Modern Insurance Magazine Issue 66

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INSURTECH SAS We Q Franklin, it was so great to catch up recently and talk about all things climate tech! You recently said that you believe AI will usher in a new era when it comes to the insurance community’s leading role in our larger, global ecosystem, particularly around existential challenges such as climate risk. Can you expand on your thoughts around how AI can enable climate resilience? A Sure! The speed and power of cloud computing, combined with innovation in AI, has finally delivered our industry to a destination where we can predict outcomes, prevent loss, and close the protection gap. We are living in the age of the ‘AI Exascale’, meaning the most powerful computers can perform the same number of calculations in one second than a person could make in 31.6 billion years. This is critical because the current situation is dire. However, we can harness AI to model better forecasts, and use this information to inform those communities most at risk. This can lead to the development of parametric products, which will keep those communities resilient. Q You recently shared an incredible case study, where the ‘smart city’ of Cary, NC adopted SAS’s cloud-based analytics in the prediction and response to flood risk. Do you see this regional approach being adopted in other states and municipalities? And at what rate, given how severe the climate crisis has become? A Sadly, 2023 was the deadliest year for climate related deaths since 2010, with more than 75,000 fatalities globally. Cities like Cary or Jakarta are leaders in climate risk resiliency, yet there are not nearly enough communities exploring the use of technologies such as IoT, streaming analytics and AI to address these risks. I really hope to see this change, particularly because the global IoT market is forecast to grow to $700 billion by 2032. Q I believe you recently attended the RiskWorld Conference down in San Diego? On the back of this, what have you observed in terms of novel new trends around climate risk mitigation? A I observed many point solutions to individual issues or problems which were both innovative and impactful, adding immediate value. Practical solutions like flood barriers, carbon recapture products, or 3D printed fire-resistive homes address immediate needs; however, I believe the use of new data sources like aerial / space imagery ingested into AI platforms will be incredibly useful in forecasting and crafting emergency responses, as well as bolstering underwriting and claims decisioning processes. We also need to take a long-term view of addressing climate risk. There’s momentum in change, and individual solutions addressing today’s problems are the equivalent of taking an aspirin for pain management when you’ve got an arterial bleed. need to evaluate organizations based on their strategic vision and the role they intend to play in addressing climate risk. This involves directing premium dollars away from organizations with unsustainable business models or practices, and diverting to organizations with true ESG principles. Providing risk assessment tools to help those same entities craft a business plan to achieve their long-term goals also ensures compliance with climate regulation, and encourages the change we so desperately need. Q Can you share your thoughts on the importance of intersectional partnerships? Why is it important for re/insurers to be in collaboration with government officials, emergency response teams and commercial or residential real estate, as well as other sectors that might be affected by a natural disaster? A The insurance community is a part of a larger ecosystem upon which people depend. Reinsurers provide coverage to insurers, who can subsequently accept risk in the form of policies to cover homes and businesses. Those policyholders then have the support and assurances from state, local, and federal authorities to enact emergency response plans or adopt flood resiliency blueprints through their hard-earned tax dollars. We are part of a larger web and represent true sustainability! Resiliency does not exist without each member of this community taking accountability for their role and executing those responsibilities. Encouragingly, when disaster strikes, people help each other in the vast majority of instances. Every claim professional I’ve ever met has that one story about how they truly helped someone when it mattered the most, and I believe in our community’s ability to achieve resiliency for this very reason. As a self-described “Insurance Super Nerd,” Franklin leads the Market Strategy & Engagement for Insurance within the Global Financial Services Industry Marketing team at SAS Institute, Inc. Prior to joining SAS in July 2022, Franklin held a variety of individual contributor and people leader roles in Property and Casualty Insurance. He is a Chartered Property Casualty Underwriter (CPCU) with bachelors’ degrees in Finance & Banking, Risk & Insurance and French from Appalachian State University. He serves on the Board of Directors for the Women’s Center of Raleigh and the Board of Trustees for Soapstone United Methodist Church. Franklin J Manchester Global Insurance Strategic Advisor, SAS Global Industry Marketing 60 | MODERN INSURANCE
