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Insurers eyeing satellite technology to help improve risk management related to natural disasters


April 10, 2012   by Canadian Underwriter


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As the insurance industry deals with climate change, satellite observation may become an integral part of improving existing risk assessment processes in the future.

“But the use of satellite observations is still in the early stages of being adopted by the insurance industry,” the European Space Agency (ESA) notes.

Earth-observing satellites can map natural phenomena such as floods and earthquakes, track hurricanes and monitor land subsidence across the globe, ESA says. This information can be valuable to insurance companies for risk and damage assessment.

“Satellite data can be used to create elevation models and map a given area’s proximity to rivers and other bodies of water to evaluate the flood potential,” ESA says on its website. “Weather-monitoring satellites can show severe weather conditions like heavy rain or hail, which can be useful for damage evaluation in agricultural areas.

“With instruments that monitor forest cover, precipitation and temperature development, satellites can even help to assess the potential risk of forest fires close to built-up areas.”

ESA says satellite imagery could be used to provide daily updates of the extent of flooding during a major plain flood event. This information can provide the insurance industry with a more accurate first estimate of their potential loss.

“Swiss Re sees high business potential in the integration of Earth observation-based flood extents as an accepted parameter for risk transfer products,” according to Jens Mehlhorn, head of the Swiss Re flood unit in Zurich Swiss Re, as cited by ESA. “My expectation is that we will see the first use of Earth observation information in parametric risk transfer solutions in the next 12 months.”


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