GEO-INTELLIGENCE IN THE INSURANCE INDUSTRY

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30. D-GEO Workshop in München18th June, 2015

Andreas SiebertCorporate Underwriting – Head Exposure Analytics & Geospatial Solutions

Agenda

04Geospatial analyticsfor risk managers

03Geointelligence within the insurance value chain

02What does Geointelligence signify?

01Challenges for the insurance industry

05Innovative outlook and key-takeaways

Source: NASA

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06NATHAN Live Demo

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Geointelligence and NATHAN 3Image: used under license from Shutterstock.com

Challenges for the insurance industry

01

Herausforderungen der Industrie –Die größten globalen Geschäftsrisiken 2015

Allianz Global Corporate & Speciality, 2015

Geophysical events(Earthquake, tsunami, volcanic activity)Meteorological events (Tropical storm, extratropical storm, convective storm, local storm)

Hydrological events(Flood, mass movement)

Loss events

Climatological events(Extreme temperature, drought, wildfire)

Selection of catastrophes

NatCatSERVICE

Loss events worldwide 2014 (980) Geographical overview

© 2015 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at October 2014

DroughtBrazil, Decemeber – March

DroughtChina, July – August

Winter damageJapan, 7 – 16 February

Winter damageNorth America, 5 – 8 January

DroughtUSA, January–September

EarthquakeUSA, 24 August

EarthquakeChina, 3 August

FloodsChina, 11–20 July

FloodsChina, 24–28 May

FloodsIndia, Pakistan,3–10 September

FloodsEurope, 13–30 May

FloodsItaly, 31 January–11 February

FloodsUnited Kingdom,December–February

Severe stormsEurope, 8–10 June

FloodsUSA,11–13 August

Severe stormsUSA, 12–14 April

Hurricane GonzaloCarribean, 8–10 June

Cyclone HudhudIndia, 11–13 October

Severe stormsUSA, 18–23 May

Severe stormsUSA, 2–4 April

Severe stormsUSA, 27 April–1 May

Severe stormsUSA, 3–5 June

Typhoon RammasunAsia, 11–22 July

Source: Munich Re, NatCatSERVICE, 2014

Rechtliche Veränderungen

Erhöhte Risikotransparenz erforderlich (Solvency II, BAFin)

Veränderter Wettbewerb; neue Marktteilnehmer; Marktstagnation oder –rückgang

Marktschwankungen (Wechselkurse)

Kosten- und Effizienzdruck im Kerngeschäft

Demographischer Wandel

Cyberkriminalität

Globalisierung und Rückwirkungsschäden (CBI, contingent businessinterruption)

Herausforderungen der Versicherungswirtschaft (non location-based)

Kumulkontrolle: früher vor allem aus der Sachversicherung, heute zunehmend durch weltweite Abhängigkeit von Risiken untereinander auch Haftpflichtrisiken

Beobachtung: Zunahme / Intensität von Schäden aus Naturkatastrophen

Zunahme von Wertekonzentrationen in risiko-exponierten Gebieten (Kumule)

Erhöhte Risikotransparenz gefordert (Naturgefahren-Modelle)

Komplexe Wechselwirkungen und Erhöhung der Empfindlichkeit in den Wirtschaftsprozessen (z.B. Lieferketten schwer zu modellieren)

Veränderungen in der globalen Risikolandschaft: neue, bisher unbekannte z.B. durch Technologiewandel, Pandemien, Überalterung von Infrastrukturen)

Herausforderungen der Versicherungswirtschaft (location-based)

ContinentOveralllosses

in bn US$

North-

America1.500

South-

America126

Europe 608

Africa 44

Asia 1.700

Australia/

Oceania138

43%

10%

28%8%

38%

5%

Differences in insurance „density“Economic vs. insured losses

Overall losses Insured losses

© 2015 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at February 2014

Hot Spots and Accumulation IssuesMonitoring of value concentration areas (e.g. industrial estates)

Better understanding of risk vulnerabilitiesExplore vulnerability interactively in the map

Supplier A Supplier B Supplier C

Consumer A Consumer B Consumer C

Sub-Supplier

ProductionEnergy

Sub-Supplier Sub-Supplier Sub-Supplier Sub-SupplierSub-Supplier

Source: Andreas Siebert, 2011

Better understanding and risk transparencyof supply chains

Increasing complexity of our business Interdependencies in global trade and supply chains

Source: Marsh Inc., 2011

Joint Venture

Marketing

Operational Risks

Loss ofEmployees

Compliance Issues

Products QualityContamination

Strategic Risks

Drop in Sales/Revenue

Legislation/RegulationChange

Customer Chumby Rumor

Exchange RateFluctuation

Interest-RateFluctuation

Lost of Reputation/Brand

Variability ofStock Price

IntellectualProperty

Financial Risks

Hazard Risks

Earthquake & Tsunami

Going Concern

Supply Chain

Sales Channel

Health & SafetyEvents

Credit Rating

Cash Flow

Liquidity Assets

Assets Value

AccountManagement System

Product RecallOccupationalAccident

Stoppage of PublicUtilities Supply

Liability

ContractualLiability

Contamination

NuclearPlant

Human Resources(outflow)

External

Business Interruption

Internal

A catastrophe is triggering multiple losses along the value chain

Property DamageLawsuit

Geointelligence and NATHAN 13Image: used under license from Shutterstock.com

What does Geointelligencesignify?

