The role of Geospatial Intelligence in improving the relationship between Policyholder and Insurer

A WHITEPAPER BY GEOSPATIAL INSIGHT

PREFACE

The usage of geospatial technologies is

rapidly increasing in the insurance

market as insurance companies look to

combat record catastrophe losses and

provide a more efficient service to their

policyholders. Currently, geospatial

intelligence is mainly deployed during

large-scale catastrophic events, this

paper suggests that this should be

widened to cover the entire claims

management process.

2

Contents

Preface……………………………………………….2

Introduction……………………………………… 3

Rising Cost of Insurance Losses……………4

Co-ordinating an Effective Response…..5

Drones: Untapped Potential………………..8

Conclusions………………………………………. 10

About Geospatial Insight…………………….11

Bibliograhy………………………………………….12

www.geospatial-insight.com

INTRODUCTION

The relationship between customer and insurer

is truly tested when the need for an insurance

claim arises. Therefore, ensuring that the claim is

dealt with in the most effective manner is

paramount to customer loyalty.

The insurance market is undoubtedly a

competitive industry with customers now able to

make use of comparison websites to find the

best value insurance cover available. It could be

argued that the ease of switching insurance

providers has resulted in a decrease in customer

loyalty. Therefore, any means of maintaining a

competitive advantage is hugely important to

retaining existing customers; geospatial

intelligence could be the answer.

Geospatial intelligence is defined by Natalia

Kussul (1) to consider all aspects of geospatial

data processing including intelligent methods

and technologies to integrate data and products

from multiple sources using machine learning

techniques and emerging big data, alongside

geo-information technologies. Geospatial

intelligence involves the analysis of geospatial

data and information to describe, assess and

visually depict physical features to provide a

highly visualised insight into property and

surrounding features. Therefore, there are clear

advantages of using geospatial solutions to

transform the efficiency and effectiveness of the

insurance claims sector.

Currently, insurers can see the advantages of

geospatial intelligence and often use such

methods as part of their response to disasters,

such as with Hurricane Harvey in 2017. However,

geospatial intelligence can provide increased

insight into more routine, everyday claims and

yet this field remains largely unexplored.

Insurance companies are investing in many

different methods to transform claims

management with the ultimate goal of

minimising costs whilst improving the customer

experience. This paper considers the ways in

which geospatial intelligence is currently being

used to achieve this goal and also how geospatial

technology could revolutionise claims

management in the future.

3www.geospatial-insight.com

THE RISING COST OF INSURANCE LOSSES

Without doubt finding a solution to reducing insurance losses from disasters is one of the key points

of research within the industry. The National Oceanic and Atmospheric Administration reported that

the total economic losses from natural and man-made disasters totalled US$306 billion in 2017

mainly due to the Californian wildfires and three hurricanes – Harvey, Irma and Maria (9). Comparing

this to the 2016 figure of US$188 billion and the annual average for the last ten years of US$58

billion gives a clear indication of the importance of catastrophe management to insurers (2). The

current issues surrounding catastrophe management for insurers concern the high economic cost of

their response alongside the increasing difficulty in predicting the scale of losses.

Martin Bertogg, Head of Catastrophe Perils at Swiss Re, highlighted the increase in insurance losses

from disaster events creeping above US$100 billion consistently in recent years (2). Whilst he

recognised that the industry has coped relatively well with this increase he cited the need for the

industry to extend its reach to plug significant protection gaps to ensure both people and businesses

are better equipped to ‘withstand the fallout from disaster events’.

Additionally, it is important not to forget the human cost of disasters with Swiss Re noting that

‘Globally, more than 11,000 people have died or gone missing in disaster events in 2017’. Dom

Addesso, Chief Executive Officer of Everest Re, echoed this point even after Hurricane’s Harvey, Irma

and Maria cost Everest Re US$1.2 billion in catastrophic losses in 2017 (3). David Storey, Claims

Manager at RSA Canada, cited the 2016 wildfires in Alberta as an example of the value of

establishing a human connection between insurer and claimant in a time of crisis.

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In Alberta 88,000 people were evacuated with around

2,400 homes destroyed over a three-month period.

