(Photo credit: Brad Goddard/NOAA.)
79 percent of insurers believe data and analytics will have a significant impact for Property & Casualty customers over the next few years, and nearly 50 percent of insurers have plans to utilize weather data as a key component of their analytics strategy. While claims validation is the low-hanging fruit for applying weather data, it is simply scratching the surface. Weather data is changing how insurers approach the full customer lifecycle from product design and marketing to underwriting, account management and claims. Advanced weather data can benefit insurers—and the industry as a whole—in several key ways.
Develop market-specific product offers: As is the case with most industries today, data is driving product and service development. The insurance industry is no exception. With advanced historical weather data at their disposal, insurers can better understand weather patterns for any location, and in turn develop optimized insurance products that unlock new business opportunities and better serve customers.
Insurers have established strong statistical modeling capabilities, largely focused on risk management. However, this same skill set can now be applied to understanding nuances between different geographies, offering new products specifically aimed at areas with special risk profiles, such as those with regular occurrences of hail and lightning. Having a full archive of historical data on Dangerous Thunderstorm Alerts, for example, helps insurers know with full precision and accuracy where significant storms have occurred in the past and where other storms might occur again in the future.
Target marketing activities to lower-risk prospects: With advanced weather data in hand, and specific product offerings developed to serve more granular customer segments, insurers can be armed with stronger value propositions and more personalized messaging to engage with prospects. The positioning and offers to prospects in high-frequency severe weather locales, such as the Southeastern part of the United States, can be different from areas where snow and ice are more prevalent. Street-level weather intelligence helps insurers identify localized areas that are less prone to severe weather, allowing them to target marketing dollars to the right area at the right time.
Optimize underwriting processes: Street-level weather intelligence can be extended to the underwriting process. By understanding places of residence and work, frequently traveled routes can be assessed for historical patterns of severe weather, occurrences of accidents, and traffic patterns.
Enhance customer relationships through storm alerts: In advance of major storms, companies can use weather data to predict severe weather on the horizon and mitigate excess damage and higher claims. For example, real-time storm alerts can protect the customer from potentially hazardous conditions, increasing their safety and avoiding excessive property damage. As a result, the insurer can also lower the potential for expensive claims.
Data and alerts from weather APIs can be delivered to the insurance carriers via mobile application, notifying policyholders to take the appropriate actions to mitigate losses. These alerts serve as a tangible benefit to policyholders and can encourage more engagement with the carrier’s mobile application—a growing strategic initiative within many carriers.
Improve claims validation process with lightning data: Lightning has long been viewed by meteorologists simply as a weather byproduct, but lightning analysis technology has advanced significantly over the past few years—to the point where lightning activity is now being used to predict atmospheric events, improve citizen safety and help businesses in weather-sensitive industries reduce risk and improve operations.
For claims validation, this means that lightning data can be analyzed at a granular level to learn where, when, and how often the most powerful strikes occur. Illustrating a historical, accurate picture of lightning strikes that indicates both predicted and actual storm severity levels helps insurers quickly and accurately dispute or verify storm damage claims as well as prepare for future risk. These efforts have been aided by advances in ground-based lightning sensors able to detect in-cloud lightning, a key to determining if a storm has a higher probability for downburst winds, large hail and even tornadoes. Total lightning detection includes detection of in-cloud and cloud-to-ground lightning data and is fundamental to the real-time identification of thunderstorm development, location, coverage, intensity and trends. These sensors can pinpoint within 200 meters where cloud-to-ground lightning strikes.
In light of the impact of severe weather to insurers, a data-centric approach is a must for today’s insurer seeking to develop and launch product offers that will grow their business and resonate with customers.