Managing Risk Exposure in our Changing Climate

Wed Jul 3 2024

Shane McCabe, Insurance Strategic Account Manager, LexisNexis® Risk Solutions, Ireland

The general trend however is that extreme weather events are becoming more frequent with heatwaves, wildfires, floods and droughts predicted to continue[ii]. Insurance providers therefore need to remain vigilant to the risks to minimise insured property losses.  This means monitoring the potential for losses at a macro level, but also putting a ‘watching brief’ at eircode or area/region level as insurance professionals go through the underwriting process.

It is an essential responsibility of insurance underwriters to assess diverse factors and information for making well-informed decisions regarding the acceptance or rejection of insurance applications. This involves determining appropriate premiums and establishing the terms and conditions of insurance policies.  Yet, as events of the last few years have shown, insurance professionals must expect the unexpected when it comes to the climate in Ireland.

Insurance providers need a clear view of key risk data for perils, not only to manage business that is already on their books to mitigate losses, but also to improve accumulations management when a policy is in the process of being underwritten.

Within the framework of underwriting guidelines, accumulation exposure must be considered, whether it pertains to risks such as subsidence, flood, explosion, fire, and more. Yet a property can change risk profile at the flick of a switch, along with its potential underwriting profitability. As perils can change so quickly and with growing unpredictability, more and more underwriters are monitoring risk in real-time.

The geospatial data visualisation tool LexisNexis® Map View offers “Monitored Zones”, allowing underwriters to designate specific areas or regions for continuous monitoring of potential changes during the underwriting process. This monitoring occurs automatically, tracking alterations in the designated zone, such as shifts in accumulation. Warnings are promptly issued if the monitored data surpasses predetermined thresholds, supporting a vigilant approach to risk management. Monitoring zones can trigger automatic responses through connections to software houses or IHP platforms to make quick decisions when specific events are occurring.

As the Irish climate continues to challenge the property insurance market, geospatial data intelligence is critical for accurate risk assessments and for managing the risk profile of a property book.  Just as importantly, precision-pricing based on real-time geospatial information means property owners who live in an ‘at-risk’ area can still receive a realistic quote and not be left out in the cold when it comes to accessing cover.

[i] https://www.met.ie/climate/summer-centre

[ii] https://www.eea.europa.eu/en/topics/in-depth/extreme-weather-floods-droughts-and-heatwaves


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