Data and analytics are transforming all facets of business from retail to banking and government.
Key insights provided by innovative data can go a long way towards improving efficiencies and processes. One area that holds significant value is weather data.
While it’s universally acknowledged that one can’t predict the weather, extreme weather events will always occur and certain areas of the country are more susceptible to them.
For the insurance claims industry, this data is especially critical to verify claims following an extreme weather event. According to Aite Group, 79% of insurers contend that data and analytics will have a significant impact on meeting the needs of property and casualty customers.
There are a number of ways that insurers can use innovative data capture approaches to enhance insurance claims.
Drones allow insurers to see rooftop damage without endangering their adjusters. (Photo: Shutterstock)
Drone site assessment
While we are in the early stages of drone usage for property damage assessments, there is growing interest from P&C insurance providers seeking ways for adjusters to complete assessments more quickly and accurately.
Drones can safely and quickly reach damaged areas and structures that may prove inaccessible and unsafe for adjusters to manually inspect — either because the site itself is unstable or because weather challenges remain. When insurance companies do not have to wait days or even weeks to access a site in order to assess a claim, claims following severe weather can be reviewed and processed in a timelier manner. Ultimately, the data afforded from drone-based assessments enables insurers to conduct claims handling more efficiently and safely.
Pairing weather data with drone services to validate claims provides an added layer of validity to a claims decision as the drone can provide accurate imagery of a site and any associated damages.
These are just two of the reasons why PwC Global pegged the emerging global market for business services using unmanned aircraft at more than $127 billion with the insurance industry alone accounting for $6.8 billion.
Related: Who’s allowed to shoot at drones?
Damage claims due to lightning strikes continue to rise. (Photo: Shutterstock)
The use of weather big data and data analytics is well past the early adopter phase. Two-thirds of U.S. property & casualty insurers use predictive models for underwriting and risk selection, up 10 percentage points from the prior year according to the Willis Towers Watson Predictive Modeling Survey. Insurers surveyed indicated that over the next two years big data will assist them with pricing, underwriting and risk selection, better management decisions, as well as loss control and claims management.
While data sources and tools vary, advanced weather and lightning data is proving among the most valuable for P&C insurers. Over the past few years, lightning analysis technology has significantly advanced to the point where lightning data can now be used in a predictive nature. Anticipating lightning activity helps businesses in weather-sensitive industries bolster operations and minimize risk while also improving citizen safety.
In 2016, more than $825 million in lightning claims was paid out to more than 100,000 policyholders, with total insured losses due to lightning rising by 4.5% from 2015 to 2016. For professionals in the claims and risk management industries, lightning data can be analyzed at a highly granular level and in real-time — which is essential for pinpointing exactly where, when, and how often lightning strikes occur. Developing an accurate, historical illustration of lightning activity based on actual storm severity enables insurers to accurately and quickly dispute or verify storm damage claims.
Advances in ground-based lightning sensors have spurred these advancements. Such sensors can detect both cloud-to-ground lightning as well as in-cloud lightning, a proven measure of determining the severity of a storm and thus the probability for large hail, downburst winds, or tornadoes. Real-time insight into thunderstorm development can pinpoint the location, coverage, and intensity of such storms. Such data is crucial for insurers investigating the validity of a claim due to severe storm damage.
New technology can pinpoint the actual areas affected by hail. (Photo: P.Harman/ propertycasualty360.com)
Improvements in hail data have also enhanced claims validation. Previously, insurance companies had to investigate claims following a hailstorm through site visits using basic tools such as ladders and tape measures. But now, detailed weather data made available through satellite and ground-based lightning data enables companies to precisely and accurately investigate and track storms. Insurance companies can identify and address the most pressing damage claims based on storm history, and more easily determine which cases merit additional investigation.
By first addressing claims through weather data coupled with aerial shots of an impacted location, an insurance company can obtain a better understanding of each hail damage case before sending out adjusters to visit a location in person, thus saving time and resources. And the predictive nature of weather analytics allows insurance companies to plan in advance of major storms and better prepare for severe weather activity such as hailstorms.
Severe weather events are always going to happen, and one single event can wreak significant damage. For example, a severe storm outbreak that impacted central sections of the United States from March 6-10, 2017 cost public and private insurance companies $1.2 billion in payouts. Utilizing emerging products such as drones and advanced weather data is imperative for insurance companies looking to take advantage of the latest technologies to improve both internal efficiencies and customer operations.
Mark Hoekzema is chief meteorologist and director of meteorological operations for Earth Networks. Contact him at email@example.com.