Storm watching

Ana Paula Nacif discovers how Hiscox uses the latest mapping technology to help clients cover their homes against natural disasters

With climate change, the frequency and intensity of weather events – floods, earthquakes, storms and tornadoes – are getting higher. While most people are more likely to be concerned about theft or fire, insurers and brokers need to see the whole picture.

Constant advances in technology mean that insurers now have much more information about these events. This allows them to not only better understand risk exposure, but also to improve their products and pricing capability. But it is far from an exact science. “We have a lot of information about these events, but it is still difficult to predict where and when we are going to get them,” explains Austyn Tusler, Head of Art and Private Client at Hiscox.

One of the tools used to help manage risk and come up with a consistent price structure is mapping technology. Hiscox uses information software called ‘map flow’ to determine the precise longitude and latitude of the property to be insured. It then overlays that location with flood or subsidence maps, for example, so that the insurer knows precisely the type of risk it is taking on.

When it comes to flooding, it is not only location that matters. There is a clear risk for properties near river banks, but when there is intense rainfall, flooding can happen in urbanised areas where drainpipes and gutters were not designed to cope. “Risk is changing, particularly in London,” says Austyn. “Space is in short supply and people have built basement flats, and this is not a good place to be when the drains are at capacity and start backing up.”

But there is still some uncertainty around these events. “We have to interpret the data, which is not as straightforward as it may sound,” Austyn points out. “Also, no one event is the same. “But technology does help us with risk selection and enables us to price individual customers. People always think about fire, theft and accidental damage, but we need to consider the other perils – flooding, earthquake, storm and tornado.”

Brokers have a key role in making sure customers are properly covered. “It is important to have full cover for subsidence, tornado and earthquake,” says Austyn. “And Hiscox offers one of the widest coverages in the market.”