As the satellite world enters a new era in which thousands upon thousands of satellites are launched into space, the onus will be on the industry to find new buyers of satellite capacity. A recent deal between Iceye, an ambitious European commercial Synthetic Aperture Radar (SAR) satellite operator and flood monitoring provider and well-known insurance company Swiss Re hints at a strong new vertical for the industry to target. The partnership aims to advance flood risk management, assist disaster response, and speed up claim payments.
Pranav Pasricha, Swiss Re’s global head of P&C Solutions spoke in-depth to Via Satellite about the deal and how a company like Swiss Re could partner further with the satellite industry going forward. Pasricha says the mission of Swiss Re is to make the world more resilient by closing the insurance protection gap, as large parts of the economy are uninsured or underinsured. One of the biggest challenges is providing protection against, and dealing with natural catastrophes.
“Climate change is leading to increasing frequency and severity of events, making the situation worse. It also means that the historic natural catastrophe models that the industry uses need to be updated to reflect changing return periods and economic losses,” Pasricha says.
Swiss Re is constantly looking at ways to leverage modern technology to make insurance more affordable, fairer, and faster. Improving its ability to deal with natural catastrophes is a priority for the insurance industry and for Swiss Re, according to Pasricha. He adds, “It will have significant societal and economic impacts and the deal with Iceye is another step in the right direction.”
The insurance industry has to often work in very distressing situations where the goal is to get money to people quickly. One of the industry’s major challenges is how to speed up this process further.
“When you have extreme flooding events, quite often policy holders are severely impacted, but insurers often struggle to get assessors on the ground due to the conditions. Using Iceye, we can quickly and accurately assess the extent of flooding, calculate loss estimates and help our insurance client's direct resources. We can also in future help expedite the claims settlement process, so people can get on with rebuilding as soon as possible,” says Pasricha. “Without Iceye's SAR technology, this would not be possible. Looking forward there are other examples, such as wildfires, where satellite technologies are useful in risk mitigation, both during as well as post event.”
The deal with Iceye was announced in March of this year, and Swiss Re is in the early stages of collaborating with Iceye in a couple of countries with a few early adopter clients, with the goal of extending this collaboration globally and for many different clients. Swiss Re will also be exploring Iceye’s technical capabilities on events beyond flood.
Working With the Satellite Industry
This deal is an example of how a company like Swiss Re sees the benefits of working with the satellite industry. Pasricha says that Swiss Re has has been looking at satellite use cases for quite a while and interest recently accelerated. “In the last two to three years, the level of interest and experimentation has increased significantly as the quality of satellite data, response time, and cost has improved. In conjunction with advances in Big Data and Machine Learning we are now able to extract insights from satellite data that were not possible before,” Pasricha adds.
He says many insurance use cases being explored such as analytics on traffic patterns, supply chain and transport monitoring and resilience, building usage and occupancy status, conditions around large industrial and commercial facilities, monitoring of weather events and impact of climate change.
Separately, Swiss Re has been using satellites for a while in the agriculture space to assess soil moisture and settle claims parametrically. For other natural catastrophes, the data generated by satellites eventually makes it to its data repositories and models, even if it was not directly procured it at Swiss Re.
Pasricha believes there are hundreds of such examples in which satellite data can bring a fundamental improvement to the risk assessment and claims settlement process in the insurance industry, and hints at further collaborations.
“I see this as the start,” he says. “We are very open to being approached by satellite companies if they feel they have the technology to help us assess physical hazards and help us improving our response. We are always open to innovative companies.”
Closing the Deal
Charles Blanchet III, vice president of Solutions at Iceye, was the driving force behind this deal. In 2020, Blanchet had recently moved from the U.S. to Europe just before the COVID-19 pandemic struck. He had evaluated 36 use cases across eight different industries as potential customers/partners for Iceye, and the only business meeting he was able to attend before lockdown was meeting with Swiss Re. The meeting in Zurich, Switzerland, was eye-opening for him.
He learned about the limitations of flood insurance, that between 5 to 15 percent of all the money spent on floods pushed out to direct insurers goes to assessing the damage, and it is a slow and cumbersome process for everyone involved.
“It is bad for the people that have the policies because it takes some time for them to get the money they deserve. It is bad for the direct insurers and re-insurers. It is a big, complicated, costly process,” Blanchet said. “They are also flying blind — a company like Swiss Re is one step removed from the front line. They don’t know how big [the disaster] is.”
