How mapping can improve risk understanding from natural catastrophes

Some 130 catastrophic events caused an estimated $54 billion in economic losses and $22 billion in insured losses in the first six months of the year, according to Impact Forecasting.


In each of these events, mapping has been important in understanding the timeline of the event, the damage caused and the geographical extent of human and economic losses.

Mapping and spatial analysis is becoming increasingly important for insurers as they seek to quantify their risks by understanding where their exposures are located in relation to potential natural hazards.

Insurance is used to mitigate the impact of these often tragic events, and location is a key component of determining risk by insurance companies. Accurately knowing where insured properties are located, the topography and geology of the area, plus data regarding the types of buildings are all important factors.

Much of this information has a geographical component and can be placed on a map and viewed together in a GIS (Geographic Information System).  Google Maps can be thought of as a simple GIS, as it allows the viewing of information on a map. Where a GIS differs is that it is designed to capture, store, manipulate, analyse, manage and present all types of geographical data; be it a property location, the path of a hurricane, or the epicentre of a large earthquake.

GIS and other geospatial technologies are used extensively in all parts of the insurance process from underwriting and pricing to estimating losses and claims. Catastrophe models have been used for the last 15-20 years to estimate the potential loss of property and life following a major disaster. Impact Forecasting’s ELEMENTS platform enables users to visualise exposure, hazard and loss outputs from the model. This allows insurers to effectively plan their capital, buy the appropriate reinsurance cover and ultimately pay claims.

The increasing use of geospatial technology and geographic data is helping insurers achieve a better handle of their risks. Communication helps with understanding risks too. In order to help communication between practitioners the Association for Geographic Information (AGI) has launched an Insurance and Risk special interest group to help build a network between the geospatial and insurance sectors.

In the future, the industry will make more and more use of geospatial data and technology to drive their analytical capabilities and improve their bottom line. Ultimately, if you do not know where your risks are, you do not have an accurate view of risk.

Chris Ewing, Impact Forecasting at Aon Benfield.


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