The concepts of ‘what and where’ are intimately tied together as one interdependent whole throughout the decision-making processes to get and keep insurance customers. Although the insurance industry is not homogenous, the two intertwined concepts of assets at risk and location-based risks of the assets are at play throughout each major line of insurance.
(Re)insurers have used a plethora of different types of resources to resolve the insurance geospatial dilemma of how to profitably resolve the continuing challenges of understanding, underwriting, and adjudicating claims of clients’ assets at risk and the concomitant location-based risks of the clients’ assets.
Insurance geospatial dilemma: (Re)insurance firms and brokers challenge of determining how to profitably resolve the interconnected issues of a client’s assets-at-risk and location-based risks of the assets.
Through the decades, the resources have encompassed a seemingly never-ending parade of people, hardware, software, and data including, but certainly not limited to: visiting prospective client locations and making notations or taking pictures; hard-copy maps; desktop mapping / demographic clustering systems; location intelligence software; geocoding address files; drawing geometric shapes around targeted geographies on digital maps; information about distance to coastlines, roof centroids, or distance to fire hydrants; NOAA and other weather data sources; devices that measure the severity, size, and direction of hail during a hail storm; and, more recently, using drones before and after severe weather events.
A new resource is emerging to join the parade: imagery from Earth Observation satellites for commercial applications. For the purposes of our report, we call private firms providing space imagery-based solutions to enterprises in one or more industries ‘NewSpace’ firms. But, NewSpace encompasses capabilities beyond the provision of space imagery-based solutions.
We define NewSpace as a value web (or visual stack) of participants and concomitant capabilities. (See the diagram.)
(Re)insurers and non-insurance company risk managers should take the following points into consideration before signing a contract with a NewSpace firm:
- NewSpace really is rocket science
- There are a plethora of activities that need to work together from various participants to generate the desired results for commercial clients
- NewSpace firms that only offer information solutions (raw imagery, terrestrial visuals, data, analytics, algorithms and models, vertical insights) are dependent to a – lesser or greater – degree on all the elements of the value web working together correctly.
To gain a better understanding of this emerging geospatial market beyond secondary research, we asked six NewSpace firms to answer questions about their company and geospatial contributions to the insurance and other industries. The six NewSpace firms that participated are: earth-i, Fleet Space Technologies, Orbital Micro Systems, PlanetWatchers, Slingshot Aerospace, and Spire Global.
The in-depth profiles of each firm cover their:
- Genesis, location, and employee information
- Strategic, investor, and revenue model information
- Go-to-market information
- Solution information
- Solution dependency information
- Technology and data information
- Roadmap and exit plan information
- Client training information.
As a group of six, these firms are participating in multiple parts of the NewSpace value web. Using their space-based solutions, some of the firms can, as examples, track ships at sea, monitor changing weather conditions on any part of the planet, help farmers manage livestock using IoT portals, enable agriculture firms to optimize their crop forecasts, monitor flooding during severe weather, and determine hail damage.
Most, if not all of the firms, have solutions that are positioned to help insurers manage claims more efficiently and/or strengthen their underwriting. In a similar fashion, most of the NewSpace firms offer solutions to non-insurance companies’ risk managers or to managers of Alternative Risk Transfer (ART) vehicles striving to better understand and reduce loss costs.Although NewSpace is the entire focus of this report, we believe that on its own, NewSpace solutions won’t resolve the insurance geospatial dilemma. However, used in concert with other geospatial capabilities, such as terrestrial land-based location intelligence and imagery from unmanned aerial vehicles, NewSpace becomes an important component of a triumvirate of solutions that can help insurers resolve the insurance geospatial dilemma.
- (Re)insurers are faced with an “insurance geospatial dilemma”: determining how to profitably resolve the interconnected issues of a client’s assets-at-risk and the location-based risks of the assets.
- Throughout the decades, (re)insurers have used a parade of people, hardware, software, and data to find the solutions to resolve the “insurance geospatial dilemma.”
- Data from NewSpace (i.e. earth observation satellites) provide rich locational texture, temporal history, and timeliness that provides the latest resource to resolve the “insurance geospatial dilemma”.
- Insurance underwriters could use a NewSpace firm’s wide range of time-based solutions to perform change analysis (with concomitant visualization) of specific geographic areas for frequency and severity of various natural and man-made events that have occurred through prior years or are projected to occur over a future time period.
- Non-insurance companies with risk management and/or ART vehicles should consider using data and analytical solutions from NewSpace firms.
- (Re)insurance companies of NewSpace solutions will not be passive consumers: some (re)insurers will want the imagery data and analytics for their Systems of Insight (SoI), Systems of Record (SoR), and / or their Systems of Engagement (SoE).
- Insurers deciding to purchase NewSpace data should realize that “yes, this is rocket science!” that they are depending on for solutions regardless of whether the insurer is only subscribing to or purchasing satellite-based data, analytics, models, or bundled insights.
- Insurers don’t have to be experts but they should have more than a passing knowledge of how the various elements of NewSpace come together into a visual cohesive whole.
- NewSpace firms wanting to participate in the commercial marketplace, whether the insurance industry or other industries, should always keep this principal foremost in mind: “hopes and dreams are not a replacement for profitable revenue streams”.
- NewSpace is continuing to grow with more firms participating from different parts of the globe; more satellites being launched (usually into LEO but not always); and more NewSpace firms using and/or offering Big Data and related AI applications, including data science, machine language, and satellite imagery.
- NewSpace firms that focus entirely or primarily on analytics (advanced analytics such as some of the AI components like Machine Learning) are really ‘niche players’ in the wider analytics marketplace.
- Relying on ‘hardware’ such as launch platforms, satellites, ground stations, or IoT devices is not sufficient to bring in a steady a flow of annual revenue. NewSpace firms need to transform a mix of hardware, data, and analytics into a subscription service for clients to have a higher likelihood of generating sufficient annual revenue.
- NewSpace firms should create alliances and partnerships with information technology firms and/or telecommunications firms that offer SoR, SoE, and SoI solutions to insurance firms.
- NewSpace firms should consider providing augmented reality and / or virtual reality solutions to insurers to enable the fusion of satellite-based geospatial, insurer policyholder data, and third-party underwriting, marketing, and/or claim data.
The above paragraphs and diagram are from my recent report: “Profiling Six NewSpace Firms: An Insurance Industry Perspective.” This is a free report to any person who wants a copy. Let me know, by sending me your email address, if you want a free copy.
It’s a long report (135+ pages) so I uploaded a PDF to Dropbox. If you want a copy, I’ll send you a link to the report.