Climate Risk is InsTech’s monthly newsletter dedicated to climate-related insurance news – you can sign up for free here.
The rise of wildfire as a significant climate risk
In early August 2023, a series of wildfires broke out in Hawaii, killing over 100 people. Bloomberg Intelligence estimates that the insurance industry loss from the wildfires will fall between $2.5 – $4.5 billion. Canada is also having its worst wildfire season on record. At least 1,000 fires are currently burning across the country.
Wildfire has traditionally been thought of as a “secondary peril”: a peril that generates small to mid-sized losses and tends to be less widely modelled. However, it is probably due a promotion to “primary peril” as it is now a significant loss driver for the industry. Some of the most expensive years for economic and insured losses from wildfires have occurred since 2016.
According to Swiss Re, wildfires cost the insurance industry $70 billion (adjusted to USD 2023) between 2013 and 2022.
Technology and data companies are starting to support more of the needs of the risk management and insurance communities. This includes wildfire models for underwriting, early warning systems to protect people and property, wildfire vulnerability analytics and solutions for post-event response.
We are producing a report later this year around wildfire, including how the peril is changing over time, what causes a property to be at risk and recent advancements in the technology and data used to underwrite wildfire. If you are interested in learning more, or have a solution relevant to the industry, get in touch via [email protected].
Flooding is the world’s most pervasive natural hazard – but modelling it is not easy. In this LiveChat, InsTech’s Ali Smedley will be joined by Cory Isaacson, CEO and Co-founder at MGA reThought Insurance on September 21st at 2pm BST. We will explore the benefits of multiple views of risk, the different techniques for combining models and reThought Insurance’s approach to underwriting. You can register here.
We caught up with CGG’s Environmental Science team to discuss how the company can help insurers understand current and future climate risk, carbon sequestration projects and climate change uncertainties.
We spoke to Greg Oslan, CEO at Arturo, about how the company uses machine learning to identify property attributes, its new sustainability module and how Arturo approaches new data and technology partnerships.
Insurance has an important role to play in supporting the voluntary carbon market. Our latest report investigates the opportunities and risks faced by carbon offsetting projects and the new insurance products being developed to cover them.
Addresscloud is launching its new platform which provides a real-time view of exposure, used at the point of underwriting to avoid expensive accumulation issues before they happen. InsTech is delighted to support Addresscloud with its launch and would like to offer insurers, brokers and MGAs the chance to see the first public demonstration at our breakfast workshop on 12th September. You can register interest here.
In the news…
McKenzie Intelligence Services (MIS), a provider of geospatial intelligence, is piloting CAT360 to reveal images of damaged properties at street-level view. This data will complement the satellite and aerial imagery already on the company’s Global Events Observer (GEO) platform. To learn more about how MIS integrates these various data sources, you can listen to InsTech podcast episode 219.
Overstone provides a platform for financial institutions, wealth managers, insurers and auction houses to manage the risk to art collections. The new partnership will see Previsico provide Overstone with live flood alerts, so the company can warn clients of potential flood risks to mitigate damage to their art collections. You can learn more about Overstone in our recent interview with Founder and CEO Harco van den Oever.
The US Flood Map uses the latest terrain and climate information to present a view of flood risk for all major flood perils. It covers every river, stream and coastline in the US at a 10m resolution. The US Flood Map also shows the impact of climate change on flood risk under all emissions scenarios, temperature changes and time horizons up to the year 2100.
Recent analysis by catastrophe modeller KatRisk suggests that Hurricane Hilary will bring significant flooding to parts of Southern California and Nevada, often exceeding the mean annual precipitation in some areas. To learn more, you can view KatRisk’s presentation here.
The partnership will make Tensorflight’s artificial intelligence imaging technology available through the EigenPrism catastrophe risk management platform. With this new capability, EigenPrism users will be able to augment their property exposure data. To learn more about the partnership, register for EigenRisk and Tensorflight’s webinar on 29th August.
The government has historically been the provider of insurance for residential flood in the US, but this is changing fast. The government-backed National Flood Insurance Program’s (NFIP) new pricing methodology now more accurately reflects true flood risk – resulting in higher rates for some policyholders. Insurers are likely to recognise this market opportunity. According to data provider Triple-I, the US flood insurance market has grown 24% between 2016 and 2022. In 2016, only 13% of total flood coverage was written by 18 insurers – by December 2022, this had grown to 77 insurers writing 32% of the coverage.
The collaboration will see Gamma LI providing its address-level risk assessment and reporting solution, Perilfinder, to specialist MGA MX Underwriting Europe. This will enable MX Underwriting to assess commercial property risk across perils including flood and windstorm at the point of quote.
Nearmap, a location intelligence and aerial imagery solutions provider, has added two new products to its post-catastrophe response solution. Together, the products provide aerial imagery and AI-derived damage assessment data to support all stages of the post-event property claims workflow.
Reask is providing its global tropical cyclone risk analytics through the Cytora platform via its API. This will allow insurers to access risk assessments and hazard data at the point of underwriting. You can hear from Richard Hartley, Cytora’s Co-founder and CEO, in InsTech podcast episode 227.
Founded in 2020, the Demex Group offers solutions for modelling, assessing and transferring climate-related risks that fall below the level of catastrophe losses and which are traditionally retained by insurance companies. This latest investment will help the company to deliver new weather risk transfer capabilities to insurance companies. To learn more about Demex, you can listen to InsTech podcast episode 234.
According to the National Financial Regulatory Administration, China’s insurance companies have received 260,600 claims in the 16 regions affected by floods and geological disasters triggered by recent extreme rainfall. Estimated losses are $1.37 billion.
Themes for Cohort 11 of the Lloyd’s Lab include new products, data and models, climate risk and sustainability. Three InsTech members focused on property and hazard data have been shortlisted for Pitch Day on 31st August.
JBA is hosting a webinar on flooding in South Africa and how the insurance industry is taking action to manage and mitigate flood risk. You can register to attend the webinar here.