RSA Canada managed to reach 90% of claimants

within 48 hours through sending loss adjustors into

the affected areas (5). In this context geospatial

intelligence can play a much larger role in reducing

the reaction times of insurers to catastrophe events

through better allocation of loss adjusters which in

turn improves the relationship between client and

insurer.

There are many different factors attributing to the

increase in insurance losses including unpredictability

of losses, climate change and lack of policyholder

preparedness. Mark Risser and Michael Wehner’s (7)

paper argues that precipitation levels were increased

during Hurricane Harvey as a direct result of

anthropogenic climate change. Climate change is one

of many challenges facing insurance companies as it

can increase losses through both higher frequency

and higher magnitude of disaster events. Paul

Sandifer’s work (8) studies the effect of catastrophic

events on human health, with a particular focus upon

the impact of stress on disaster-stricken communities.

It goes without saying that making an insurance claim

is a very stressful experience for a policyholder,

especially if the claim results from a large-scale

catastrophe.

For insurers responding quickly and efficiently is

paramount to maintaining client relationships;

geospatial intelligence plays a vital role in improving

the relationship between policyholder and insurer.

CLAIMS MANAGEMENT: CO-ORDINATING AN

EFFECTIVE RESPONSE

Geospatial Intelligence can be used throughout the

claims management process by all important

stakeholders from call handlers to managers and loss

adjusters. This section focuses upon the many

different uses of geospatial technology including

assessing the likelihood of claims before they occur

and how to mitigate the damages once a claim has

been placed.

Swenja Surminski’s study (10) evaluates the

importance of assessing vulnerability to floods instead

of simply responding to flood events when they

occur. Surminski (10) argues that flood management

should anticipate risk and raise levels of community

preparedness in order to reduce the scale of damage,

and therefore reduce the scale of response needed

and minimise overall losses.

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This theory can be applied to other hazards

through insurance companies increasing their

usage of geospatial data pre-event to mitigate

and anticipate risk. In addition, Heidi Kreibich

(18) highlighted how the 2002 Saxony floods in

Germany prompted insurers to review the way in

which their risk assessments are conducted.

Whilst insurance risk assessments have moved

on considerably since 2002, evaluating risk as

accurately as possible is still paramount to an

insurer’s business; use of geospatial data

represents an opportunity to redefine the

parameters by which risk is determined.

Both reducing and assessing risk are paramount

to the functioning of an insurance company;

being able to accurately do both of these things

significantly reduces insurers costs and improves

the policyholder’s experience. Hegger (11)

defines preparedness for response as:

‘Risk awareness-raising initiatives, such as the

provision of risk-relevant information and

knowledge transfer to educate policyholders and

the public about preventive and preparatory

measures; capacities to warn and alert in case of

an event and to stipulate risk-adequate

behaviour’.

New applicants for insurance policies could be

assessed using geospatial technology platforms

in order to determine a client’s overall risk

combining different factors such as flood risk,

subsidence risk and local crime rates. Geospatial

intelligence can provide this information in a

highly localised, easily accessible format, and

even supply high resolution satellite and drone

imagery of the property and surrounding area.

This information can also be passed on to

policyholders to ensure that they are fully

prepared for any event, man-made or natural,

that may threaten their area. For example, if an

area is experiencing high levels of crime an

insurer can contact their client to warn them to

be more vigilant. This information can be shared

instantly with the client, a point which is

particularly important when responding to

catastrophic events.

At the first point an insurance call handler

receives an alert that a catastrophic event has

occurred they must mobilise their resources

rapidly to respond as effectively as possible.

Geospatial intelligence commences this process

even before the first claim is logged with the

insurance company. For this particular

explanation of claims handling procedures using

geospatial intelligence, a flood is used as the

catastrophic event example. A geospatial

intelligence platform is able to identify the

probable areas of significant loss as soon as high

precipitation levels are registered, with many

possible outcomes outputted. Using this data

insurers are able to identify the number of their

policyholders who could be affected by the flood

and gain an early estimate of losses. Also, with

this information insurers could contact their

policyholders in order to ensure that they are

prepared for the oncoming floods and could

even offer resources to minimise damage which

would be beneficial for both parties.