INSURTECH Fathom QDr. Jones, you often speak of the concept of ‘uncertainty’ in the insurance industry. How do models and data assuage that uncertainty as it pertains to flood risk? And what is the role of metadata in all of this? Uncertainty is a prerequisite for insurance, and reducing uncertainty - to individuals or corporations A or governments - is a vital benefit that the insurance industry provides. When it comes to building models and flood maps, uncertainty is present in every component, as well as being inherent in the processes we are trying to model. Therefore, it is the risk we are attempting to quantify. A key part of Fathom’s ethos involves transparency. We have a commitment to publish everything we do, to the largest extent possible, in academic peer-reviewed journals. We also provide extremely detailed and comprehensive methodology documents. In short, we hide nothing. This all helps to reduce the uncertainty faced by our customers when they’re trying to understand what underpins our flood maps and models. However, of course there will always be a significant element of uncertainty remaining. In this case, it’s our job to communicate this remaining uncertainty to the best of our ability. Our Metadata product helps by providing a ‘certainty rank’ for every grid cell on the planet, which reflects how sure we are about our estimate of flood risk for that particular grid cell. Ensuring our customers appreciate the different levels of uncertainty adds an extra dimension to their decision making. It’s not just about how much flood risk there is, but how certain they are in the level of it. Q Climate change is expected to increase the frequency and intensity of extreme weather events, including floods, leading to greater risks for communities worldwide. How will Fathom better serve its clients through its expanded offerings with Swiss Re? Flood is one the few perils where there is a reasonable confidence in the direction of change A for future climates. Generally, flash or surface water flooding will get worse in future, alongside coastal flooding, whereas river flooding will very much depend on the specific location in question. We’ve published numerous papers in academic journals on the impacts that climate change will have on different communities around the world, from Puerto Rico to Morocco and the US. Being part of Swiss Re means that their established relationships and distribution channels can enable us to reach more people. We’re also poised to distribute our products in a way that better suits the needs of our current and future customers. For example, our flood maps are now available in Swiss Re’s CatNet®, which is a wellestablished platform for accessing hazard data for a variety of perils - including visualization and API capabilities. Q “Climate tech” has become a real buzzword. What are some of the trends and/or novel new technologies you’re seeing in the industry at the moment to address climate change? A ‘Climate tech’ can cover a lot of sins, and it’s really important to understand what is meant by this! At the resolution required for meaningful risk assessment, there’s a lot of climate model data out there that is completely unsuitable for quantifying flood hazard by itself. That said, we do find that machinelearning techniques can assist by training them in data rich areas, which can then help supplement the data we have in relatively data-poor areas. The SWOT programme is a really exciting development, which a number of our experts are currently involved in. It’s a joint development by numerous space agencies around the world, led by NASA and the Centre National D’Etudes Spatiales in France. The programme saw a new satellite launched into space in 2022, which will measure all of the water on the planet’s surface in one big survey and repeat every 21 days. Never before have oceans and inland water bodies been measured at the same time, and the data collected by this survey will go a long way towards helping us map global water surface elevation and gain a much better understanding of river channels. We’ll also be able to validate our flood maps against this data in the future, resulting in a significant reduction in uncertainty for our next-gen flood maps and models. Dr. Matthew Jones Chief Product Officer, Fathom Dr. Matthew Jones is the Chief Product Officer at Fathom, responsible for ensuring that the company’s existing products and services are accessible to clients and meet their requirements. His role also includes the creation and oversight of a compelling product roadmap. Most of Matthew’s career has been spent as a consumer and user of catastrophe models and hazard data, giving him a great insight into how Fathom’s products are wielded and how they can best serve the needs of customers. Matthew has a PhD in Oceanography and Remote Sensing from University College London, which he completed whilst being based at the UK’s National Oceanography Centre in Southampton. He is a co-author of ‘Natural Catastrophe Risk Management and Modelling: A Practitioner’s Guide’. MODERN INSURANCE | 61
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ISSUE 66 ISSN 2515-3803 THE ART OF
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Modern Insurance Magazine Issue 66

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