How Big Data is Painting a New Picture of Properties and Portfolios

Mikhail Palatnik, Vice President, Product Management, Insurance & Spatial, CoreLogic

Mikhail Palatnik, Vice President, Product Management, Insurance & Spatial, CoreLogic

Natural catastrophes and other weather-related events, such as hail, can have a significant impact on the portfolios of financial institutions. With a large number of both residential and commercial properties potentially impacted from one catastrophic event, it’s important financial institutions understand risk exposures, portfolio diversification, and insurance coverage exposure. An imbalance in any of these can contribute to poor health of their portfolio such as high rates of mortgage default, fraud or potential flipping of price to rent index. With advancements in technology, institutions have a more accurate and view of portfolio risk. For example, we can machine learn on images collected from drones after a natural catastrophe event to tell us the extent of the damage. We can text mine and machine learn from images and text collected from our real estate platforms in order to more accurately assess property values such as market value or reconstruction cost.

Over the last two decades, data and high-resolution imagery have become the lifeblood of our growingly digital existence. According to an International Data Corporation study sponsored by Seagate , the global datasphere will reach 163 zettabytes (one zettabyte equals about a trillion gigabytes) by 2025. As access to a variety ofinformation continues to grow, companies in the property ecosystem– lenders, insurers and reinsurers, property management companies and others –cannow instantaneously obtain data and imagery to improve risk calculation and mitigation. These advancements provide a better understanding of risk exposure and a better view of portfolios, enabling those in the property ecosystem to make better decisions and improve their portfolio profitability.

"Companies can also use geospatial and weather verification analytics to identify claim outliers and investigate cases of fraud, so their efforts can focus solely on their customers who qualify for and require services"

For example, when risk assessments become more informed by data and analytics, insurers can price risk prescriptively so that they can be more competitive whileoffering more personalized coverage and services. For insurers, accurately setting the price of premiums is critical. The amount must be affordable to homeowners while adequately covering the risk to both parties.

During a disaster, like a hurricane or a wildfire, it is imperative for portfolio managers to stay as informed as possible. When companies view high resolution imagery in realtime, they are better prepared to accommodate and address the needs of property owners who have been most adversely affected. This information also strengthens the feedback loop between the property owner and provider and helps them to assess the impact of the next possible disaster more accurately.By using aerial imagery, not only can portfolio managers like insurers and reinsurers determine loss through cutting-edge geospatial analytics, but government agencies, construction companies, and a host of other industries can also prepare the necessary funding or machinery for the task ahead.

When portfolio managers have the resources and tools to accurately track the risk associated with a natural disasterand anticipate its impact on property and business owners, they can also deploy resources and personnel to the impacted area and ensure they have an adequate number of claims adjusters on the ground to assess damages. Companies can also use geospatial and weather verification analytics to identify claim outliers and investigate cases of fraud, so their efforts can focus solely on their customers who qualify for and require services.

Geospatial and weather verification analytics can also help validate the accuracy of claims to improve customer satisfaction and profitability. For example, evaluating hail damage can be a particularly difficult task for property claims adjusters. Not only does quick-melting hail and roof accessibility bring additional challenges, but homeowners are also often unaware of the initial extent of damages. With GIS and weather verification analytics, adjusters can handle claims more efficiently while also reducing cycle times and increasing transparency.

Diversifying policy options is vital for the health of portfolios and for protecting policyholders who may be unaware of future dangers or possibilities. For example, during Hurricane Harvey, 80 percent of homes were not insured against flood-related damages. By using natural hazard risk data, portfolio managers can more accurately access the risk associated with underinsured natural hazards such as floods and earthquakes.

Today’s property portfolio faces a greater variety of risk than ever before. New technologies and analytical innovations will continue to evolve the property ecosystem by providing new ways to measure and mitigate risk, reduce cost and improve overall efficiency. The sooner thatlenders, insurers, property management companies and the wider property ecosystem embrace these innovations and data analytics, the more prepared and responsive they can be while also ensuring the health and protection of their portfolios.