GIS to revolutionise flood insurance

By on 26 March, 2012
An international geospatial expert and key figure behind a global flood modelling project says the insurance industry is recognising GIS as a powerful tool that will drive comprehensive business transformation.
Simon Thompson, a senior executive with geographic information system (GIS) specialist Esri, has been meeting Australia’s top insurers as the industry faces widespread reform following two years of severe flooding that has inundated large parts of the country and exposed extensive underinsurance and poor risk assessment processes.
The flooding, which has impacted much of the eastern seaboard, significant parts of the south-east and even the nation’s Red Centre, triggered the Federal Natural Disaster Insurance Review (NDIR), whose recommendations were handed down in November and included compulsory flood cover in policies for homes in medium and high-risk areas.
Mr Thompson said his advice to local insurers facing the next few years of change was to follow their overseas counterparts, who were increasingly recognising geography’s role in assessing risk.
“Insurers cannot write a policy without accurately understanding and pricing risk and geographic information system technology is the most effective method for insurers to gain a holistic view of the exact exposure and risks they are underwriting.
“Layering detailed flood and engineering models over residential or commercial property data enables insurers to more accurately and efficiently understand their portfolios and deliver better products and services to their customers.
“The improvement in cover benefits both customer and insurer by reducing uncertainty, increasing competition, and ultimately driving transparency in providing householders with the information they need on the risks of living in flood-prone areas.”
Mr Thompson said the spatial industry has traditionally been more focused on technology instead of information sharing, but this is now changing.
“Local governments and the insurance industry is now recognising the value of the information that lies behind GIS technology,” he said. “As a result, the focus has swung onto the information product and the people it serviced, rather than the technology behind it.
“In the process, pressure is now building on local governments and developers for better thought-out development planning and approvals, and to make the information available to residents, both existing and potential ones.
“For example, Brisbane council is now viewing GIS information not just as a map, but a living medium that can be updated with information real-time and be shared with the man in the street.
“The possibility is now also open to assess individual properties for risk. While there may be winners and losers, insurance policies will carry equitable pricing, based on specific risk, and not subsidising risky properties through higher premiums on everyone.”
Mr Thompson has been a driving force behind an attempt to kick-start a global flood model, an international platform for flood risk assessment and modelling that could encourage governments and citizens to become more engaged in developing measures to adapt and mitigate flood dangers.
“The model will connect best practices to the system at different spatial scales – global, national, state and local – allowing many people to contribute their expertise and everyone can access the results,” Mr Thompson said.
“We feel if we can encourage everyone, from the man on the street to national governments to understand the flood risk in their own area, they will be more inclined to reduce its impacts and long-term costs to society.”

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