When it comes to insuring real property, P&C companies have a problem. It is essential for insurers to have up to date information on the state of their property portfolio, both to assess risks and to make sure properties are accurately valued.
For example, have the policyowners of an insured house added a swimming pool? Have they put a trampoline in the backyard? Have they sustained roof damage in a recent storm? Does the growth of vegetation on land adjacent to their property pose a fire hazard?
Commercial properties pose many of the same concerns. Are the owners properly maintaining the building and grounds? Is water collecting on roof areas? Are code violations evident? Are neighborhood transportation patterns changing?
It takes an enormous amount of time and significant resources to track the condition of large residential and/or commercial property portfolios. Given the daunting logistics of conducting in-person, on-site inspections, insurers have turned to the skies for help, not only with seeing how their properties look at the time of underwriting, but with adjudicating claims faster and giving their customers a better claims experience.
Insurers now have access to imagery and data from what is called “near space” – a layer of the atmosphere 12 miles (or about 60,000 feet) in the air. Near Space Labs (NSL), my Brooklyn-based startup company, is exploring altitudes between 60,000 and 85,000 feet for commercial purposes.
NSL uses weather balloons to lift its proprietary robot (known as the Swifty) into these stratospheric altitudes. Swiftys are able to capture entire cities, at 10 centimeters per pixel resolution, which allows examination of fine details such as roofing tiles or ground surfaces, at scale. This high-resolution, high-frequency imagery assists insurers with claims processing, underwriting, and post-disaster property inspections. The Swifty robot is also zero-emissions, another advantage over existing approaches.
Near space imagery overcomes many of the limitations faced by the three primary technologies – satellites, airplanes and drones – used for obtaining visual imagery from above. For example, insurers can buy satellite imagery and analysis from many providers, but the images often lack the resolution needed to make accurate underwriting or claims decisions. Due to their orbital rotation, cloud coverage and other factors, satellites may be unreliable in their captures and lack recent data that can show insurers what their property looks like. Airplanes are expensive and lack the high-frequency imaging capacity needed for extensive portfolios. Drones fly at low altitudes and provide high-quality images, but the problem with drones is that, since they fly at low altitudes and require on-site personnel to operate, they are generally unable to obtain imagery across a large area, such as a major metropolitan region in which properties may be concentrated. Regulations also make it difficult, if not impossible, to use drones effectively in urban areas.
Near space imaging also allows for detailed examination of a large area in a short period of time. This is invaluable in the aftermath of floods, hurricanes, or other natural disasters. Their high-quality optical imagery helps machine learning models detect change, automating real-time assessment of property damage and sparing claims adjusters the need to venture into hazardous or unreachable areas. This accelerates the claims process and allows insurers to notify their customers more quickly about developments in their specific cases. The imagery can also help insurers limit fraudulent property claims.
Evidence also suggests that P&C insurers may be leaving large sums of money on the table through their inability to track homeowners’ additions, upgrades, and improvements, which accelerated during the pandemic years of 2020 and 2021. According to Statista, home improvement expenditures jumped from $406.6 billion in 2019 to $497 billion in 2020 and have climbed ever since, reaching an estimated level of $558 billion in 2022. While P&C insurers have reflected some of this value in their renewals, much of this expenditure remains hidden to underwriters.
Of course, vast quantities of imagery are of little use to insurers unless such data can be properly organized, analyzed, and displayed.
High quality geospatial data is a valuable resource for governments, businesses, and researchers seeking to track everything from climate variations to urban growth. By integrating this data with other advances in insurance Technology such as analytics, cloud, IoT and sensors, machine learning and artificial intelligence – as well as greatly enhanced computing power – insurers are well-positioned to take advantage of this previously neglected trove of information.