12 March 2007, London UK – The Lloyd’s insurance market has notched up another first in its 300-year-history by offering underwriters the means to see Lloyd’s data on Google Earth maps to plot their exposure to hurricanes, earthquakes, terrorist attacks and other catastrophes.
Technicians at Lloyd’s have created a service that the market’s 42 managing agents can use with Google’s popular mapping service to ensure they are better prepared to manage the world’s risks.
Insurers can input their data and see at the touch of a button what they could be liable for in the event of a calamity such as an earthquake in San Francisco, a hurricane in Florida or another terrorist attack on New York.
Paul Nunn, Lloyd’s head of exposure management, says: “This is really geared to helping syndicates build the ability to manage their portfolios of risk more effectively.
“One of the big issues that came out of the record 2005 hurricane season was that Hurricane Katrina caused a few surprises to insurers because they were largely using property catastrophe models to manage their accumulation of risks.
“While such models can be very useful, they did not capture all the ways that people sustained losses because people were relying on one approach, rather than looking at their exposure in a more holistic way.”
Lloyd’s believes that Google Earth, while best-known for allowing people to see aerial views of their properties, can help plug that gap.
The software the market is offering features a continuous colour scheme that helps draw underwriters’ eyes to areas of most exposure, plotting this on a map of a territory so that they can take this into account when writing new risks.
The software is three-dimensional, so large exposures can be shown vertically as well as by colour coding. Policy information and other data can also be layered on top to help managing agents keep abreast of what risks they have in their portfolios and where they are most vulnerable.”
When applied to showing hurricane loss potential, Mr Nunn likens the visual effect to a white picket fence stretching, for example, along the hurricane-prone east coast of the US.
Posts along the fence would appear at different heights and be highlighted in different colours to indicate the pockets where insurers were most heavily exposed. “It should give underwriters increased confidence that they’re not going to be caught out by a hotspot.” he says.
“Underwriters already do this on physical maps in two dimensions. Now they can add a third dimension.”
Lloyd’s already has a licence from Google for the arrangement and believes this is a cost-effective way of helping support the markets 42 managing agents and 64 syndicates.
It is offering the service free of charge and has already signed up a dozen managing agents, who are trialling the service. Mr Nunn said Lloyd’s is now exploring similar initiatives, including a potential way of helping syndicates map and track their exposure to flooding risks.
“The proof of the pudding will be in the eating,” he added. “We are working with a dozen managing agents at the moment and they are a good set of early adopters.”
Robert Caton, head of risk modelling at Hiscox, one of the insurers using Google Earth through Lloyd’s, says: “It’s early stages yet, but what we have seen so far is promising.
“This tool provides a way of presenting a significant amount of relevant information about exposures in a way that’s clear and instructive and quickly highlights potential problem areas.
“A reporting tool of this sophistication could be expensive and time consuming to produce for individual agents so it’s pleasing that Lloyd’s is developing this type of tool, and making it available for use by the market.”
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Lloyd’s is the world’s leading specialist insurance market and expects to have the capacity to write approximately £16bn of business in 2007. It occupies sixth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2007, 64 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from
more than 200 countries and territories worldwide. Visit www.lloyds.com.