Catastrophe modeling tools go mobile

Smartphones make it easier than ever for risk managers to model in real time the threat of an approaching natural catastrophe, and the technology is evolving to model more gradual climate-related threats and feed better data into the mobile tools.

While the human contribution to climate change is a source of political debate, risk managers generally understand and accept that the warming climate is increasing the intensity and frequency of natural catastrophes and causing sea levels to rise, said Michael Brown, vice president and property department manager at Golden Bear Insurance Co. in Stockton, California.

Risk managers know they should mitigate the exposures where possible and buy insurance to cover the risks because “it’s the sort of thing you can’t afford to underestimate,” Mr. Brown said.

“The savvier risk managers are taking it into account, particularly if they’re dealing with coastal property,” he said.

Given this recognition, risk managers are increasingly turning to tools that can help them assess climate-related exposures — tools that can be easily utilized in the smartphone age such as SnapCAT, a mobile application that enables field engineers or consultants to gather and document windstorm, earthquake and flood primary and secondary exposures and allows for the quick and easy creation of detailed reports for risk managers, brokers and insurers.

FM Global clients can also utilize the mutual insurer’s MyRisk website, which provides risk managers a comprehensive overview of their entire property profiles — information that can be downloaded via a mobile application. The MyRisk Map Center allows risk managers to assess the potential impact of natural hazards on their locations in real time, factoring in details about their facilities such as engineering specifications.

“Clearly, risk managers are exhibiting an increased interest in the impact of climate change on natural catastrophes,” said Carl Solly, vice president, chief engineer for FM Global in Johnston, Rhode Island.

The tools enable risk managers to assess their exposures and become more sophisticated insurance buyers, experts say.

For example, risk managers can use their phones to assess risks and then explore deductible buy-down products for large retention programs or uninsurable perils that are excluded in traditional policies, according to officials with Ann Arbor, Michigan-based EigenRisk Inc.

The company developed an analytics and risk modeling platform called EigenPrism that allows risk managers to run what-if scenarios by imposing a map of historical catastrophe exposures over a firm’s assets to assess risk exposures and provide insights that can be used in pricing negotiations.

Traditional modeling companies focus on catastrophic events such as hurricanes, but EigenPrism can also use National Oceanic and Atmospheric Administration information on rising sea levels to overlay a company’s exposures and allow risk managers to consider possible solutions, said co-founder and President Deepak Badoni.

In addition, risk managers can use the information to take action to mitigate risks, such as elevating a facility or investing in other risk and engineering controls, said Kristin Carrington, founder of Fort Myers Beach, Florida-based property risk consulting firm Carrington Risk Consulting L.L.C. and SnapCAT creator. The information can also inform decisions on whether to purchase a facility, she said.

“You can mitigate a lot of those things,” she said. “Sea level rise, if it’s permanent, that’s going to be a tough thing.” But the technology must constantly evolve to more accurately model sea level rises, and the modeling becomes more effective as the quality of the data input into these models improves, experts say.

Superstorm Sandy is an example of models only being as good as the data entered into them. Flooding caused by the storm was worse than had been projected using Federal Emergency Management Agency information, they said.

“Even though we identified it, we didn’t anticipate the amount of water that occurred during Sandy just due to flood zone and map issues,” said Mike Martin, Boston-based executive vice president and general manager for Liberty Mutual Insurance Co. overseeing property coverage provided to large national and multinational buyers. “As good as technology is, we can always be surprised.” 

“You can’t just go to this is what the model says,” he continued. “It’s really that human intervention and interaction that makes all the difference in planning for that really catastrophic event.”