I live in a small town between Charlotte, N.C., and Rock Hill, S.C. Today, schools and businesses in Charlotte are closed after a series of severe storms came through the area to my north yesterday. That was the same day that South Carolina’s governor requested federal aid for cleanup after a severe storm outbreak in Rock Hill a couple weeks ago. Twelve homes were destroyed and two-inch hail was reported.
Near-misses for major losses have been a fact of my life over the past few years. For a time I lived outside Austin, and tornadoes passed to my north and south fairly regularly. Combine that with years of working in the insurance industry and the question emerges: Am I just lucky?
Carriers are juggling coverage all over the country, pulling out of or raising rates substantially in many markets. And though many carriers are talking about a growth opportunity in 2024, the news still indicates a trend away from providing coverage in many areas. As I see severe weather enclose me on all sides, I wonder if I might be next.
Or maybe the data is on my side. Over the past several months, I and my Celent colleagues have looked at several data and analytics solutions that promise to help insurers find “the green house in the sea of red.” Every day it’s easier to identify homes and businesses that are less at risk of catastrophic damage than others even in the same ZIP code. That should, in theory, allow insurers to keep operating in certain markets and maintaining their position as a key component of personal and commercial risk management.
The confluence of several technologies are making this possible. Geospatial data grows in volume and resolution every year. Between satellites, radar, and overhead flights, a wealth of data is available to evaluate the condition of most properties. In addition, computer vision allows those images to be easily scanned for categorization in terms of roof health, tree cover, or fire breaks. And connected devices are feeding up-to-the-minute data on other hazards while encouraging a dialogue between insurer and insured to keep track of the big stuff.
The barrier to implementing these technologies for many insurers is going to be sticker shock – what good is it to find the best risks if it costs a lot to get there? But that’s a matter of mindset. The insurance industry is trending toward leveraging more granular data. What seems like a leap of faith today is likely to be table stakes tomorrow – and the technology is here now. If the alternative is leaving markets altogether, a little spending now can go a long way later. It’s how you achieve growth despite a hard market and relentless cost pressures and catastrophe activity.