Speaking to The Insurer TV, Wardlaw spoke of the Lloyd’s Lab parcticpant’s recent partnership with insurtech start-up Descartes, which aims to highlight the importance of hazard data in the growth of parametric flood solutions and facilitate greater market traction on this front.
“In insurance, we always talk about the protection gap or the coverage gap and I would say that, unfortunately, with the recurring events of climate change, we’re seeing indemnity products being priced somewhat out of the market. So you have a high coverage gap,” Wardlaw said.
“Parametric offers a wonderful solution to this because the entire objective of it is around price affordability and a quicker claim settlement, based on an objective trigger.
“ICEYE aims to be the parametric triggering of source in the industry, fuelling all parametric innovation, product design and product service solutions,” she added.
ICEYE has been providing insurers with flood hazard data following a number of major events, including the European floods and Hurricane Ida, and there are a couple of stages to this.
The first stage, according to Wardlaw, is known as the “solutions framework”.
“We need to get our data out of these amazing satellites and then we transform that geospatial data and join it with other information sources to then inform the data, because the data is actually a radar beam that beams down and then beams back up and based on scientific calibrations and equations it creates the imagery that we’re able to produce,” Wardlaw explained.
Following this, the team looks for other “sources of truth” to make the data as robust as possible. ICEYE’s in-house team of meteorologists and geospatial analysts enables the firm to monitor more than just the weather as an event is taking place. They’re also monitoring patterns which provide indicators of the possibility of an event occurring.
“When we get into that analysis phase, we’re grabbing the data, we’re combining it with imagery and then we’re delivering it to clients, which becomes the even more interesting part,” said Wardlaw.
“You can’t underestimate the complexity of actually organically ingesting this in insurance operations and insurance systems to make data that enables and illuminates decisions.”
The impact of climate change has increased the demand for more accurate, granular flood data.
“Not only are we as a society impacted by climate change, but if you connect that into our industry of insurance, it’s affecting us in ways that our historical models and the way we’ve looked at frequency and severity are changing at an evolutionary pace,” said Wardlaw.
This, in turn, has led to an urgent demand for available data sources to capture data in near real time as an event is unfolding and this, said Wardlaw, “is incredibly valuable for all”.
ICEYE hopes to “create some form of empowerment” for (re)insurance companies and modellers in order to get a better handle on evolving risk associated with climate change.
As part of the seventh cohort of the Lloyd’s Lab initiative, ICEYE has been able to plug directly into the demands of the industry for better data and more probable modelling insights.
Speaking about the experience, Wardlaw said: “It’s wonderful. There are so many different levels upon which you have to attack innovation. Being part of a cohort where you’re able to actually interact with the industry and you’re able to get mentorship, guidance, you’re able to share and exchange in a way that’s not threatening or proprietary, while at the same time able to saturate any feedback and apply it in these very iterative capabilities and processes, is very important.”