This feasibility study carries out an analysis of the most critical elements with respect to technical feasibility and viability (economic as well as non-economic) of a web application aimed at improving the efficiency of the management of insurance claims with a focus on weather-related hazards.
Objectives of the service
The objective of this feasibility study is to assess the validity of the InsureApp service consisting of a range of applications to support the insurance industry with a novel approach of interaction between insurers and their clients before, during and after natural hazards, in which provision of warnings and feedback collection from policy holders form an integral part of the service.
Users and their needs
The user community for the InsureApp Service includes all relevant users in the general insurance and reinsurance value-chain concerned with the assessment and management of claims arising from the occurrence of major natural disasters and man-made events, e.g. insurance and reinsurance companies, loss adjustment professionals, industry associations, policy-makers and regulatory agencies
At the first instance the InsureApp service will focus on the Australian insurance market which includes 133 insurance companies. Numerous disasters occur in Australia, the populated areas are very sparse and poorly monitored and using satellite data might be very beneficial. For this reason, HydroLogic has made contacts with local partners which operate in the insurance business: Watertechnology, AusInsured and Royal HaskoningDHV. These companies are actively involved in the Feasibility Study and they might be the future distributors of the InsureApp service.
As a result of preliminary interactions with the involved users and the stakeholders, the following needs emerge:
- In order to validate a flood related claim, the Claim Department need to know the source of a flood-related claim (rain or river). It takes a lot of time and money to collect the required information on rainfall and rivers. The costs for these Flood Claim Reports could be greatly reduced if data would have been available easier.
- The Underwriting Department needs 2 days to a few hours ahead access to obtain detailed information on natural hazards in order to make the right decision on the claim or the policy.
- The damage of rain, hail, storm hazards can be reduced if policy holders receive timely warnings. Insurance companies want to issue these warnings via SMS, smartphone or via the landline about 2 hours in advance so that the clients have enough time to take action.
Insurance companies want a claim forecast at different times: a few days ahead to forecast the expected claim volume, a few days after the event to get an improved insight in the expected claim volume and a few weeks and months after the event to get insight in the amount of claims already submitted and the amount of claims still to be expected.
Service/ system concept
Earth observation data (soil moisture, land use, precipitation, evapotranspiration) and in situ data (rain and flow gauges) are collected and stored in databases in the Cloud. The following services are used to generate the required rainfall and flood information:
- The RainWatch service to create an area covered rainfall product based on rain gauge data, radar data and satellite data (via the Hydro-estimator)
- The FloodWatch service to develop flood maps for areas where there are no existing floods maps
The RainWatch and FloodWatch services validate the data and generate rainfall map of Australia and Flood maps. The information is made available the the Flood Claim Report generator application which is accessible by the insurance companies via the web.
Space Added Value
Satellite data plays an important role in the Flood Claim Report Generator Services. GNSS measurements will be used for geo-tagging photographic/video evidence and damage reports as input for the Flood Claim Report. Earth Observation is used to provide rainfall information in areas without radar-coverage. This satellite based rainfall information will be automatically calibrated with rain-gauge data and will be archived in databases. Based on the measurements of the nearest rain and flow gauge(s), the recurrence interval of the event and the available flood maps, the flood extent will be determined as input for the Flood Claim Report. All relevant data will be archived. This will give insurance companies the opportunity to generate Flood Claim Reports event months or years after the event.
The benefits of the InsureApp service which includes several applications in order to support the insurance industry before, during and after natural hazards, are:
- Improved weather-related disaster forecast for an early identification of likely impacts of weather-related disasters at insurance companies’ offices
- Provision of early warnings and alerts to insurers in order to mitigate risk of losses.
- Smart and real-time flood inundation mapping to get insight in forecasted and historical flood extents.
- Better validation of the damage extent by using crowd-sourcing information via smart phone technology.
- High claim volumes are processed more efficiently by improving the current system of post-event claim assessment by using smartphone services.
- Reduction of claim fraud.
- Methodology to validate the potential costs savings or efficiency gains related to weather, floods, droughts and bushfires natural disasters.
Based on the outcomes of the user requirement definition and the technical and economic viability analysis, can be concluded that the Flood Claim Report Generator is the most viable and feasible InsureApp Service. The main benefit of this service is reduced time and costs to prepare a Flood Claim Report. By providing this Flood Claim Report Generator, the costs for analysing flood claims can be greatly reduced. It is estimated that for the 2011 floods more than 12 million euro and the 2013 floods more than 8 million euro could have been saved if the Flood Claim Report Generator would have been available for only the 7 insurance companies involved in this feasibility study. The payback period for insurance companies is expected to be less than one substantial flood event.
The concept of the proposed InsureApp solution is based on a three-layer SaaS (Software as a Service) architecture, which exploits the HydroNET network of services. HydroNET network includes more than 100 hydrological applications. It is adopted in the water and environmental sectors to manage water systems offering reliable meteo information, online flood modelling and mapping for cities, early warning system for drought risks, etc. HydroNET system is currently used by over 1250 users from different countries. The system provides a network of hydrologic services, by connecting individual data sources to a service bus, using generic open protocol web-services.
Essential element of HydroNET, which will be also implemented in the InsureApp service, is the data storage at the premises of the data owners who take care of the management, validation and quality control. As soon as a user sends a request for specific information (which requires some level of data processing), the information is made available to this user. Data transport on the network is secure and data are accessible only to authorised users. The final information is presented real-time to the user via a personalised HydroNET dashboard to support the user during decision-making process.
Based on the outcomes of the user requirement definition and the technical and economic viability analysis, is concluded that the Flood Claim Report Generator service is the most viable and feasible InsureApp Service.
In order to validate a flood related claim, Claim Departments need to know the source of the flood: storm based flooding or river based flooding. Most policies state insurance companies will pay for damage caused by rainwater or storm water, but will not pay for damage caused by rising river levels. The insurer has to prove that the damage was caused by a source which is excluded under the policy, otherwise the insurer has to pay out the claim. It currently takes a lot of time and money to collect the required information to identify the source of flooding. The Flood Claim Report Generator automatically collects the best available rainfall, flood and crowdsourcing (photo’s, videos of the damage or event) data, smartly combines this data to provide area covered rainfall and flood maps and automatically provides a Word Document with a tailored, predefined template containing all required information to support the flood analysis.
Key issues of the Flood Claim Report Generator service are:
- EyeWitness Mobile App: using a crowd-sourcing approach that allows the policy holder to upload additional information (e.g. pictures, video), despite their location and availability of terrestrial communication. We call this service:.
- RainWatch: Identifying suitable rainfall data (gauges, radar, satellite) and combine the data properly to achieve reliable real-time area-covered rainfall maps.
- FloodWatch: Identifying suitable flood data (flood maps, flow gauges) and combine the data properly to achieve reliable real-time flood maps.
Translating this data into a tailored Flood Claim Report based on a predefined template which is determined in cooperation with the insurance company.
The project was finalised in January 2014.