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Can satellites help insurers to grow by closing protection gaps, and improve sustainability?

Satellites can do much more than provide cool weather system pictures and mobile phone connections. They are a great example of how technology can be an ally in building a more sustainable future, and present insurers with an opportunity to grow good business - because ultimately sustainable business is good business.

Specifically, Earth observation (EO) satellites – of which there are nearly 1,000 orbiting the planet – are using ever-more sophisticated remote sensing techniques to provide us with increasingly granular data about the state of the world we live in.

Mapping sustainability

This sophisticated space technology offers unparalleled opportunities to map the planet’s sustainability challenges and enhance the insurance industry’s risk modelling and intelligence.

Remote sensing data from EO satellites can be used to help governments and organisations better understand the Earth’s environmental challenges and how to tackle them.

Our new report, Remote sensing: high-resolution geomapping to progress sustainability goals and expand insurability estimates that 39 of the the UN’s 231 Sustainable Development Goal (SDG) indicators can benefit directly or indirectly from EO data.

EO data for vegetation cover, habitation patterns, and hydrometeorology together with other data can provide granular insights into progress on sustainability issues. For example, forests and mangroves are great carbon sinks, as well as supporting biodiversity. These nature-based solutions are a key tool in mitigating the effects of climate change. With EO data it is possible to see where deforestation is occurring and determine where resources need to be allocated.

The report estimates that the proportion of SDGs that can benefit from EO data will increase over time as remote sensing becomes ever-more accurate.

However, the ability to integrate EO data to measure progress on the SDGs varies hugely by country. The report cites lack of processing infrastructure, talent and poor interoperability across data frameworks as the biggest hurdles.

Expanding insurability

Remote sensing can enhance risk modelling and intelligence, making insurance processes more efficient.

EO data could, for example, be used for faster, more efficient and more accurate pricing of crop yield risk in the agricultural sector.

Insurers currently collect yield data via crop-cutting experiments (CCE) in a defined area chosen via random sampling. CCEs are time- and resource- intensive, and the relative lack of accuracy means they are prone to basis risk.

Combining historical CCE data with satellite images and weather data creates “smart sampling” that is more representative of the actual crop situation.

This information could also be used to promote more sustainable agricultural practices – aligning with the zero hunger SDG – and serve as an early warning system of impending famine.

In close cooperation with VanderSat, a remote sensing company, Swiss Re developed an effective soil moisture deficit index insurance, aimed at protecting farmers against the financial losses caused by this peril.

Already available in over ten countries, it pays out in case the soil moisture deficit reaches a pre-defined level. The soil moisture deficit is closely linked to the drop in yield that occurs due to drought. Farmers and insurers daily updates through a tracker. 

In the world beyond Agro, Swiss Re and ICEYE, the world's largest commercial radar satellite operator, have agreed to partner in order advance Swiss Re’s natural catastrophe services with state-of-the-art radar satellite monitoring technology. This technology provides early warning systems and near real-time monitoring before and during the event and high-resolution imaging and rapid response analysis 24 hours following the event.

Swiss Re has access to ICEYE's radar satellite constellation that can see through the clouds as well as at nighttime for all global floods. This will be further enhanced with optical satellite images as well as airborne images (through drones, for example), with an addition of geospatial analytics.

As a result, insurers benefit from a faster damage assessment, enabling them to estimate losses only a few days after such an event has happened. Portfolio damage assessment has already been launched for earthquakes, tropical cyclones and flood. By combining various data sources, including remote sensing, optical or radar satellite with other data sources we get the best granularity and reliability.

Historical EO data can also be used to model flooding at a more granular scale than ever before, expanding insurability to many homes that were previously uncovered.

Enhancing ally

Remote sensing and EO data - especially when combined with other data sources and machine learning - offers huge potential to enhance risk modelling and intelligence. It could help insurers better price and monitor their risk portfolio, as well as help influence clients’ decisions about their assets.

This could help make households, businesses and society more resilient.

Our industry is already a great consumer and provider of data. Remote sensing will increasingly become our ally in closing the protection gap and expanding the bounds of insurability.