Analysts from the Insurance Information Institute(Triple-I) have stated that insurers need partners to reduce the threat flooding poses to life and property worldwide, and are taking several steps to achieve this.
Advances in data and communication, as well as in collaboration and innovation are needed to achieve such a mindset focused on resilience and pre-emptive mitigation, the report titled Stemming A Rising Tide: How Insurers Can Close the Flood Protection Gap noted.
“Risk transfer is just one tool in the resilience toolkit,” said Sean Kevelighan, CEO, Triple-I. “Our understanding of loss trends and expertise in assessing and quantifying risk must be joined at the hip to technology, public policy, finance, and science.
He added: “We need to partner with communities and businesses at every level to promote a broad resilience mindset focused on pre-emptive mitigation and rapid recovery.”
A 2022 Capgemini Research Institute report found few insurers are currently on course to achieve climate resiliency even as improved data tools have increased insurers’ comfort in covering flood risks.
Analysts highlighted that these tools are critical to unlocking new data potential and enabling more accurate risk assessments.
“Risk prevention based on data and behavioural science is at the top of the agenda for future-focused insurers,” says Seth Rachlin, Global Insurance Industry Leader, at Capgemini, adding that insurers should “deploy IoT, cloud, artificial intelligence, and machine learning,” to improve risk management, develop products, transform claims processing, and enhance customer experience.
Regarding collaboration and innovation, Triple-I’s paper cited Flood Re, a partnership between the UK government and insurers, as an effective way to install flood resilience measures.
At the same time, in the US, United States, community-based catastrophe insurance (CBCI) – arranged by local government or quasi-governmental bodies to cover individual properties – is being used.
The report also noted that parametric insurance has been gaining traction with respect to weather- and climate-related risks. Instead of paying for damage, parametric insurance policies pay out if certain conditions are met.