The impact of Storm Desmond on the 4th and 5th December 2015 with gale force winds and unprecedented rainfall has resulted in severe flooding in Cumbria and the North of England. UK insurers will be faced with a large bill as a result with initial market loss estimates being put at up to £500 million.
The bad news for insurers is that these extreme weather events are not going to go away. With around 5,200 residential properties flooded, the estimated bill to the insurance industry in terms of household claims is thought to be around £174 million. Every model that has been produced indicates that we are going to be experiencing more severe weather conditions in the future. So what can insurers do to mitigate their flood risk exposure?
Property risk in the insurance industry depends on a range of factors linked to the physical location. The local environment, the types and construction of buildings, local crime rates, the demographic make-up of the population, physical hazards such as flooding, storm or extreme cold weather – all need to be considered when assessing each risk.
There have been some significant developments over the last few years in terms of the data and tools available and insurance companies are now able to make insightful decisions based on reliable data and risk mapping software. Things have moved on from rating at the level of postcodes to using more sophisticated methods which allows rating at an individual address level for risks, enabling insurers to understand their exposure to a much greater depth.
Business Insight’s risk mapping tool, Location Matters©, combines state-of-the-art risk mapping technology with the best of breed perils and geodemographic data to provide insurers with a powerful insight and a deeper understanding of geographic risk and the make-up of the local area.
It is the only mapping software designed specifically for the insurance industry that features a complete set of best of breed perils risk models including the market leading Business Insight data models for the UK property insurance market and JBA Flood data.
Location Matters© provides today’s insurance professional with the highest resolution data to give them a greater insight to risk, help drive a more profitable risk selection and improve exposure management through insight into accumulations of risk across their book of business. It can also be used post an event within Claims Departments to assess the validity of individual claims and for better allocation of resources.
We are still learning about the future implications of climate change, but one thing seems certain – weather conditions look unlikely to stabilise. The potential influence of climate change cannot be ignored as even small increases in the frequency and severity of events can translate in to significant numbers of claims.
So it is more important than ever for insurers to invest in technology and data models that are based on up-to-date, reliable information that take in to account changing risk patterns to gain a deeper insight into risk.
Find out more about Location Matters© here.