At a private event last month, one executive at the corporation that oversees the market told underwriters that it has not yet seen clear evidence that a warming climate is a major driver in claims costs. Kirsten Mitchell-Wallace, the market’s director of portfolio risk management, predicted that this effect will however magnify future losses — and called for urgent action from firms to invest in modelling and improve their underwriting. “Losses are already increasing, so climate change is likely to amplify these increases,” said Mitchell-Wallace, according to a transcript of her remarks seen by the Financial Times. “By the time we can definitely see the impact in claims, it will be too late.”
FT 23rd October 2023
Floods in New Zealand, devasting fires in Australia, the USA, and the Mediterranean, and other natural CAT events left the global insurance industry holding an estimated $50BN in losses in the first half of 2023. Compounding cost inflation last January reinsurers increased prices by up to 200% and capacity restrictions. In California, many direct insurers withdrew from the property market.
Mitchell-Wallaces reported warnings to insurers that the full impact of climate change has still not been factored into claims data is worrying.
It's not that there are not many sources of data, predictive analytics, and underwriting solutions. Intech has and is hosting various events in London on these topics.
- CoreLogic- manage property data for selling, financing, and protecting property
- Hazard Hub- property risk data
- ICEEYE- global flood earthquake and CAT damage data in near real-time
- KETTLE- house-by-house risk assessment across USA
- LexisNexis- vehicle, ADAS and home data
- McKenzie Intelligence Services Ltd wide range of data sources and data management
- Mitchell- Auto data
- Moody's Analytics
- Previsco- predicting and preventing flood impacts
- SAFEHUB- building-specific US earthquake damage
- Synectics identity, financial, and fraud data
- Terrafirma property risk data
- Verisk- auto and property data
- WeatherNet- granular and near real-time weather data (UK)
- WhenFresh- a wide range of UK property data
Insetch recently hosted an evening event in London “The future of underwriting has arrived” applying AI to data to improve risk decision-making. Companies helping underwriters connect, surface, normalise and analyse data across all these rich sources include:
- Cytora - digital risk processing including leveraging LLMs and GenAI
- Giroux.ai- profitable predictive analytics for MGAs and brokers
- hyperexponential- pricing decision intelligence
Underwriters seeking to reduce wasted time on administration might like to enjoy the benefits of Underwriter's Workbenches including those from: -
- Artificial Labs
The next key test for the insurance market will be the coming January renewals and companies like the above can help analysts and executives manage a more orderly build-up than last year, where discussions were strained as reinsurers demanded tougher terms and conditions and substantial increases in premiums. But, some predict reinsurers’ appetite for taking on natural catastrophe exposure will remain restrained. “Capacity is still likely to be restricted due to global [catastrophe] losses continuing at record levels,” Adam Garrard, head of corporate risk and broking at Willis Towers Watson, one of the world’s biggest insurance brokers, told the FT.
Time to source & access the right data and technologies combined with the human intuition and expertise of data scientists and data engineers combined with underwriting and actuarial expertise to analyse and predict better than the competition.
Lloyd’s of London has warned insurers that the full impact of climate change has yet to translate into claims data despite annual natural catastrophe losses borne by the sector topping $100bn.