Three Reasons Why the Insurance Industry Needs Big Weather Data

By Jonathan Porter, VP & General Manager, Business Services, AccuWeather Enterprise Solutions

Jonathan Porter, VP & General Manager, Business Services, AccuWeather Enterprise Solutions

For the past seven years, the World Economic Forum’s The Global Risks Report has consistently featured a cluster of interconnected environment-related risks—including extreme weather events—among the top-ranked risks globally. In fact, a recent Fortune magazine article cited FactSet: 50 percent of the S&P 500 companies reported the 2017 hurricane season negatively impacted their businesses. Severe weather continues to put at risk a wide spectrum of businesses whose revenues, costs and financial performance are sensitive to weather.

"Business weather experts help minimize business disruption and losses for your policyholders and transform risk into opportunity"

Too many of those businesses aren’t even aware that the risk can be mitigated. Advances in the weather industry, along with accurate weather data and innovative analytics, have made it possible to reduce risk and loss—positively affecting overall revenues, costs and margins.

No industry is more vulnerable to the volatile nature of weather hazards than the insurance industry. The good news for the insurance industry is these weather risks can be seriously reduced by having the right weather partner with the experience and expertise to provide the kind of intelligence and insights that not only mitigate the risk of severe weather events but can help transform these events into opportunity.

Here are three critical benefits that insurance companies get by using personalized big weather data, AI and expert-driven insights as core business assets:

Engage more Effectively with Policyholders. The pinpoint-accurate, localized forecasts and insights possible that can be obtained from big weather data enable insurance companies to proactively and efficiently engage with customers. For example, insurers can provide weather alerts and warnings to prepare clients for upcoming severe weather. These personalized, advanced weather warnings allow both residential and commercial policyholders to take action to reduce loss. These proactive, advanced warnings also enable insurance companies to stage resources just outside of the impacted storm area—so once dangerous weather conditions cease, adjusters and support staff can begin serving customers and expediting claim resolution as quickly and as efficiently as possible. Further, companies can be confident they have the information to know exactly what policyholders and which areas were affected and ensure their team can be on the ground to support customers right away. This speedy response helps put policyholders at ease and reinforces insurers’ commitment to them.

Minimize claims by taking proactive steps before a storm’s impact. Not all forecasts are equal, so obtaining weather information with superior accuracy is critical. Government warnings do not provide enough protection for businesses. Businesses need dedicated experts continually monitoring their assets as if they were their own. Policyholders can receive notifications days before an event, and with just-in-time warnings for businesses, insurers can reduce the risk of employees being hurt or killed by severe weather. Around-the-clock, dedicated, site-specific monitoring can save insurance companies tens of millions of dollars in workers’ compensation claims by preventing resultant claims from just one hazardous weather event. No matter where they are, there are critical weather-related risks—from hurricanes, to flash floods and blizzards—that can easily catch businesses off guard if they’re not prepared. For example, an EF2 tornado struck commercial properties in northeastern Pennsylvania in June 2018. Having a clear, actionable safety plan in place, along with expert insights to activate that plan in time to make a difference, will help protect people, property and reduce overall claims. That advanced warning can also help promote precautionary action for policyholders, and a little bit of action goes a long way towards mitigating risk and reducing loss.

When severe weather does hit, accurately determining the forecasted path of greatest destruction and pre-positioning supplies and resources can help a company reduce claims in addition to fostering confidence and goodwill in policyholders. Once the danger has passed, claims representatives and supply trucks can be quickly deployed to tarp-over holes in roofs, clear fallen trees, and reassure distressed policyholders. These quick actions help reduce damage from future weather events—such as ensuring a roof is covered by a tarp before the next major rainstorm—critical in the aftermath of a disaster. Reaching affected properties quickly reduces the total size of the claims, lowers temporary lodging charges, and makes policyholders more satisfied—and less likely to file unreasonable claims.

Better Predict Risks and Flag Fraud. Increasingly, insurance firms want to know beforehand what their potential loss will look like. By leveraging weather data and insights and overlaying that with a company’s book of business, insights can be derived to accurately predict risk. Site specific, GPS location weather data can also help dispel fraudulent claims. For example, insurers may find that after a significant hailstorm in a city, individuals outside of the affected area also claim roof damage from the hail. Pinpointing the exact path of the hail can determine on a block-by-block level if a specific site was impacted or not. Similarly, during litigation, forensic meteorologists can recreate what took place during a weather event and provide expert testimony. In doing so, they can determine where the responsibility might lie for the damages that play such a huge role in property insurance claims.

In my many years at AccuWeather where we serve 245 of the Fortune 500 companies and thousands of other businesses globally, I have seen how a single hail storm, flood, or hurricane can inflict millions of dollars of damage. When you have expert meteorologists watching over your policyholders’ exact locations, those in threatened areas can receive customized, site-specific warnings by text message and email, notifying them when they need to take action to protect property, employees and customers. Ultimately, business weather experts help minimize business disruption and losses for your policyholders and transform risk into opportunity all while enhancing your customer service and reducing costs for the actual insurance firm substantially by reducing risk for claims.

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