Spanish risk managers want recognition for investment in nat cat tech

Risk managers are striving to maximise their companies’ investments to better assess and transfer risks. But is the insurance market recognising this effort? This question was one of the questions discussed by risk professionals gathered in Málaga, Spain during the annual conference of risk and insurance management association Igrea. The discussions focussed on the challenges and opportunities created by new technologies such as generative artificial intelligence, parametrics and data science, and their impact on the insurance market. The message was clear: new technologies are here, they will not be stopped and there is little time for risk managers to get used to them. Risk managers and their teams must adapt. “We get used to everything. We even get used to Real Madrid not winning the Champions League,” quipped Daniel San Millán, president of Igrea, during the conference’s opening speech. One example of the work done by risk managers to make the best of technological investments was provided by utility group Iberdrola, which explained during a panel how its weather prediction technology works. The company employs extensive levels of data collection to analyse weather patterns and forecast, with the help of artificial intelligence, events that can impact the generation and distribution of energy by its network of renewable plants in Europe and the Americas. The technology, developed in-house over the past two decades, enables the company to estimate levels of wind and solar energy production with a high degree of accuracy. It allows the company to take action when there is a significant probability of weather events that can affect its operations. Luis Prieto, head of forecast, performance and global technical services at Iberdrola, explained that the system collects data on a permanent basis and produces reports every hour that will inform decisions made by individual areas of the company. For that reason, one of the main priorities for Prieto and his team was to develop specific technological tools that help other departments make use of the available data. All areas of the company, which are spread across 15 countries, have real time access to the data produced. In addition to weather forecasting, the firm has developed models to identify patterns of behaviour from other natural factors that can impact operations, such as the movement of oceans and other water sources. “It is important that all the information we generate gets to everybody in the company and is easy to understand. Therefore, we invested significantly in the development of visualisation tools,” Prieto explained. For example, the system is able to identify the conditions that lead to the formation of ice tubes around cables. This proved its worth back in January 2021 when Spain was hit by a once-in-a-century snowstorm, known as Filomena, which disrupted the operation of some electricity systems. Iberdrola, however, was able to take preventive action to avoid the formation of the ice structures across its cable network. The wealth of information is very handy when it comes to managing risk and helps inform the design of structures that will better withstand extreme weather conditions, noted Koldo Camiruaga, head of property, engineering and ART at Iberdrola. The data also helps estimate whether insurance programme limits for facilities in disaster-prone areas, such as the US and Australia, will be enough to cover eventual losses. However, if the risk management department clearly values the contribution of the predictive technology, the situation is not so clear among the company’s insurance partners, according to Camiruaga. “Sometimes it feels we are preaching in the desert,” he said. “But I do believe the market listens to us.” He added that more differentiation should be made between companies that make this kind of investment and others that take a more cavalier approach to nat cat risks. Camiruaga regretted that premium rates are often equally applied to programmes, no matter whether buyers are well prepared to face a catastrophic event or not. “But I want to believe that in some way it all helps to obtain the limits that we have,” he concluded.

Spanish risk managers want recognition for investment in nat cat tech

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