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InsurTech to open up opportunities in historically excluded risks

21st December 2017 - Author: Staff Writer

Epidemic risk modeller Metabiota predicts that in 2018 insurers will focus more on speed with increased appetite for risk to reach the needed returns and innovation in the InsurTech space will make this possible, opening up opportunities in historically excluded risks such as terrorism and pandemics.

insurance technology insurtechMetabiota Head of Data Research on Climate Risk, Damien Joly, believes that health risks around the world will increase next year due to the connection between catastrophic weather events and public health.

Experts predict the financial impact of a global epidemic amounts to 0.7% of global income, or $570 billion.

In 2018 modelling communities are expected to improve and enhance forecasting models with higher resolution and more timely data such as electronic health records and the genetic sequences of pathogens; these innovations could open up multi-billion dollar opportunities for re/insurers in risks that have traditionally been uninsurable.

Metabiota said forecasting epidemics is the holy grail of infectious disease modelling and one that looks increasingly achievable in the year ahead.

With many of today’s critical risks to human health and well-being being interrelated – from climate change to epidemic outbreaks, armed conflict and natural catastrophes – Senior Scientist Ben Oppenheim noted that in 2018, the international community will focus on new initiatives that address the links between global threats.

“As a result, a single event has the potential to set off a chain of crises. The challenge is that the current systems that monitor, model, and manage each crisis are not integrated. Two factors will start to break down those silos.

“First, improvements in data (both historical and real-time) and advances in modelling will allow for more sophisticated analyses that shed light on how threats interact—and where governments, multilateral organizations, and the private sector can best intervene to mitigate risk.

“And second, the organizations on the front-lines—NGOs, humanitarian organizations, and others—will increasingly recognize the need to build partnerships, to share data, expertise, and responsibility to respond to complex crises.”

With the proliferation of risks such as hurricanes, earthquakes, fires and floods, as well as non-physical risks like cyber breaches and infectious disease spread that can cause major business interruption, it is increasingly difficult to keep pace with the current and emerging risks.

However, with insurers rethinking their growth strategy and expanding into niche and previously uninsured risks as innovation improves modelling capacity.

“From the Madagascar Plague to the Ugandan Marburg virus outbreaks and the continued plight to mitigate the Zika Virus, it is clear that epidemic risk continues to pose a global health threat to communities and organizations worldwide,” said Bill Rossi, CEO of Metabiota.

“At the center of this effort are new methods for assessing and insuring risk, and thanks to advances in disease tracking and reporting, software machine learning and artificial intelligence, we can now understand the risk of disease spread more clearly,” Rossi said.

So called “risks without history” can support the creation of new markets for insurance in 2018 and beyond.

Big data, machine learning and artificial intelligence techniques add leverage to predictive modelling, combining technology, computing power and science to develop innovative insurance products.

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