The Risks of Hazard

As we move into the Thanksgiving weekend, I would like to wish everyone who has explored location-based risk analytics with Risks of Hazard a happy holiday season.

It’s an exciting time around the world for flood insurance, with new mass markets opening up through the introduction of the necessary analytics and (in some cases) reinsurance capacity. In Canada, for example, it was nearly impossible to get flood coverage on residential property — until last year. After the floods of 2013 in Calgary and Toronto, it was inevitable that flood insurance would become available, but it was uncertain how it would be implemented. The Insurance Bureau of Canada (IBC), the federal and provincial governments, and the insurance industry have explored the possibilities together, and now flood insurance is about to really happen.

Unlike the United States, where flood insurance is evolving from a centralized and subsidized program to the private market, Canada has no legacy that needs to accommodate new flood products. Historically, water damage was only covered for “sewage backup”, which proved to be inadequate for everyone in 2013. When entire streets of urban homes are submerged, it’s highly likely that dirty water will enter houses through the sewage lines. But most of the water damage in such circumstances is definitely not caused by the sewer back-up. The resulting claims were mutually unsatisfactory: homeowners were technically not covered for most (if not all) the damage they sustained but they nonetheless claimed the damages with nowhere else to turn; insurers paid the claims for which they had not collected premium to avoid public relation disasters. By 2014, it was clear that Canada needed generally available flood insurance.

This blog is a joint collaboration between Ivan Maddox and Susan Parks.

Cloud computing has rapidly become the method of choice for countless applications across many industries. Insurance is a relative newcomer to cloud computing, but most software solutions for insurance now at least offer a cloud option (if it’s not entirely based in the cloud). However, there are still concerns that cloud computing is not the right technology for insurance solutions. Those concerns are usually based on a misconception, though. To help clear things up, here are four common myths about “the cloud” debunked.

Myth #1: It is unreliable.

The opposite is usually the case. Most providers of cloud services (most commonly, Microsoft and Amazon) bend over backwards to offer backup options, and the cloud can actually be more reliable than other types of infrastructure platforms. The cloud provider can easily back up data to multiple locations to provide an additional level of protection through redundancy. Usually, the cloud service provider and the application vendors will automatically send you emails updating you on critical events.

There is a great article over at Insurance Thought Leadership by Deb Smallwood describing the traditional interaction between agents and insurers. Or, to be precise, the lack of interaction between them (It’s not a good sign when the metaphor for the link is a trench!). The issue she explores is the difficulty in exchanging the necessary information between agents (or brokers) and insurers to ensure smooth business processes. The same problem could be expanded to include any interface in the entire insurance industry, including reinsurance brokers working with their customers and the reinsurers, and even the reinsurers working with the markets.

Imagine for a moment that your home has been damaged, and you and your family need to move out for a few months while it’s repaired. The more you think of it, the more the extra expenses add up – rent, extra groceries because you have a smaller fridge, extra commuting costs, and on and on. Luckily there is insurance for this: loss of use.