Storm Season in the Home Stretch

As we enter the final month of the hurricane season, we can only hope we have gotten through the worst of things. While it seemed to many that catastrophes in the U.S. could have been worse, the financial analysis done by SNL Insurance tells us that the second quarter of 2011 was the second worst performance in industry loss ration since 2001, with a figure of 70.6 percent.

The second quarter problems were based largely on the damaging tornados that devastated the south and southwest this spring. The damage from Hurricane Irene happened in the third quarter, so we've got something else to look forward to.

The losses insurers are suffering once again brings to focus the need for carriers to invest in geographic information systems (GIS) technology and find more ways to use the information at their hands.

In a new report from Celent that looks at the location intelligence solutions on the market, senior vice president Catherine Stagg-Macey reports that when faced with large-scale responses to disasters such as Irene in the U.S. and summer floods in the U.K., it is imperative that insurers be aware of their risk exposure in affected areas, both from a customer-service perspective and as a good management tool.

With a half a year ahead before the 2012 storm season, it would seem like a good time to consider your company's options. While Stagg-Macey isn't hopeful that carriers will suddenly discover the money in their budgets to look closely at new GIS systems, she makes a point that carriers and solution providers need to focus on more ways for insurers to use their GIS tools.

Underwriting will always be the area where insurers are looking to solve problems because location data allows for better pricing of risks, supports an understanding of risk accumulation, and presents new business opportunities that previously would have been rejected.

But GIS technology also can offer help for claims, customer service, risk management, and even marketing to the wise insurer.

As technology makes it easier for carriers to expand into new markets without the huge investment that previous expansions carried with them, carriers need to study these markets with a precision that only GIS tools can provide, particularly when the difference between success and failure can sometimes come down to one bad storm.

Insurance has always been about examining risk, but the gambling days of yore are behind us. It's a tools-based world today, not intuition-based, and you better have the right tools on hand.