Desjardins’ weather alerts: sign of a preventative insurance model?

Desjardins General Insurance Group (DGIG) will soon launch severe weather alerts allowing consumers to take pre-emptive steps to protect their property from potential damage.

The move is indicative of a larger trend towards a preventative insurance model, as found in a recent Insurance Institute of Canada (IIC) report.

Starting in May, Desjardins members and clients across Canada who use the Desjardins Insurance Home-Auto, State Farm, or The Personal mobile apps will have access to a severe weather alert system for hail, windstorms, torrential rains, and, eventually, hurricanes and tornadoes, the insurer said Monday. DGIG says it’s the “first property and casualty insurer in Canada to offer this kind of detailed information alert service.”

Digital transformation is promising to not only expand the potential for process innovation at P&C insurers across Canada, but some predict it may alter the core insurance model as well, according to a January 2018 IIC report, Ounce of prevention worth a pound of cure: How tech is changing the insurance model.

“In a world now dominated by the Internet of Things (IoT) and Big Data, the rapid expansion of data collection has put insurers in a position where they can start to prevent accidents from happening,” the report said. “Imagine insurers and brokers sending out text messages warning their insured policyholders in a certain postal code that a hurricane is about to hit their high-net worth homes. Or perhaps a proud new Lexus owner receives an email from an insurer warning about a series of vehicle thefts in a local mall.”

The report noted that putting IoT data to use in the Canadian P&C space is happening now, although it is not widespread.

It’s also important to understand which consumers may want to receive alerts. “So, for example, if we look at the prospects, there might be one type of person who would want information right after they got off the phone,” said Bill Redford, vice president of product development for Keal Technology solutions, whose broker management system offers the ability to send out storm warning notifications to clients. “They would want to have emails or texts coming to them — warning about flood, for example, or giving them more details about a product — and they would want to make a decision very quickly.”

Others, Redford says in the report, may not want to be pushed that quickly and may take two or three weeks to make their choices.

In the Desjardins’ example, users will be notified if there is a severe weather event within 500 metres of any of five locations of their choice. Clients will also be able to notify the insurer if they need to make a claim. If the system detects hail, not only will it alert the consumer, but it will also indicate the size of the hailstones. “Hailstones the size of golf balls can damage cars, but hailstones the size of tennis balls can damage buildings,” DGIG says in its release.

While the mobile technology is available, the industry is often a long way from being able to use or adopt it, the report cautioned.

One major issue is the entire network infrastructure, the IIC report says. Insurers are still trying to move away from their legacy systems or to layer new solutions onto their systems. On the broker side, brokers wishing to take advantage of advanced technologies to push the information out to consumers – by using text messages or a chatbot, for example – will need to organize and house their data into one solution before being able to gain insights from IoT data.