LexisNexis warns of rising flood risk in South Coast & Wales

LexisNexis Risk Solutions has published analysis showing that more than 10% of properties in parts of the South Coast and Wales could face increased flood risk by 2030, highlighting a gap in property insurance underwriting.

The analysis links the projected increase to rising sea levels and higher expected rainfall. It comes as insurers face scrutiny over how they assess climate-related exposure across their books of business. LexisNexis is also updating its Map View geospatial platform to bring portfolio exposure data closer to underwriting decisions at the quote and renewal stage.

For insurers, the issue is not only the risk attached to an individual building, but also how each additional policy changes concentration risk in a wider area. LexisNexis argues that exposure and accumulation data often sit with catastrophe and exposure management teams and are refreshed only periodically, creating a disconnect with day-to-day underwriting.

That can leave underwriters writing or renewing business without a current picture of how much risk is already concentrated in one location. In areas exposed to flooding or other weather-related threats, that blind spot could become more significant as conditions change more quickly.

Caroline Elliott-Grey, Senior Product Manager, Insurance, at LexisNexis Risk Solutions UK and Ireland, outlined the concern in two comments on the state of the market and the company's response.

"Assessing risk at an individual property level using geospatial intelligence data is important. However, as the climate changes, underwriters also need to understand how accepting a risk will affect the wider portfolio. The challenge is that accumulation and exposure data held by catastrophe and exposure management teams is often updated only periodically and remains separate from the underwriting process. As climate-related perils evolve, an area's exposure profile can change significantly between reports. This can increase the likelihood that underwriters will renew a policy or write new business without realising how much risk is already concentrated in a particular location. This gap between portfolio risk intelligence and underwriting means insurance providers could be exposed to concentrated losses when a major weather event occurs," said Caroline Elliott-Grey, Senior Product Manager, Insurance, at LexisNexis Risk Solutions UK and Ireland.

Platform changes

Map View is used by insurers, brokers and managing general agents to assess location-based risk. The platform handles about 1 million transactions a month and covers tens of millions of risk locations.

The latest changes fall into three areas: workflow tools, location and peril assessment, and portfolio management. In practice, the updates add functions that allow users to save map filters and views, upload external geospatial files, and refine geocoded locations with custom coordinates for properties that are harder to identify through standard address data.

LexisNexis has also added an elevation profile feature that shows the height difference between a property and nearby water. For flood underwriting, that offers another layer of context when reviewing a location.

On the portfolio side, new tools include hotspot identification for areas with high concentrations of total sum insured, monitored zones for tracking policy counts and exposure in defined areas over time, and user scoring that lets underwriting teams apply their own treatment to selected zones. Another feature, called fire blocks, groups buildings by proximity and fire-spread assumptions to support accumulation analysis in dense urban portfolios.

Market pressure

The changes come as insurers operate in a competitive property market while dealing with more volatile weather patterns. The challenge for underwriters is to make quick decisions without losing sight of aggregate exposure.

Some Map View data and functions are also available through application programming interfaces, allowing insurers to feed location and exposure information into their own quoting and underwriting systems. Available functions vary by configuration and delivery method.

Elliott-Grey said the flood analysis shows why insurers need more timely information when deciding whether to write or renew property risks.

"In a soft market, insurance providers are under pressure to assess property risk more fully and more quickly. Our flood-risk analysis underlines how important portfolio management has become within the underwriting process. As climate risks continue to evolve, insurance providers need more robust and timely insight into how individual decisions affect the wider portfolio. The latest enhancements to LexisNexis Map View demonstrate our continued investment in helping insurance providers gain greater visibility of climate risk, from underwriting and pricing right through to portfolio management. As the climate changes, this one platform enables new business, renewal, catastrophe and exposure teams to work in unison across the entire insurance process to help maintain profitability," said Elliott-Grey.