Whatever the weather, Brokers can gain deeper intelligence on Property Risks

It may not be a surprise to learn that in 2023, Ireland experienced some of the wettest months recorded  since 1941i. We’ve not just had rain though, severe storms have taken their toll. Casting our minds back to Autumn 2023, some weather stations in County Cork recorded over 100 mm of rainfall in a 36-hour period during Storm Babet. In Midleton, one of the worst-hit communities, 250 homes were flooded. River Owennacurra, which flows through Midleton in Co Cork, Ireland, recorded a streamflow of 25.9 cubic meters per second on 18 October 2023, equating to a 1-in-135-year event for this locationii.

Now, with summer approaching, the risk of subsidence rears its head again, knowing that in 2022, Ireland had its hottest day since 1887iii and the highest temperature ever recorded in Dublin.  This all drums home the need for faster, more accurate and actionable data on environmental risks, at the point of quote for residential and commercial property insurance.  In fact, there is growing demand for this data from the broking community, MGAs and insurers.

It may seem a complex challenge but by utilising our geospatial data intelligence on floods, fires, subsidence, windstorms, and other local hazards, along with crime rates, the task of assessing the probability and cost of claims for a property as well as the risk exposure is made simple.  And most importantly, that knowledge can be gained in near real-time allowing decisions to be made that are not only fair for the customer but limit the insurance market’s exposure to a new risk such as a flood occurring.

Knowing exactly where subsidence risk is present at the point of quote is clearly essential. By using geospatial data intelligence insurance professionals can make a full, fast and accurate assessment of environmental risk at individual property level to offer the fairest and most precise price for that home.

Data on the average or expected weather conditions, together with soil type, the pattern of clay rich soils, the proximity of large trees and types of ground movement, enable a risk score to be created which can be used in insurance pricing, providing an indication of a property’s propensity to subsidence.

Clearly, perils risks need to be understood in the context of the risk of the property itself based on detail such as its age, construction, roof type, number of rooms and so on. Then there is the risk of the proposer or policyholder to consider.  This is why we make it easy to view each of these factors in tandem, from one source, to gain a 360 degree view of the risk. That means right first-time quotes and products that are appropriate for the customer’s needs. For example, if it becomes evident that a property is at flood or subsidence risk, then specific cover for that risk could be offered and customers could be offered tips on how to mitigate the risk to their property and possessions.  Early identification of subsidence could certainly help avoid the disruption and higher claims cost if left unchecked.

It is also possible to visualise geospatial data intelligence through tools such as LexisNexis® Map View. This gives greater clarity over the environmental and perils risks for a single address or a whole portfolio.  The advantages of this approach to risk assessment is that as well as facilitating more accurate pricing, it can support better resource planning for extreme weather events, and claims management.  It also gives insurance providers valuable insight on risk on cover to manage their capacity.

We have found that insurance providers who use this geospatial data visualisation tool typically see a 50% reduction in flood exposure and 8% improvement in new business targetingiv.  They can assess and filter both policy and perils data, ensuring the quotes or policies with the highest level of risk stand out.

Irish Insurance providers can also import files such as storm tracts or create new zones for the identification and analysis of on-cover policies.  Added to this, a range of additional capacity management tools help insurance providers target areas where they can sell more business in large cities and automatically identify where they have areas of high concentrations of Sums Insured.

We are seeing the impact of climate change and severe weather events on loss ratios in the property insurance market. This is increasing the need for a deeper understanding of location and property risks. By leveraging real-time data, brokers can ensure precise pricing, appropriate product selection, effective portfolio management, and the ability to take immediate actions to mitigate exposures.

i https://www.gov.ie/en/press-release/ea1f7-met-eireann-data-shows-2023-is-the-warmest-year-on-record-and-a-year-of-firsts-for-ireland/

ii   Source: Analysis conducted for LexisNexis Risk Solutions by JBA

iii  https://www.met.ie/sweltering-heat-forecast-from-15-19th-july-what-to-expect

iv  LexisNexis Risk Solutions Research