Tweet                                                

An open letter to insurers: share your climate data and I’ll make it free to all

An open letter to chief executive officer of the Insurance Council of Australia, Rob Whelan from Dr Karl Mallon, director of Climate Risk


Dear Mr Whelan

On 5 April, while you and I were being interviewed on Radio National about flooding from Cyclone Debbie, I proposed that if ICA could provide me access to the flood data it has collected over many years, I would provide a free service to home owners that would 1. Forecast their future insurability from extreme flooding events including climate change, and 2. Alert them to possible loss of property value due to extreme weather and climate change.

This is the work Climate Risk does every day for large utilities and Government. To my knowledge we are one of the only organisations in Australia that can do this. It is this capability (and also this source of income) that enables us to offer such a service to residential users.

You will know that I have previously requested access to the ICA’s Data Globe information, which I know has taken a long time to collect.  As recently as 9 March I was in touch with ICA’s General Manager Risk, Karl Sullivan, to discuss the use of the Data Globe for utility risk and financial sector stress testing.  Whilst I understand there are constraints on access to this data, at no point have I been told that this information is for insurance company use only. Comments to the contrary are disingenuous.

While Data-Globe allows maps to be viewed online, our system requires the GIS data in downloaded form to perform the complex risk calculations. Our system does not need to release maps or disclose underlying flood data to provide reports; this is not our intention.

Since the interview a number of people have asked me why I would make such an offer and how I can afford to do so. In fact the cloud computers needed to execute this data analysis and computation cost Climate Risk thousands of dollars a year and the software has taken many areas to develop.

We can cross subsidised the development of our residential analysis from our infrastructure contracts in order to support this area of important adaptation analysis. In the long term I would hope that some users of a free service might pay for our more sophisticated analysis tools that could allow some cost recovery.

It has long been a concern of mine that the computational complexity required to create, use and understand climate change and extreme event data is leading to information asymmetries in our societies. Indeed those who are most vulnerable and least resilient are likely to be those least able to access or understand the trends in extreme weather that will directly affect their lives.

These are the people who may indeed be moving into or buying low cost housing on flood plains, with no ability to afford the flood cover, and no understanding of the risks to which they are exposed. In many cases the community service organisations that support these people are no more prepared either.

The challenge I have put to the ICA is a continuation of our work to break the information barriers to people making prudent risk decisions about extreme weather and climate change. We all agreed on Radio National that there needs to be price signals in the property market to help people avoid high-risk areas and start implementing mitigation actions – especially as climate change exacerbates risk every year. The insurance sector needs to be backing up its words with actions.

Where is the price signal to the community if the ICA collects flood information, which is only exploited for the commercial benefit of members?  The problem of unaffordable and unavailable insurance does no one any good, and though it is uncomfortable, disclosure is important.

I repeat my offer. Share the Data Globe information with us so we can use it to create the extreme weather and climate change price signals that will help guide the market to rational risk decisions. It may save lives and avoid financial ruin. If necessary make Climate Risk an ICA member!

If your existing members can use this information for pricing premiums, allow us to do the same, but with climate change included and with projections over 30 years of a mortgage. The only difference is that we won’t offer a policy, but will direct enquiries to other members for the appropriate cover.

Between ICA and Climate Risk we have much of the information and technology to do what needs to be done to support society as it adjusts to climate change and worsening extreme weather.

If you are interested in finding a solution, I’ll look forward to making progress.

Kind Regards

Karl Mallon

Karl Mallon is Director of Science and Systems at Climate Risk

Comments

One Response to “An open letter to insurers: share your climate data and I’ll make it free to all”

Comments are closed.

Have Your Say
Submit an Article »

More Articles on this Topic