Flooding data could help cut insurers’ loss ratios says insurtech chief exec

Access to real-time flooding data could help cut insurers’ loss ratios by giving them a 48-hour window to take advance action and potentially reduce claims.

Real-time data can also help protect people and properties across the UK because it can predict the time and place of flash floods.

This is according to Jonathan Jackson, chief executive at insurtech Previsico, he said that if underwriters added policy conditions that required the use of flood warnings and a flood protection plan, it could be of benefit to them.

He told Insurance Times this could “significantly reduce [insurers’] loss ratios, [increase] margins on existing business [and] add new revenue by underwriting risks they previously thought were uninsurable.”

Furthermore, the use of real-time flood data could also win insurers new business by offering better terms, excesses or no claims bonuses as well as adding value to clients who have actionable flood warnings in place.

Although many clients in high-risk, flood prone areas have flood plans and resilience measures in place, what is currently missing is accurate flood warnings, Jackson added.

He continued: “The addition of warnings would give underwriters the confidence to improve their pricing, especially if they add the use of warnings and plans into policy conditions.”

This is because warnings could help insurers prepare for a flood more effectively and process claims more efficiently, as insurers can accurately assess which claims are immediately valid compared to those that might need investigating or a loss adjustor, Jackson explained.

Previsico is now looking to turn the tide on how flood incidents are dealt with.

This insight is particularly pertinent following the flash floods in Scotland last week, which also later descended on South London. One driver described the rain on the M25 as “biblical”. 

M25 flooded near Junction 7. Biblical rain and hail. Clockwise traffic at a standstill #M25 #flooding pic.twitter.com/tEVmfzG7bY

— Julian (@Julian__HJ) August 13, 2020

LV= paid out around £100,000 for flood and storm damage claims resulting from flash flooding in Kirkcaldy, Scotland last week after it received nearly 150 claims; the insurer settled these claims in 24 hours. 

Case studies

Previsico works in partnership with IBM to produce flood warnings. 

For example, a report from the insurtech showed that on 12 and 13 August “persistent hot weather created [the] ideal conditions for intense localised storms across southern England. In particular, South London experienced heavy rain, lightning and hail, which led to severe flooding events later in the afternoon, causing considerable disruption”. 

This included surface level flood water at junction seven on the M25.

The Evening Standard reported that many vehicles had been left stranded as the motorway was shut due to flash flooding between junctions six and seven, causing tailbacks of up to three hours. Croydon, Wallington, Purley Oaks and Richmond in South West London were all affected.

Following this, the Met Office issued a yellow thunderstorm warning for the next five days with the risk of damage to buildings from lightning, hail and more flash flooding.

Meanwhile, on 13 August in Aberdeenshire, Scotland, Previsico issued a report of “torrential rain and lightning which led to severe flooding events in the early hours of the morning”. This hit Dunnottar Primary School in Stonehaven as well as caused cancelled trains. In addition, Perth saw 90mm of rain fall overnight – this equates to five weeks’ worth of rain.

Flooding has become more frequent in recent years, with climate change being a major contributing factor.

Supporting claims teams 

Previsico’s newest recruit is former manager at Lloyd’s Lab Lucy Coutts; she joins as the insurtech’s business development manager.

She will be focusing on driving Previsico’s development in the insurance sector, as well as improve its worldwide presence.

Following the flash floods last week, Coutts published a blog examining Previsico’s data. She said: “At Previsico, we are big believers that most flood losses are avoidable if you can provide people with an accurate warning and give them time to protect their property or assets.

”As part of our participation in the Lloyd’s Lab, we worked with insurers to show how providing alerts to customers can help reduce losses by over half, reduce premiums and support claims teams.”