The Risks of Hazard

Carrier Management published a great feature on innovation in P & C insurance last month (June 2015). Inside the Minds of Insurance Innovators explores the subject of innovation with a group of 16 leaders from different carriers, reinsurers, brokers, rating agencies, and (for good measure) a modeler, by asking each of them 11 questions. The questions and responses present an overall picture of how a 400+ year-old industry approaches the future at a time when the business and technology is changing faster than ever before, and the speed of change is still accelerating.  

There are some definite trends in the responses, and some complete outliers. I'd like to explore what these 16 industry thought leaders are telling us with a two-part series: In today's post I will focus on the consensus. Later in the week I will look at the not-so-universal responses, which are interesting of course because they're different.

The National Research Council (NRC) published a report in June that explored how FEMA’s National Flood Insurance Program (NFIP) appraises flood insurance in the U.S. It is a very thorough and technical document (as one would expect), that reaches ten conclusions on how NFIP can improve its pricing strategies to become, essentially, more solvent. The conclusions focus on different aspects of how a policy price is determined, including the use of loss/claims data, the risk analysis, flood modeling techniques, damage and exposure estimations, replacement costs, and other factors. One conclusion stood out for me, and I wasn’t alone.

These days, business software (and technology in general) evolves faster than ever before. Users have access to rapidly improving analytics based on huge datasets; flexibility on how questions are asked; and — most importantly — how answers are received and interpreted.

In the past 10 years or so, business systems have moved from desktop-based programs to much more dynamic applications that are simultaneously more specialized and more universal. Business solutions now leverage more data to deliver answers that are very specific to an industry, to an organization, and to specific users. There are several technological cornerstones that make today’s systems so powerful, and one of them is the Application Programming Interface, or API.

How do APIs play such a big role in today’s software? Well, they're like LEGO blocks.

Summer is here, and in the Pacific Northwest and Western Canada, it really feels like it. Record highs are being set all over the region, the Calgary Zoo is closed so the animals can be cooled, and the wildfires are burning.

The most newsworthy wildfire so far is the Sleepy Hollow wildfire in Wenatchee, WA. It's burning homes and industrial buildings, and as of today is only 10% contained. It will get bigger before it gets smaller.

Today is a big day for Intermap and for InsitePro — we are releasing FloodScope™ USA, the only flood model available that is built on a contiguous, manually-edited digital terrain model (DTM) for the lower 48 states and Hawaii.

As I've discussed before, elevation data is a key input into any flood model, so the ability to leverage a high quality DTM at full resolution is a significant achievement. Starting today, insurers can use flood zone determinations as a part of their analytics to better understand the risk of river flooding.