Tuesday 22 April 2014 – Using satellite information to better understand and monitor natural catastrophes has gained pace in the insurance industry in recent years. This is, in part, thanks to a reduction in costs and a growth in understanding of the benefits. (source: Lloyd’s of London)
In March 2014 the Moderate Resolution Imaging Spectroradiometer (MODIS) aboard NASA’s Aqua satellite captured an image of fires burning in Sumatra. The fires have resulted in hazardous air quality and low visibility, leading to school closures and flight cancellations in Pakanbaru, the capital of Riau province.
In a recent presentation, SCOR chief executive Denis Kessler predicted that by 2020 the reinsurance industry would be widely utilising satellite loss assessments.
He used the example of Super Typhoon Haiyan, which caused extensive damage to Tacloban in the Philippines last year, and said the detailed satellite images had allowed the reinsurer to assess its exposure in real time.
Kessler also showed how the technology could be used to assess quickly, and process, crop insurance claims using the Global Risk Agriculture Intelligence (GRAIN) index, developed jointly by Airbus Defence and Space and Zedx.
The index provides yield estimates based on daily ago-meteorological forecasts and crop vigour maps derived from satellite imagery. Based on this information satellite maps indicate areas in green where crop insurers are “okay to pay out” a claim, areas in yellow where “further assessment is needed” and areas in red where they should “send in an adjuster”.
Satellite images were also useful during last year’s Central European floods, according to Edi Held, head of sales and products at PERILS AG.
“The German floods lasted for two weeks and spread over an area of many tens of thousands of square kilometres, ” he explains. “And the river floods progressed up north rather slowly, so it was a suitable event to be monitored by satellite technology.
“The quality of satellite-based footprints is important, ” he continues. “It’s important that you capture the peak of a flood and that can be quite a challenge. Then the resolution of the satellite images is key. Often, the higher the resolution the better, especially when it comes to its use for claims validation.
“For a reinsurance company it’s often about having a quick overall loss estimate, and in that situation it’s necessary to be very quick, ” he adds. “Timing is crucial, not only in capturing a peak moment, but also to have the footprint available ideally one or two days after an event and not a week later.”
The willingness to use satellite information also depends on the costs involved, notes Held.
“It is still rather expensive but there are some programmes from the European space agency where data is expected to become free and this would help to develop [the use of satellite data] further, ” he says.
In February this year, reinsurance broker Guy Carpenter launched its satellite-based catastrophe evaluation service, GC CAT-VIEW. The service is provided in partnership with geo-information provider Geospatial Insight Limited and analyses Earth Observation Satellite and radar imagery, plus footage from other sources.
Resolution is all-important, but an incomplete satellite picture can be supplemented with other data, explains Vic Jenkins, from the International Strategic Advisory team and head of Analytics for the UK, MENA and South Africa at Guy Carpenter.
“There are a number of satellites flying around over our heads at any one time, ” she says. “Those satellites will have different purposes and the information coming from them will be at different spatial, temporal and spectral resolutions. Some may be at one metre spatial resolution and some might be as much as 30 metres and the resolution is quite important in terms of the detail that can be picked up.”
“Sometimes it has to be a patchwork of information, ” she continues. “One of the things we did in the recent UK flood events, where there was cloud cover or the resolution for a specific area was not as fine as we would like, is we used different information sources to supplement that information. For example we also deployed footage from unmanned aerial vehicles (UAVs) and the media.”
Building catastrophe knowledge
As well as helping insurers and reinsurers understand the impact of a particular event, satellite information is also useful in developing further the industry’s understanding of natural perils. One area is active volcano monitoring where satellite remote sensing is being used to develop an early warning system for volcanic hazard mitigation.
Earthquake science can also benefit from information gathered in space. In the aftermath of the 2011 Tohoku earthquake and tsunami, measurements of the earth movement – including GPS satellite data – were analysed by researchers at the California Institute of Technology in an effort to better understand this rare “megathrust” event.
They found that the area where the fault slipped the most – 30 metres or more – happened within a 50- to 100-kilometre-long segment. A much smaller area than they might previously have expected.
“This is not something we have documented before, ” says Mark Simons, professor of geophysics at Caltech’s Seismological Laboratory. “I’m sure it has happened in the past, but technology has advanced only in the past 10 to 15 years to the point where we can measure these slips much more accurately through GPS and other data.”
“Satellites can be used to look at past earthquake ruptures and that can also help potentially to identify strain on ‘locked’ faults [an earthquake fault that is not slipping], even if they’re not obvious in the landscape, ” says Jenkins.
“Satellites are also very good for allowing us to look at changes through time, particularly in terms of land use data – how the built environmental and population density is changing” she adds. “In areas where there hasn’t been a significant history of observational data, satellite imagery can be used to infer daily weather data for those regions.”