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The next stage in the claims management response

to a catastrophic event involves analysing the

resultant claims and identifying any possible

fraudulent claims. A geospatial intelligence

platform provides data about the claims placed

after, or even during, an event to the call handlers,

insurance managers and to the on the ground loss

adjusters. Instead of loss adjusters simply dealing

with tasks chronologically, geospatial technology

can allocate tasks based upon geographic location

and the most efficient routes between sites. This

dataset can be altered in real-time with higher

priority tasks fast tracked, providing an efficient

communication platform for coordinating the

response. From a manager’s perspective,

geospatial data can also help to monitor the

performance of loss adjusters and possible ways in

which loss adjustors could improve their practices.

Foudi’s (19) sociological study considers the impact

of flooding on the mental health of the people

affected, with 61% of those studied stating that

problems with loss adjusters and insurers added to

their stress levels. Those studied also cited issues

concerning a lack of clarity from insurers, with

many unsure of their coverage and entitlements,

and a lack of understanding of the role of the loss

adjusters. This indicates that insurers need to

establish a clear line of communication with their

policyholders, especially in times of crisis. Using

geospatial intelligence to gain a better

understanding of their clients’ needs would

certainly help to improve the relationship between

insurance companies and their customers.

Ultimately, geospatial intelligence provides a

coherent, logical and adaptable platform that can

be used to coordinate the most effective response

to a catastrophic event. Many different variables

can be assessed on this platform without the need

to access multiple data sources independently,

both saving time and reducing the likelihood of

human error occurring. The variety of geospatial

technological advances are rapidly expanding, the

following sections discusses one of the most

exciting avenues of exploration; drone technology.

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DRONES: UNTAPPED POTENTIAL

Drone technology has been a hot topic of media

discussion in recent years, with high quality

drones now available for public use and

questions raised surrounding the issue of

privacy. Articles written by Ben Chapman in The

Independent (12), Sophie Curtis in The

Telegraph (13) and multiple BBC reports (14)

illustrate this. However, coverage surrounding

the commercial uses of drones has been

somewhat less in comparison, even though their

uses are much more interesting, especially in

the insurance claims sector.

On the subject of industrial drone use, Jason

Wolf, a property defence attorney, suggests that

loss adjusters may have to adapt their skillset to

include using drones for initial loss assessments

in the very near future. However, Grant

Goldsmith, president of risk management

agency Overwatch, believes it is more likely that

experienced drone operators will assist loss

adjusters in their work, especially after

catastrophic events (4). Whichever prediction

becomes reality the truth is that industrial drone

usage is rapidly increasing as their vast potential

is finally tapped in to.

Assisting loss adjusters in field assessments of

claims is likely to become the prime use of

commercial drones in the insurance sector over

next couple of years. Their function is to provide

aerial footage and imagery of a claim site,

whether that be one property or a whole area,

to enable loss adjusters to better assess the

value of a claim. It is probable that the safety of

loss adjusters will be much improved through

drone usage as drones are able to enter sites

that would previously have been too hazardous.

Loss adjusters work in hazardous areas, so

naturally anything to reduce their level of risk

exposure also reduces the number of

compensation claims logged by loss adjusters.

Unlike some reports claim, drones will not

replace the role of the loss adjuster and will

instead serve as another tool at their disposal

(16). They will provide an extra dimension to

the visual assessments that are currently carried

out by loss adjusters (17) particularly by

enabling more rapid response to CAT events

literally as they unfold and in treacherous

conditions that are unsafe for field assessment.

The key point to takeaway is that drones

drastically shorten the overall response time for

the insurer, which in turn provides a better

overall experience for the policyholder.

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The calculation of insurance premiums is another

avenue of opportunity in terms of use of drone

technology. It is probable that the use of drones

will enable insurance companies to calculate

personalised insurance premiums for every

potential policyholder. Insurance companies

specialise in measuring and precisely pricing risk,

being able to do this more accurately will

minimise losses and ultimately strengthen the

stance of the insurance market as a whole (15).

Drone technology also has a role to play with

regards to the earlier point concerning

identification of fraudulent claims. It is estimated

that fraudulent claims currently cost insurance

companies around US$32 billion per annum,

with 57% of insurers predicting this figure will

continue to rise (15). Insurers could put into

place a system by which they use drones to

capture imagery of their policyholders’

properties on a regular basis and not solely for

use after a claim has been made (6).

