How insurers can assess flood risk more accurately

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.

Launch of Business Insight’s Risk Mapping Software, Location Matters

Business Insight’s risk mapping software, Location Matters©, is featured in Post Magazine.

Property risk in the insurance industry is dependent on a range of factors which all need to be assessed such as 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.  Location Matters© addresses all these requirements using state-of-the-art mapping capability and the highest resolution data to provide a greater insight into risk for today’s insurance professional.

Read article here: Post article 16 November 2015 Risk mapping software launch

Product Focus – RESONATE

RESONATE© is the latest analytics data product from Business Insight and was launched earlier this year.  It is a very detailed model classifying demographic, neighbourhood and lifestyle information into distinct risk categories at a highly granular level.  It is the only geodemographic classification system enhanced specifically for the United Kingdom personal lines insurance market.

RESONATE© classifies people on the demographics of the neighbourhood in which they live.  Featuring easy to understand segments and classifications, it has been built from a wide range of data sources including the latest census information and environmental risk factors as well as data relating to lifestyle and affluence.

Providing insurance professionals with a wide range of analysis options, RESONATE© consists of over 1000 different demographic clusters, ranked into relative affluence.  These clusters have then been grouped into a more easily manageable 50 distinct Neighbourhood Types that fall into 11 Lifestyle themes ranging from ‘Affluent Achievers‘ through to ‘Breadline and Benefits‘.

For example, the Lifestyle Group ‘Affluent Achievers’ makes up 7.4% of all UK households and within this group there are a number of distinct neighbourhood types such as Type 1 typically found in Kensington and Chelsea. This neighbourhood type consists of very wealthy mature families and couples, privileged lifestyles and high value homes located in exclusive urban areas and makes up less than 1% of UK households. Within the same Affluent Achievers group we also have Type 5 prosperous professional families with young children living in large modern housing. This neighbourhood would also be categorised as one of the ‘mass affluent’ segments of the UK demographic make-up with high disposable income, private schooling, large housing and highly paid professional and white collar managerial occupations being key characteristics. Type 5 represents 2.3% of UK households and can be found in high concentration in locations such as St. Albans, Wokingham and Berkhamsted.

The geographic segmentations have been developed to help analysts, underwriters and marketeers to:

  • Get another insight into risk pricing from another lifestyle and demographic perspective.
  • Understand the business’s current market penetration across segments.
  • Track product uptake trends across their customer base for future product builds and marketing offers.
  • Understand customer’s behaviour towards price in a competitively priced market.
  • Provide a risk assessment of their customers based on their claims frequency and average claims value.
  • Identify segments of higher margin/less risk customers and build strategies for retention and new customer acquisition.
  • Help offer the right products and services to the right customers and better match offers to demand.
  • Identify segments of loyal customers.
 Find out more about RESONATE© here  or contact the Business Insight team for a demonstration on 01926 421408.

Leveraging the value of Big Data

It is claimed that 90% of all data in the world has been created in the last two years. Companies are switching on to the strategic and commercial value of harnessing this data.  A recent IBM survey (October 2015) found that 74% of insurance companies report that using big data and analytics is creating a competitive advantage for their organisations.

One way to maintain that competitive edge is by leveraging and maximising the use of big data. With much better access to data from a wide variety of sources, Insurers are able to gain new insights now into risk at a highly granular level.  Data can be used to spot and analyse trends, uncover new patterns and anomalies and identify, measure and manage risk exposure. This information can then be used by Insurers to gain a comprehensive understanding of markets, customers, products, distribution channels and competitors.

The Business Insight team has extensive big data experience and provides insurers with tools to address key business challenges such as business growth and benchmarking products and position in the market.  Our market leading products support quote enrichment, risk selection and claims validation such as ‘Location Matters©‘, one of our most recent solutions that combines geographic risk mapping and analytics with highly granular lifestyle, demographic and perils data to provide powerful new insights. The software combines state-of-the-art risk mapping technology with a complete set of highly granular perils models including best of breed data from Business Insight and partner suppliers from across the industry.

Please contact the team at Business Insight for a demonstration on 01926 421408.

Weather warning?

Is the media speculation correct? Are we really heading for the coldest winter in 50 years? Is the media speculation correct?

The weather over the last year has been fairly benign with associated claims being well below historic averages. When can we expect to see another major weather event? Various news sources have been speculating that Britain is set to be battered by fierce snowstorms and freezing temperatures this Winter as the first El Niño cycle for five years kicks in.  But with the Met Office reporting that 2014 was the warmest year on record and 2015 shaping up to be warmer can we predict with any accuracy what is more likely?

Whilst there have been no major weather events for a while and claim levels low, let us not forget the impact that a severe weather event can have. The last El Niño event was the winter of 2010 which was the coldest since records began and during that period the ABI reported receiving over 467,000 claims affecting vehicles, homes and businesses.

