Tropical cyclones are perhaps the most destructive forces of nature to hit India, causing widespread economic loss. Insurers estimated losses up to INR 1000 crores ($142 million) after cyclone Amphan struck, while cyclone Fani was expected to cause insurance losses of well over INR 2000 crores($273 million). However uninsured losses many times are looking at the low insurance density in India.
All stakeholders need to take into account both predictable and unpredictable situations when it comes to mapping risks and to mitigate losses, which is extended by natural disasters like tropical cyclones. Given the current upheavals in weather patterns, it is necessary to be prepared for financial risk mitigation for tropical cyclones.
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The need for a cyclone risk assessment solution in India
India is surrounded by coastline of over 7516 km, exposed to the full wrath of tropical cyclones, which are an increasingly common phenomenon. Every year, India has to endure at least 2-3 tropical cyclones that cause great damage to life and property. Since cyclones are unpredictable in nature, people fail to understand the risks associated with them.
With increasing global warming and continued damage to the planet, irregularities formed will only result in an increased number of cyclones. Cyclone Tauktae and YAAS are the recent examples of the kind of havoc, they created in the coastal regions of India.
The point is not just about predicting cyclones, but also to insure our assets against them. However, when it comes to insuring assets for unpredictable natural hazards like tropical cyclones, both clients and insurance agencies rarely get relevant weather-related data in a timely manner. This is where use of GIS mapping for insurance risk assessment comes into the picture.
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GIS technology and its use in risk assessment
Under remote sensing technologies with the help of satellites, it has become possible to monitor our planet and gain critical information, pertaining to the topography and climate data. Over the years, this data has become prevalent in determining as well as predicting natural calamities for property protection and development.
GIS is now being extensively used to predict natural disasters. Initially used to accumulate land data, GIS technology is now being increasingly integrated into risk assessment software. GIS uses its vast database and mathematical algorithms to analyze spatial locations and portrays the output in visual data.
This data is spread over maps, so patterns and relationships can be assessed. With the help of this data, different zones can be created over a map depending on the potential risk, they possess from calamities like floods, landslides, and cyclones. These zones can be strengthened against the threats they may encounter by implementing the necessary pre-disaster strategies.
GIS is used for risk assessment because of its near-accurate capability of predicting natural phenomena like storms, cyclones, and floods. Apart from government bodies, NGOs that help during disaster management can also benefit from this technology, by knowing which areas are worse affected.
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Benefits of GIS-based risk assessment for insurance companies
GIS technology uses satellite data to predict weather conditions and climate anomalies at any given latitude-longitude coordinates. This is useful to insurance companies in identifying potential risks to a property due to events like cyclones. Such insights are instrumental in setting premiums, underwriting, and reinsurance policies.
Insurance companies can use GIS-based risk assessment technology to:
- Identify risk potential for assets in cyclone-prone areas
Asset owners in risk-prone areas insure their properties against damage caused by the natural calamities. Asset owners can take informed decision on location of the property, designing the structure, loss prevention and business continuity. Insurance companies face a risk when it comes to charging a safe premium amount from their customers in cyclone-prone areas. This is primarily due to the lack of scientifically proven data source.
Using GIS-based solutions, insurance agencies can identify the probability and intensity of cyclones to determine insurance coverage and charge asset owners appropriately. These logical, data-driven premium values, in turn, encourage more asset owners to opt for risk insurance during the tropical cyclones. This is a win-win situation for both the insurer and the insured.
- Use GIS data in real-time to track tropical cyclones and their impact
GIS is not only useful in pre-disaster situation but even after that. Insurance companies can use GIS to trace a cyclone in real-time to understand its path. By overlapping information of the insured with the damage caused by the cyclone over a map, the insurer can get a clear idea of the number of claims expected. This will help the company to be well-prepared in the disbursement process and provide relief to the insured.
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TROPCYC – the GIS-based risk assessment software for tropical cyclones
TROPCYC, developed by Unity Geospatial, assesses cyclonic data to create predictive reports regarding the risk and impact for business assets in a cyclone-prone area. TROPCYC is a GIS-based solution and the first of its kind and applied for Patent, that uses historical climate insights with mathematical algorithms to provide risk assessment data pertaining to tropical cyclones.
TROPCYC uses data collected over the past 129 years to help you identify the locations which fall under High-Medium-Low-No hazard based on Wind Speed, Flash Flood and Storm Surge Zones. TROPCYC predicts the cyclones that may hit a location in the next 10 years and also their intensities. This information can be used to estimate Maximum Probable Loss (MPL) Estimates technically but the best option is to arrive at realistic MPL Estimates based on the past claims experience of the cyclone damages.
TROPCYC also suggests changes in new/existing properties that can help you minimize your loss in the event of a cyclone. Insurance companies can use TROPCYC to effectively determine the risk and help them calculate the insurance coverage required for a property.
We understand the need for Underwriting and Reinsurance policies and having a good quality of insurance business portfolio. We can help protect the capital of the Insurance companies, looking at the catastrophic nature of Tropical Cyclone. Here, TROPCYC is a much-needed practical, GIS-based risk assessment tool that can help insurance companies as well as insured businesses to safeguard their assets.
