Flood deal spotlights the need for a proactive approach

Reinsurance giant Swiss Re’s announcement that it has allied with the world’s largest commercial synthetic-aperture radar (SAR) satellite operator and flood monitoring provider has furthered the growing trend for insurers to use technology to tackle the rising threat of flooding.

The deal between Swiss Re and ICEYE will “seek to advance flood risk management, assist disaster response and speed up claims payments”.

Critically, the reinsurer said it will enable early warning systems and near real-time flood monitoring built on ICEYE’s radar satellite imaging, which will enhance the ability to track and react to flooding.

“Flooding has been consistently one of the most recurrent and costly natural catastrophes our world suffers,” added Swiss Re.

“Modelling floods has proven particularly challenging in locations with fine scale changes in elevation, complex terrains and man-made structures as is typical for dense urban centres. The partnership aims to address exactly these areas where most of flood modelling today falls short, thereby addressing insurers’ pain points.”

Ruta Mikiskaite, head of property and casualty client solutions at Swiss Re, told Insurance Times: “The partnership will allow Swiss Re and our insurers to have the ability to understand the scope and scale of a flooding event far more quickly than at present.

“We will have the ability to have a real understanding of the scale of the flooding within 24 hours and the data in the depth of the flooding within 48 hours.

“It will enable insurers to better deploy their support systems given the granular level of data they will be able to access. It really is a case of the benefits that the data can deliver for insurers and their policyholders.”

Stephen Way, senior solutions manager for UK and Ireland at Swiss Re, added that the system will enable insurers to be far more proactive in terms of how they deal with floods, their exposure and the aftermath.

“At present, insurers tend to have to rely on customers filing claims notifications before they can react,” he said.

“This will change the approach to one where it will be a case of the insurers saying ‘we have X number of policyholders affected’ rather than ‘we have X number of claims notified’. We believe it [will] make a difference in the way we can approach the aftermath of a flood event.”

A data-led, proactive stance

The UK continues to wrestle with how best to tackle the rising threat of flooding, with technology viewed as the key to drive risk mitigation and speed up claims payments.

Jonathan Crook, chief executive of Balkerne, a software firm which provides a specialist property risk management platform for the insurance industry and corporate risk managers, said Swiss Re’s announcement reinforces the view that the industry needs to be more proactive on property risk management.

“The level of data that can be accessed within the UK to identify the risk of flooding on an individual property level is significant and constantly growing,” he explained.

“The industry needs to be more proactive and engage with the client to explain the nature of both enduring and dynamic risks specific to an individual property.

“When risks are better understood, then the opportunity exists to work with the client to ensure they have taken suitable steps to mitigate the risks as much as possible.”

However, Crook said the market needs to use digital platforms, such as Balkerne’s SmartResilience system, to go one step further.

“The key is to have the capability to provide adequate warning of any developing threat to a property,” he added.

“Flooding is a great example because if you can tell the insured that their premise has an enduring risk of flooding and also provide timely dynamic warnings of imminent danger, the insured can be provided with both the knowledge and the means to achieve the most effective flood mitigation measures possible.

“Ultimately that means a benefit of reducing financial costs of property damages, business interruptions, loss of customers and property rectifications. The insurer also benefits, as naturally they do not want to be paying claims, whilst the comprehensive digitised engagement with the insured reaps rewards for customer loyalty and subsequently profitability.”

Taking positive steps

The move towards the introduction of flood performance certificates (FPC) across the UK continues to gather pace - the chief executive of Flood Re supports this approach as it would enable home buyers and businesses to understand the likelihood of their property falling victim to flood water.

“With increasing risks of flooding due to climate change, FPCs can provide peace of mind for families about their new home and act as a catalyst to encourage them to make changes to the property so it is more resilient to flooding,” said Andy Bord. “They are a real positive step towards building a more resilient housing stock in the UK.

“Nobody can stop the rain from falling, but we can all be better prepared for when it arrives.

“Building a more resilient and flood prepared nation is a goal we can realise through working together and I would urge the UK government to look seriously at how FPCs can help them achieve this ambition.”