Of those claims, 190,000 related to property damage at a cost to the industry of £900 million with 103,000 accounting for burst pipe damage.  A further 278,000 were linked to vehicle damage costing £530 million.

A strong El Niño event doesn’t necessarily correlate to a severe Winter for the UK, however, and our data partners at Weathernet have produced a graph to illustrate the relationship between Winter Severity and El Niño events (highlighted in purple). The Winter of 2006/07 is a perfect example of an El Niño event when the winter weather was remarkably warm.

We asked the experts at Weathernet, if there were any indicators to suggest we are heading for the severe winter the press is speculating about.  The Weathernet team advise that beyond two weeks ahead, all forecasts should be treated as very speculative. However, the outlook from their long term model looking forward until March suggests that temperatures are likely to be milder than average this winter but they expect it to be wetter and we are likely to get much more rainfall.

Compared to historic averages, they are forecasting over double the average rainfall in many areas of East Anglia, the Midlands and the South East of England. More rain days than average are also expected in the South East of England and a consequence of this could be higher than average claims for flooding in areas at high risk.

The Met Office 3-month Outlook and their seasonal prediction system also suggests that above average rainfall is more likely which may also be coupled with an increase in the frequency of Atlantic storms and spells of windy or stormy weather.  The winter period from December 2013 to February 2014 was the wettest on record. A repeat this winter would result in a surge in storm and flood claims and an Industry bill approaching the £1 billion mark.

In contrast to this view, Piers Corbyn of WeatherAction, an expert in long range weather forecasting based on solar activity, is predicting that in the run up to Christmas, Britain will be very cold and have heavy snow, especially in the North East.

Extreme weather and severe events like the winter freeze of 2010 are difficult to predict in advance. However it is possible through analysis of vast volumes of historical data to understand and highlight the areas that are more at risk. Investing in technology and data models that are based on accurate, up-to-date information and that take account of changing risk patterns to gain a deeper insight in to risk is becoming more important for insurers to ensure they are not selected against or over exposed in high risk areas.

Business Insight launch new risk mapping software ‘Location Matters’

LocationMattersLogoLeading technology provider, Business Insight, has launched Location Matters – a geographic risk mapping solution that gives insurers the tools and insight to increase underwriting profitability, improve risk selection and better manage their exposure.

It combines state-of-the-art risk mapping technology with the best of breed perils and geodemographic data to provider a deeper understanding of geographic risk and the make up of the local area.

Benefits include:

  • Insight into accumulations of risk across your entire book of business
  • More profitable risk selection

Read press release here:  Press release 19 October 2015 Location Matters

Business Insight exhibit at Flood Risk & Insurance Event

The GeoInformation Group & Business Insight are working together to bring insurers sophisticated data and solutions to help them better understand the location, physical properties and structure of buildings across the UK.

Combining the extensive experience and feature rich data resources of The GeoInformation Group with the market leading analytical modelling of Business Insight has resulted in a compelling, innovative solution for the UK Insurance Industry.

The solution combines accurate, detailed and reliable data with best of breed perils databases to provide high resolution predictions of the risk of theft, fire, freeze, storm, subsidence and flood for both residential and commercial insurance.

Both Business Insight and The Geoinformation Group will be exhibiting at the Flood Risk & Insurance 2015 Conference which takes place on 29 October 2015.


Post Magazine Article: Business Insight unveils risk analysis tool

post article mapTechnology provider Business Insight has launched Resonate, a new risk analysis model that classifies every address and neighbourhood in the UK.

The tool classifies every address into a range of lifestyle categories to help improve the accuracy of risk rating, target marketing and underwriting.

At the tool’s lowest level, consumers are grouped into 1,000 different demographic clusters that can then further be aggregated into 11 lifestyle themes that range from Affluent Achievers to Breadline and Benefits.

All neighbourhoods have been grouped into a number of similar categories bases on millions of pieces of data covering a wide range of demographic, environmental, lifestyle and socio-economic factors.

Read full article here: Post Online 20 April 2015


Greater demographic insight is now possible with the launch of RESONATE – a new data tool from Business Insight

Resonate_LogoRESONATE© is Business Insight’s newly launched geodemographic classification of all households and streets across the UK and Northern Ireland.   Every neighbourhood has been grouped into a number of similar categories based on a wide range of demographic, environmental, lifestyle and socio-economic data.

Benefits to insurance professionals include:

  • Deeper insight into risk pricing from another lifestyle and demographic perspective.
  • Understand the business’s current market penetration across segments.
  • Model and visualise customer demographics in specific areas for more accurate policies and quotes.
  • Easily identify segments of higher margin/ less risk customers.

Read more here: Press release 25th March 2015- RESONATE