02

What does Geointelligence signify?Business intelligence & Geointelligence

Insurance businessData (Big Data)

Business intelligence(can be any insurance

information)

What?

Who?

How many?

Geointelligence(can be any spatial

information)Where?

Holistic approach

Insurance data (liabilities distribution)

Principle of GIS is connecting data sources

Claims and event information

GeospatialAnalytics

Socioeconomic data

Hazard data

Improved risk transparency

Aerial and satellite imageryPost codes Number of risks Sum insured EUR

70 267 48.636.00071 398 83.308.00072 370 80.104.00073 299 61.532.00074 241 41.696.00075 180 38.214.00076 561 114.108.00077 406 79.198.00078 248 34.268.00079 624 128.662.000

Mobile-tools (with GPS)

Source: Munich Re

The importance of Geocoding Accuracy

Acc

urac

y

Address Point

Street Address Interpolated

Postal Code Centroid / City Centroid

Source: Munich Re, GfK Geomarketing

Source: Munich Re, GfK Geomarketing

Accuracy depends on your business needs and availability of client data

I. Nerd Phase: Experts only

II. Touch Phase: Supporters join

IV. ROI Phase:Return can be measured

III. Integration Phase:Community forms

BusinessGIS

GISBusiness

BusinessGIS

Business

GIS

Herausforderungen der Geo-Community4-Phasen der GIS-Integration

Quelle: Andreas Siebert, Munich Re, 2014

03

Source: Munich Re

Geointelligence within the insurance value chain

High demand of geospatial services and analyses across the organization…

GISProduct

Actuarial

Portfolio Management

ClaimsMarketing /

Sales

IT / Data Management

LegalGIS

Geographic Information Systems (GIS) aligns teams by facilitating communication and understanding

Geointelligence in the insurance businessValue chain

Product development

Sales and marketing

Risk management

Claims management

Risk identification

Risk assessment

Modelling, rating,

budgeting

Risk accumulation

control

Single risk identification

Geocoding – Visualize your single risk location

Source: Munich Re

Geocoding – Visualize your global distributed Portfolio

Multi risk identification

Source: Esri, DigitalGlobe, GeoEye, i-cubed, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community

Worldwide single risk evaluation

Single risk assessment

Worldwide multi risk evaluation

Multi risk assessment

EQ Locations Sum PD TSI LoadingZone 0 120 7.163.044.720 0

Zone 1 70 3.970.989.382 ?

Zone 2 43 1.849.545.546 ?

Zone 3 17 556.629.741 ?

Zone 4 4 7.922.628 ?

Sum 254 13.548.132.017

Quantitative evaluation of exposed locations using the example of earthquake hazard

Example for earthquake is transferable to all Natural Hazards!

Source: Esri, DigitalGlobe, GeoEye, i-cubed, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community

Risk = F (Hazard, Vulnerability, Exposed Values)

Loss experience

Set ofscenarios

Statistics

Expected loss / loss occurrenceprobability

Risk curve

Individualexposure

Scientific input

Vulnerability functions

Hazard informationSource: Gfk Geomarketing, Munich Re

Value distributionSource: Gfk Geomarketing, Munich Re

Modelling, rating, budgeting

2000Number of photovoltaic installations: ~ 1900 units

New technologies are creating new risk accumulationsIdentification of „unknown“ accumulation

Source: esri Source: esri

Risk accumulation control

Photovoltaic systems in South-West Germany

2010Number of photovoltaic installations: ~ 110.000 units

Source: Munich Re

Geointelligence in the insurance businessValue chain

Product development

Sales and marketing

Risk management

Claims management

Quantitative loss estimation example

Number of Risk Locations Percentage

Affected by Irene 14.000 58 %

Not affected by Irene 10.000 42 %

Sum 24.000 100 %

Claims loss estimation

Demo Footprint Analysis Hurricane Irene (August 2011)

Source: esri

Source: Munich Re

Verification of reported claims with event footprints

Short term estimation of portfolio losses after catastrophes

Visualisation of reported claims

Fraud prevention: identification of potential cases of fraud (using footprints)

Using event footprints to optimize claims management

Claims management

Source: Munich Re

Geointelligence and NATHAN 30Source: NASA

Geospatial analytics for risk managers

04

Location based services for risk managersMain GIS-application fields at Munich Re

Internal Solutions„visible“

RiskMapper

Internal Solutions„invisible“

GeoData-Services

Client Services

NATHAN

RiskMapper: The data dashboard allows to combine many underwriting information

Portfolio Data

NATHAN Hazard Maps

Industrial Parks

Event Footprints

Critical Infrastructure

IndustryLocationDatabase

+

From data generator to data orchestrator and solution provider!

