Alberta wildfires highlight unpredictable risks
Alberta wildfires highlight unpredictable risks | Insurance Business Canada
Catastrophe & Flood
Alberta wildfires highlight unpredictable risks
CEO talks about what’s next
Catastrophe & Flood
By
Gia Snape
Unpredictable and intense wildfires in Alberta and other parts of Canada are a stark reminder of the importance of data to better predict and mitigate wildfire risks, one CEO has told Insurance Business.
Canada’s wildfire season got off to an intense start earlier this month as high temperatures fuelled dozens of wildfires in Alberta, blanketing much of the country with smoke.
US climate scientists have dubbed it an “unusually active” early season, triggering tens of thousands of evacuations in the western Canadian province.
Other provinces, such as Nova Scotia, are also seeing unprecedented wildfire activity, officials said.
“Canada has become one of the riskiest areas [for wildfires] and we must take action to protect properties,” said Izik Lavy (pictured), CEO of GeoX, an aerial imaging AI analytics company.
The Israel-based tech startup produces geospatial property data used for underwriting and claims by property and casualty (P&C) insurers worldwide.
What are the challenges in underwriting wildfire risks?
Lavy said one of the biggest problems that carriers face when underwriting wildfire risks is the lack of property data. Historical data on wildfires can help model risks, but amid a rapidly changing climate, carriers need more data capabilities to predict and prevent.
“The impact of climate change on the environment was on their books. Carriers need more capabilities and more information to better understand what exposures they have, but they don’t have enough tools,” he told Insurance Business.
Geospatial information, such as nearby vegetation or roofing material used, can determine a property’s exposure to wildfires.
GeoX’s platform uses a mix of machine vision, artificial intelligence, and deep learning to create detailed databases of properties and extract 3D objects.
“[Wildfires] create a very dynamic environment that can change any time, so it’s important for us to keep up with our clients every two weeks. The risk can increase when the vegetation changes, for instance,” Lavy told Insurance Business.
Changing climate means more risks
Working with various clients around the world, Lavy said his eyes were opened to how wildfire severity has increased over the past few years.
“No matter where you are, the environment is changing and you’ll always be surprised about the risks that you have,” he said.
In Alberta, Canada, nearly 100 wildfires are burning with several dozen out of control. The 782,000 hectares that have already burned are nearly SEVEN TIMES greater than the five-year average for the same period. Take a look:pic.twitter.com/TcKPW4u2Kg
— Steve Hanke (@steve_hanke) May 23, 2023
Last year, a major drought dragged Canada’s wildfire season well into October, though there was less damage than in 2021. Lengthy wildfire seasons could become the new norm, climate experts have warned.
Additionally, forecasters have marked 2023 as an El Niño year with higher temperatures and greater rainfall in many regions.
“Especially in Canada and California, we’ve seen that the wildfire environment has changed,” Lavy said. “Insurance companies that adapt to this environment, those that create more sophisticated models, create better workflow, and streamline my underwriting process, will eventually profit.”
What’s next for wildfire risks and technology?
Real-time data and risk scoring for wildfires is on the horizon as tech companies and insurers continue to collaborate, according to the GeoX CEO.
“Looking at the market in the five years, I think most of the sophisticated insurance carriers will have real-time risk scoring,” Lavy said. “Understanding risks in real time is also important for businesses to take action, protect people and properties, prevent damage, and eventually create more resilient communities.”
Amid the impact of climate change, insurance companies will focus more on protection, he added. This is where wildfire data will become critical.
“We do want to open the data to insurers’ end-clients to help them take action on their risks,” said Lavy. “I trust that insurance ecosystem will do the right things and we are here to help them.”
Do you agree with Lavy’s perspective on wildfire risks and data? Share your thoughts in the comments below.
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