New horizons
The range of visualisation options opens up completely new horizons for users – in terms of both regional risk concentrations and hot spots, the potential danger areas in a portfolio.
Portfolios often contain multi-location policies, which are difficult to identify precisely – especially in the case of treaty business. In many cases, they are chains of companies, whose quoted address only refers to the headquarters, disregarding risks at other locations also included in the policy.
The result is extremely disagreeable: exposures can be wrongly assessed. The problem of “unknown accumulations” can nevertheless be solved with the help of geoinformation if all the individual risks collected together in one multi-location policy are available with their addresses and indemnity limits.
Indeed, if portfolio information is supplemented with earthquake, windstorm, or flood maps, a single risk or an entire portfolio can be scanned for its exposure to natural hazards.
Almost unlimited scope of application
In some classes of insurance, it is customary to work with geoinformation, as in the case of agricultural insurance when forecasting crop yields or calculating crop losses after hailstorms, windstorms, drought, or frost. But this sector will soon go over to using a satellite-based system that will facilitate permanent monitoring of crop areas and their yield.
One interesting special application is the risk analysis of aquacultures. As the number of commercial fish farms is growing all over the world, information on the spread of toxic algae or special fish diseases is particularly valuable, as are data relating to damage caused by windstorms and wave action.
Geographical information systems are also used in the energy sector. Thousands of mobile and stationary offshore oil rigs in the Gulf of Mexico can be monitored in terms of their exposure to hurricanes much better nowadays than just a few years ago.
But as water depths and maximum wave heights are equally important geoparameters, future analytical processes will also consider pipeline and pump systems that are below the surface, which, if damaged, can cause substantial business interruption costs. The same processes can be adopted in the very young and dynamic market of offshore wind farms, because here too underwater lines are particularly at risk.
Geographical information systems
On account of changes in the legal environment, such as the introduction of the new EU Environmental Liability Directive, environmental liability insurance has for the first time entered the focus of GIS applications. The first step is to find out more about how far insured objects are from areas that are worthy of protection, i.e. conservation and water protection areas.
And what about geoinformation in the life and health insurance markets? This may be a surprising combination at first sight, but here too there are solutions. In the UK market, group life insurances are evaluated against the backdrop of terrorism using geoanalyses. The benefit for insurers is that inner-city accumulations can be identified at an early stage and avoided. Primary insurers can check the available capacities online using RADAR, a Munich Re UK Life Branch system.
And finally, Munich Re Group’s Mercur Assistance is an example of how geodata are increasingly being used in connection with assistance services. In this way, call centres can provide their clients with more efficient service on journeys, in the event of illness, or after accidents – in terms of repatriation or medical aid locally.
Claims management benefits too
Recent GIS developments have focussed on solutions that support claims management. Linking up current weather and flooding data with portfolio data enables claims investigators to distinguish clearly between risks that are affected and those that are not. BLIDS, for example, an information service provided by Siemens, supplies prompt information on where and when lightning strokes occur, how strong they are, or how thunderstorms are developing.
BLIDS uses a network of weather stations that localises lightning strokes to the nearest 300 m. Geocoded information can be used to establish the truth in connection with dubious claims following a lightning stroke.
The insurance sector is benefiting from these systems in the context of loss prevention too. Cooperation with weather centres has led to warning services being developed that help policyholders to adopt appropriate loss minimisation measures. And after a severe weather event, Munich Re’s CatLoss Estimation Service goes into action and analyses the extent of loss suffered by the respective portfolio.
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