As insurers were warned they need to wake up to the benefits of the use of location intelligence, one expert has said while the data exists the ability to create the necessary relevance will be the game changer for the market.
InsTech London launched its report on Location Intelligence 2021 which highlights where better use of location intelligence can support and provide the essential tools to assess fast-changing environmental risks that cost the industry around $60 billion in 2020.
For Harish Pesala, director of software provider Balkerne, which operates the SmartResilience real time risk intelligence platform, said the recognition of the benefits of location data was long overdue.
The InsTech London report said: “With improvements in the power of analytics, we are gaining more raw processing power offered by cloud computing and insights from ever more intelligent Artificial Intelligence. This is leading to the emergence of a new generation of higher resolution, up-to-date analytics at a cost that makes these accessible to insurers.
“Climate change, and the resulting reporting regimes associated with ESG (Environmental, Societal and Governance) and the TCFD (Task Force on Climate Related Financial Disclosures) will require credible measures of hazard impact and mitigation across all aspects of society. As is often the case, but often not properly appreciated when considering the drivers of innovation, regulation is likely to be one the main reasons for widespread improvements in risk reporting.”
Mr Pesala explained: “The report is very welcome given the growing threats that face property owners, risks managers and their insurers. We have long said there is a clear need for hyper levels of locational data which can be delivered to support the ability to make far more informed and real time risk management and underwriting decisions.”
“It is an issue we have been working to support our clients with via our platform for some time and we are fully aware of what can be delivered if firms get the delivery right,” he added.
However, Mr Pesala warned that while the recognition of the benefits locational data can provide is increasing, the challenge remains around the delivery of such data.
“Understanding the need is important,” he added. “However, to deliver that data with high accuracy, and relevance is difficult to achieve. We have been working on that delivery for some time and the use of AI and machine learning is enabling us to significantly enhance that relevance.”
Amongst several factors driving increased interest in the use of location intelligence, the report points out is that “the biggest driver of change in 2021…is likely to be the increasing requirement for insurers to report on their ESG (Environmental, Societal and Governance goals).”
InsTech London predicts that ESG factors – already being used to determine asset allocation in the industry – are likely to become increasingly important to underwriting over the next few years. This is an area where greater use of location intelligence may well become indispensable.
“The use and the relevance of locational data not only for insurers but also risk managers will continue to increase,” said Mr Pesala. “Real time intelligence can create a new dynamic for insurers in understanding and more accurately rating the risks they are asked to assume.”