Here, satellite can help provide precise data and analytics which changes the game for a company like Swiss Re. “They were using models. We are converting the industry into using observations of what actually happened instead of models, at least for post-disaster situations. I have already watched this create massive change in the industry. It is creating positive, massive change,” Blanchet says.
He talks of the changing dynamics of this type of partnership. He says, “We are not going to hand you imagery anymore. We are going to hand you a spreadsheet or a raster file. It is literally rows of buildings and columns of water depth. That is the same spreadsheet they would get from people going out into the field and measure the high watermarks. So, they are well equipped to convert that spreadsheet into what the damage of the building is, and well equipped to turn that into a loss.”
ICEYE has three lines of business - a Missions line, a SAR data line, and the Solutions line. The deal with Swiss Re is the biggest deal that the Solutions part of ICEYE has ever done. Even for Blanchet and his experience with other industries, this was an eye-opening deal.
“My career has been about early stage venture backed B2B technology startups. I have been taking these companies from $0 to their first $30 million or so. I have never seen anything like this,” he says. “In your first nine months of operating you don’t usually sign deals like this. It is significant. We have this unique asset – the spacecraft — and we are solving a big problem,” he says.
Overcoming Past Dissatisfaction
Blanchet hints that there is more to be done to get insurance companies to work with the satellite industry, given previous experiences. He says insurance companies are hesitant as they have burnt by experiences with satellite in the past.
“[In] the first 30 minutes I have to show and prove to insurance companies that we have made the investments required to make them successful with this,” he said. “Almost every insurance company has tried at least twice before with other satellite companies and they have failed miserably. For example, [there would be] 100 pages of procedures for one flood.”
Whether the disaster is a flood, wildfire, or earthquake, the goal is get to precise information to clients so action can be taken more quickly. These are often life or death situations so speed is especially critical here. Iceye chose to floods first as they create the most damage globally every year.
“Every other peril together is about the same as what floods are. So, the next set of cases are directly adjacent and serving our insurance clients. That is wildfire, wind and earthquake. These are fascinating. Flood is observing water. Wildfire, wind, and earthquake is a change detection problem. We are assessing the damage from space.”
It is clear that satellite imagery and data can make a huge difference in a number of instances. If you take the example of wildfires for example, Blanchet explains how the industry can help. “We will see that fire line, and understand the hazards, we will come right behind that fireline and assess the damage of houses. We can work with the likes of FEMA in the U.S., insurers in Australia. The goal would be that within 48 hours of this event happening, get the money flowing, rather than months. I have learnt that insurance and governments just want to cut checks fast. They have no incentive to slow that process down. We will enable them with data.”
He also says Iceye is exploring persistent insured asset monitoring. “Instead of reacting to natural disasters, this solution is all about helping insurers be proactive. This solution involves us imaging all insured assets on a regular basis and providing insurers with a report on what has changed. Over time, we may be able to prevent big accidents from happening at large factories, bridges, dams, etc.,” he says.
Four Core Opportunities for Insurance
Pasricha sees the potential satellite data to have a major impact in all four core areas of insurance: risk assessment, modelling, risk mitigation and event response and estimate. In risk assessment, he talks of the ability to get real or near real time exposure data with accuracy is highly valuable to the industry. With improving satellite capabilities and economics, Swiss Re sees the potential to assess physical assets and their risk attributes, and monitor changes so our assessments reflect true risk position.
In terms of modelling: Pasricha says the industry uses vast amounts of historic data of all sorts to develop its underwriting models and that Swiss Re sees huge potential for improvement there as the granularity and accuracy of event and loss data improves due to contribution of satellite data.
On the subject of risk mitigation, Swiss Re believes in improving societal resilience and the best way of doing that is by reducing losses in the first place. “Here again we see tremendous potential for satellite data to alert us to impending events and help communities prepare and prevent. Good examples will be analysing the long-term impact of climate change and forecasting increasing susceptibility to wildfire, wind or water events. Likewise, early warning of approaching weather systems and helping people prepare,” adds Pasricha.
Finally, on the subject of event response and loss estimate, Pasricha adds, “When bad things do happen, satellites can vastly help us improve our response. As the example of our collaboration with Iceye shows, we can very quickly help insurance companies prioritize the most severely impacted areas, identify the clients with the greatest need and even help with fast and accurate payment of claims.” VS