Data obtained from the imagery captured would

enable insurers to determine when damage to a

property occurred, comparing archive imagery to

images captured by loss adjusters during the on-

site investigation (15).

The geographical concept of place is central to

the insurance claims process with policyholders’

sense of belonging threatened by damage to

their homes. Insurers conveying a level of

understanding and concern to their policyholders

is critical to customer satisfaction. Decisions can

be made faster through use of drone technology,

as adjusters are able to send drones into

hazardous areas whilst remaining at a safe

distance themselves. Put simply, drone

technology is another useful geospatial tool for

insurance companies to provide the most

efficient and rapid response to their clients in

their time of need.

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CONCLUSIONS

Geospatial intelligence has vast potential for use

in the insurance claims sector, however it is clear

that many insurance companies are yet to fully

integrate geospatial technologies into their

operating procedures. The opportunities for use

of geospatial technologies in claims management

are endless and widely applicable across the

insurance industry. Geospatial data can be used

throughout the claims process, before, during

and after an event has occurred. Highly accurate

geospatial data can provide the basis from a

more effective and efficient claims handling

process for both catastrophe management and

daily insurance claims.

For a policyholder the point at which they are

forced to make a claim to their insurer is

normally as a result of a highly stressful situation.

The manner in which an insurance company

responds is key to a policyholder’s perception of

their insurance company and ultimately

customer retention. Using geospatial technology

to improve response times will help to maintain

all of these aspects.

With geospatial intelligence insurers can gain an

insight into the whole claims process and add an

extra dimension to their understanding of risk.

Understanding a prospective clients’ level of risk

before insuring them helps to reduce losses in

particularly vulnerable areas, through

personalised insurance premiums. The insurer

benefits economically with the assessment of

risk becoming increasingly localised and the

policyholder’s experience is improved thanks to

shorter response times and increased

preparedness through a better understanding of

a personalised risk assessment.

Drone technology is one the most exciting

aspects of geospatial intelligence and is clearly a

valuable tool to assist loss adjusters in their

work. With a minimal first-time cost and obvious

benefits, it is difficult to understand why drones

are not yet widely used in claims management.

Improving the safety of loss adjusters whilst

improving a policyholder’s experience through a

more rapid assessment of a site are just a few of

the many advantages.

With insurance losses at a record high the desire

for new ways to minimise losses has never been

greater. Geospatial intelligence is surely a worthy

avenue of exploration, with full integration into

claims management procedures a question of

when not just if. Commercial drone usage is

rising rapidly as insurers seek to gain an early

advantage in such a competitive market. The

relationship between policyholder and insurer

has always been somewhat strained at times,

due to the stressful nature of their encounters.

Therefore, using geospatial intelligence to

improve this is surely worth exploring, with rapid

response times, increased safety and increased

levels of preparedness only scratching the

surface of the potential of geospatial

intelligence. The insurance industry would

undoubtedly benefit from increased

collaboration between insurer and policyholder

as a direct result of integration of geospatial

technologies into claims management

procedures.

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ABOUT GEOSPATIAL INSIGHT

Geospatial Insight is Europe’s leading provider of independent research and alternative data derived

from the analysis of satellite imagery and other aerial sources, combining this intelligence with a

range of other data sources to provide in-depth market insight and business analytics to clients in the

corporate, financial and insurance sectors.

Established in 2012 and headquartered in the UK, Geospatial Insight provides these unique

intelligence services to clients around the world. Geospatial Insight is also a member of the

European Association of Independent Research Providers (EuroIRP).

VISUAL INTELLIGENCE FOR INSURANCE

Geospatial Insight is leveraging innovations in drone, satellite and aerial imagery and combining with

big data capabilities to revolutionise the Insurance sector.

We enhance traditional insurance data collection and assessment methods by providing a new

source of actionable information that is backed by visual evidence. This Visual Intelligence provides

insurers, loss adjusters and brokers with improved capabilities to monitor, analyse and respond to

risk.

www.geospatial-insight.com 11

www.geospatial-insight.com

www.geospatial-insight.com 12

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