important that we start looking for new weather data sources now?
Solutions and data become available over time, including the availability of the weather data needed to assess climate change. If those capabilities were available five or 10 years ago, I’m sure insurers would have already been making decisions based on that data.
With 50 percent of all claims somehow weather-related, finding new weather data sources is a logical extension of insurers’ efforts so far. I don’t think any organization needs to be convinced of climate and weather's role in their business.

Do carriers have the skills internally to make the most of this information?
Some of the most impressive data science initiatives or data-driven organizations now exist in the insurance industry. There are insurance companies being created today that are 100 percent data-driven and we don’t even know their names yet. They understand how to evaluate data. They understand how to model and learn from data, training AI bots based on that information.
Some larger insurance companies have even got to the extent of hiring meteorologists to translate what that data means. Essentially, you need both sets of talents in the organization—meteorology and data—to collaborate to consider the data in the right context.

“The same data modeling used in product creation or pricing is also there from a weather modeling perspective.” Daniel Tatro, Precisely

Can this be achieved in organizations that are still significantly siloed?
Every organization is different, but the creation of data analytics departments, and chief information or data officers in businesses, sees them taking on the role of leveraging those data elements on behalf of the other silos or functions. The same data modeling used in product creation or pricing is also there from a weather modeling perspective as a touchpoint in the underwriting or quoting process.

Bringing in weather data to a sector that is often overwhelmed with data—how do insurers maintain focus?
Throughout this session, attendees will realize that there are some aspects of climate and weather information that are completely abstract, they’d need someone with a PhD to discern them. But there are other datasets that are very direct and deliberate, allowing claims executives to answer simple questions such as: ‘did a certain weather event happen on the day of a claim?’.
It can simply be a question of a look back to historical information if someone is coming to an underwriter with a new property to cover: has the property already been impacted by weather? Have similar properties in the same area been affected? How bad was the hailstorm? That information is simple but powerful.

In terms of climate change overall, however, there isn’t a lot of historical data—most of it is only two years old. We’re hearing that even though insurance companies have data, they don’t have all the data they need for modeling because it doesn’t exist. We will have experts on this panel who can walk us through how to accommodate this discrepancy and how the industry is actively working to make climate change data available to insurers.

What should attendees take away from this session?
There will be an educational element to this webinar where attendees can expect to learn about how climate change and weather events are going to impact the insurance industry in the future. Equally, it will demonstrate the solutions that will help them react.

 

Daniel Tatro, solution architect, insurance practice at Precisely, will speak at the Intelligent Insurer webinar “Find out how to boost climate expertise in your organization and inject dynamic weather data into your risk assessment framework” to be held on June 9, 2022.
Register for the event here

Precisely, Climate Change, Technology, AI, Machine Learning, Insurance, Reinsurance, Daniel Tatro, North America

Intelligent Insurer