Recently, SpatialKey partnered with leading global reinsurer, Swiss Re, to offer insurers access to multi-peril hazard data through SpatialKey’s proprietary underwriting solution. This collaboration integrates Swiss Re’s CatNet® hazard data directly into SpatialKey, providing insurers with access to more than 10 hazards worldwide.
In this interview, we catch up with Peter Hausmann, Head of Nat Cat and Engineering Solutions at Swiss Re, where we talk about Cat models, climate change, how insurers can help close the protection gap, and more. This is a must-read interview for insurers underwriting natural catastrophe risks globally.
On a global level, CatNet® provides coverage in regions where other traditional Cat tools lack intelligence. Where are you filling in the gaps?
CatNet® data is unique because we provide high-resolution, homogenous data globally. This means that you find hazard information of the same quality in emerging and mature markets. Furthermore, we cover perils which are only partly covered in the usual Cat models (e.g. hazard zones for storm surge, tsunami, or volcano ash fall). And, we speak here about modeled zones including quantitative hazard information and not simple qualitative approaches.
In 2017, there were approximately $300 billion in global natural catastrophe losses across all perils, with only about $130 billion of that insured. Is there an opportunity for insurers to close the protection gap, especially as catastrophes increase in frequency and severity?
To be aware of a certain hazard is obviously critical to becoming more resilient. Today, the insurance industry has the opportunity to inform people living in poorly protected areas by sharing hazard maps and related information. Offered together with adequate insurance products and recommendations about protection measures, this helps to close the protection gap.
How is climate change impacting Swiss Re’s data for certain perils (like flood) to the benefit of insurers, and underwriters specifically?
In the early nineties, Swiss Re launched the climate change topic in the insurance industry and since then observes the loss development and the scientific insights. While the global trends are pretty clear, it is difficult to forecast changes regarding individual hazards, like wind or flood, for a certain location on earth. Furthermore, many changes like sea level rise, for example, are long-term and do not require a frequent adjustment of the data. Innovation happens mainly in the feasibility to model flood, storm surge, or tsunami hazard zones for the whole globe using high-resolution terrain model data. A smart approach combined with parallel computing makes this possible.
How is your solution helping property underwriters specifically?
To be clear here, probabilistic Cat models are the ideal tool to calculate a premium for a multi-location industry policy, for example. But, this comes at a certain cost, and model coverage of markets and perils is patchy, at best. In such cases, and also to cross-check the results of the models for plausibility, map-based tools are extremely helpful. The key differentiators are: efficient usage, transparency of data, flexibility to combine hazard data, and maps with any other spatial data sets. And not to forget, individual data sets or maps can be easily integrated in any tool via an API.
In what way does SpatialKey empower your data to provide underwriters with even greater insights?
Swiss Re offers CatNet® data services directly to its clients for an integration based on an API. However, not all companies want to develop a needed tool on their own. A tool like SpatialKey combined with Swiss Re's CatNet® data, is a great shortcut for companies that want to combine individual location and portfolio data with globally homogenous hazard data.
Can you share with us some quantifiable or qualifiable results insurers can expect from your data?
Sure, let's assume you offer earthquake policies in East Asia that usually include tsunami coverage. The only way to easily find out what this means for your portfolio is to have a high-quality data set and a geospatial tool at hand. Your insured corporate with headquarters in New York and say 50 subsidiaries in East Asia, requires an accurate check about where to expect earthquake and tsunami Cat risks. This is very efficient with the named solution. All in all, the main benefits are accuracy and efficiency.
Last year Swiss Re released the industry’s first Global Storm Surge Zones with five-meter resolution (for Europe and U.S.). What are some of the other ways you’re innovating?
We also offer CatNet® data directly through a browser solution and therefore have a large user community. This said, it is clear that we want to stay ahead of the crowd with high-quality global data sets. While we have already reached a high level regarding natural hazard services, there are gaps regarding real-time event and detailed exposure information. So, there is more to come.
Click here to read more about SpatialKey’s collaboration with Swiss Re.