“It is fair to say that climate change is challenging our long established risk models, especially for wind-based disasters. In other words, what we now think of as a 1-in-500 year event may no longer be such a low probability incident as storms intensify as a result of climate change,” Sherif El-Tawil, Professor of Civil and Environmental Engineering at the University of Michigan said. “Since it is not yet clear how climate change affects storm intensity, it is hard to predict how the hazard level will grow and make our communities more vulnerable. However, indications are that the risk is growing.”
The September 7, 2017 University of Michigan Engineering magazine went on to say that these risks are compounded by the increases in population in urban areas that are more susceptible to natural hazards. “While the extreme wind speeds that occur during hurricanes are perhaps the most easily recognizable symbol of hurricanes, it is the associated storm surge, wind-borne debris and wind driven rain that causes the vast majority of casualties and property damage during these events,” Seymour Spence another professor at Michigan said.
Weather analytics can offer actuaries data-based insight for risk analysis and for helping their insured prepare for significant events. Risk analysis with weather data will help predict claims reserves allocations and specific weather location analytics will help evaluate claims in context for actuaries to flag fraudulent claims. Insurers should engage their policyholders with weather alerts to help them prepare for weather events like Hurricane Harvey. These alerts can help avoid damage leading to fewer claims.
Insurers can guide communities on land-use planning infrastructure decisions and building codes based on insurability, and insurers can encourage the transition to a low carbon economy by offering products and services that encourage clean and efficient energy. If this seems like too much big brother, remember insurance companies have helped change American society for the better in the recent past. When insurance became contingent on smoke detectors deaths and losses from building fires dramatically decreased, and insurance backing of seat belt laws helped save lives on the road.