RiskMapper: Functionalities Portfolio Upload (Aggregated data or treaty business)

RiskMapper: ApplicationsVisualization of property exposure data with density maps

RiskMapper: ApplicationsHazard analysis of industrial facilities to identify hot spots

RiskMapper: Functionalities Use real-time data to improve the „risk radar“

RiskMapper: ApplicationsMonitoring of industrial estates in flooded areas

RiskMapper: Functionalities Create surface profiles to identify the flood impact

RiskMapper: ApplicationsApplying event footprints for claims assessment and estimation

1978 / 1988 / 1998 / 2009 / 2011 2012 / 2014 / 2015

Munich Re‘s NATHAN Risk SuiteFrom Wallmaps to innovative and fully integrated mobile solutions

Source: Munich Re

NATHAN Risk Suite toolsNATural Hazards Assessement Network

NATHAN Risk Suite

NATHAN World Map of Natural Hazards

NATHAN Mobile

NATHAN Single Risk

NATHAN Portfolio

Risk

NATHAN Premium

NATHAN Risk

Consulting

NATHAN World Map of Natural Hazards The wall map illustrates the natural hazards distribution.

NATHAN MobileThe tool provides mobile NATHAN access for single risk assessment on address level.

NATHAN Single Risk and Portfolio Risk The online tool supplies NatCat risk assessment for single and portfolio risk on address level via Munich Re’s client portal.

NATHAN Premium is the premium service for NatCat portfolio risk assessment tailored into clients’ interface.

NATHAN Risk Consulting: personal expert know how to help introducing geointelligence at clients’ site.

NATHAN Portfolio Risk AssessmentOnline PDF Report

US Single Risk Location in St. LouisRiverflood

Source: JBA, Munich Re | DigitalGlobe, GeoEye, Microsoft, CNES/Airbus DS | Esri, HERE

To further expand NATHAN‘s competitive position various innovations are planned for 2015

Source: Munich Re

Most important improvements realized in 2015

New Risk Index for Earthquake, Storm and Flood

Planned update of global flood maps

Planned major innovations 2016

Major NatCat loss event Footprints for lossestimations

Mobile solutions

Source: JBA Risk Management, GfK GeomarketingNew heat maps and interactive circle for worldwide exposure and accumulations control

Significant upgrade of the Global Flood Maps

1. New NATHAN flood maps (rivers) remodelled using full 2D hydraulic model and DTM NEXTMap 5m DTM data – resampled on 30m

2. New NATHAN flood maps now include all rivers (no minimum catchment size), using 2D hydraulic modelling approach on DTM

Current NATHAN flood maps [100yr RP] Planned flood maps [100yr RP]

Source: ESRI; JBA Source: ESRI; JBA

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Innovative outlook and key-takeaways

05

Datengewinnung einst…..

…immer mehr Daten

Datengewinnung heute…..

…immer genauere Daten

…immer schnellere Datenverfügbarkeit

Quelle: http://www.welt.de/wissenschaft/article122957094/Was-Drohnen-alles-koennen-aber-nicht-duerfen.html

…und neue Technologien

Neue Plattformen und Lösungsarchitekturen

Management Awareness und Commitment (“innovative big data project”)

IT-Unterstützung und Geo-Knowhow

Workflow-Verständnis bei den Geospatial-Experten

Einfache Integration der Geo-Lösung in bestehende IT-Landschaft

Datensicherheit auch bei Geodaten (Cloud-Diskussion)

Geodaten-Verfügbarkeit und –standards; Qualität und Kosten

Anwenderfreundlich – “Underwriter-tauglich”

Erfolgsfaktoren für “Geospatial Underwriting”

Geospatial-Technologien unterstützen sehr gut das Geschäftsmodell der Branche.Big Data und Industrie 4.0 können jetzt zum endgültigen Durchbruch führen.

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06 NATHAN Live Demo

NATHAN Live Demo

Getting started: Log-in via nathan.munichre.com

Source: Munich Re/Bild: Martin Hendriks/Getty Images

Thank you very much for your attention!

Andreas Siebertasiebert@munichre.com

© 2014 Münchener Rückversicherungs-Gesellschaft © 2014 Munich Reinsurance Company Image: used under license from Shutterstock.com

Disclaimer

Münchener Rückversicherungs-Gesellschaft (Munich Reinsurance Company) is a reinsurance company organised under the laws of Germany. In some countries, including in the United States, Munich Reinsurance Company holds the status of an unauthorised reinsurer. Policies are underwritten by Munich Reinsurance Company or its affiliated insurance and reinsurance subsidiaries. Certain coverages are not available in all jurisdictions.

Any description in this document is for general information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product.