It may be surprising to know that U.S. natural catastrophe economic losses totaled $119 billion in 2020, and 75% (or $89.4B) of those economic losses were caused by severe storms and cyclones. In the insurance industry, data is everything. Insurers use data to influence underwriting, rating, pricing, forms, marketing, and even claims handling. When fueled by good data, risk assessments become more accurate and produce better business results. To make this possible, the industry is increasingly turning to predictive analytics, which uses data, statistical algorithms, and machine learning (ML) techniques to predict future outcomes based on historical data. Insurance firms also integrate external data sources with their own existing data to generate more insight into claimants and damages. Google Cloud Public Datasets offers more than 100 high-demand public datasets through BigQuery that helps insurers in these sorts of data “mashups.” 

One particular dataset that insurers find very useful is Severe Storm Event Details from the U.S. National Oceanic and Atmospheric Administration (NOAA). As part of the Google Cloud Public Datasets program and NOAA’s Public Data Program, this severe storm data contains various types of storm reports by state, county, and event type—from 1950 to the present—with regular updates. Similar NOAA datasets within the Google Cloud Public Datasets program include the Significant Earthquake Database, Global Hurricane Tracks, and the Global Historical Tsunami Database.  

In this post, we’ll explore how to apply storm event data for insurance pricing purposes using a few common data science tools—Python Notebook and BigQuery—to drive better insights for insurers.

Predicting outcomes with severe storm datasets

For property insurers, common determinants of insurance pricing include home condition, assessor and neighborhood data, and cost-to-replace. But macro forces such as natural disasters—like regional hurricanes, flash floods, and thunderstorms—can also significantly contribute to the risk profile of the insured. Insurance companies can leverage severe weather data for dynamic pricing of premiums by analyzing the severity of those events in terms of past damage done to property and crops, for example. 

It’s important to set the premium correctly, however, considering the risks involved. Insurance companies now run sophisticated statistical models, taking into account various factors—many of which can change over time. After all, without accurate data, poor predictions can lead to business losses, particularly at scale.  

The Severe Storm Event Details database includes information about a storm event’s location, azimuth (an angle measurement used in celestial coordination), distance, impact, and severity, including the cost of damages to property and crops. It documents:

• The occurrence of storms and other significant weather events of sufficient intensity to cause loss of life, injuries, significant property damage, and/or disruption to commerce.
• Rare, unusual weather events that generate media attention, such as snow flurries in South Florida or the San Diego coastal area.
• Other significant weather events, such as record maximum or minimum temperatures or precipitation that occur in connection with another event.

Data about a specific event is added to the dataset within 120 days to allow time for damage assessments and other analysis.

Driving business insights with BigQuery and notebooks

Google Cloud’s BigQuery provides easy access to this data in multiple ways. For example, you can query directly within BigQuery and perform analysis using SQL. 

Another popular option in the data science and analyst community is to access BigQuery from within the Notebook environment to intersperse Python code and SQL text, and then perform ad hoc experimentation. This uses the powerful BigQuery compute to query and process huge amounts of data without having to perform the complex transformations within the memory in Pandas, for example.

In this Python notebook, we have shown how the severe storm data can be used to generate risk profiles of various zip codes based on the severity of those events as measured by the damage incurred. The severe storm dataset is queried to retrieve a smaller dataset into the notebook, which is then explored and visualized using Python. Here’s a look at the risk profiles of the zip codes:

Another Google Cloud resource for insurers is BigQuery ML, which allows them to create and execute machine learning models on their data using standard SQL queries. In this notebook, with a K-Means Clustering algorithm, we have used BigQuery ML to generate different clusters of zip codes in the top five states impacted by severe storms. These clusters show different levels of impact by the storms, indicating different risk groups. 

The example notebook is a reference guide to enable analysts to easily incorporate and leverage public datasets to augment their analysis and streamline the journey to business insights. Instead of having to figure out how to access and use this data yourself, the public datasets, coupled with BigQuery and other solutions, provide a well-lit path to insights, leaving you more time to focus on your own business solutions.

Making an impact with big data

Google Cloud’s Public Datasets is just one resource within the broader Google Cloud ecosystem that provides data science teams within the financial services with flexible tools to gather deeper insights for growth. The severe storm dataset is a part of our environmental, social, and governance (ESG) efforts to organize information about our planet and make it actionable through technology, helping people make a positive impact together. 

To learn more about this public dataset collaboration between Google Cloud and NOAA, attend the Dynamic Pricing in Insurance: Leveraging Datasets To Predict Risk and Price session at the Google Cloud Financial Services Summit on May 27. You can also check out our recent blog and explore more about BigQuery and BigQuery ML.

Google Cloud results

• Helps enable instant document approval with optical character recognition by Vision API
• Processes 100,000 documents in 20 minutes with automated document processing product Recognic, powered by Vision API and Apigee
• Helps increase the number of applications processed by 30% within the same timeframe

The insurance landscape in India has seen significant changes in recent years with the adoption of new technology. As one of the major insurance providers in the country, ICICI Prudential Life Insurance has aimed to lead in this transformation journey. “There has been a data explosion across India over the past few years, together with a high mobile penetration rate. Today, about 60% of our customers approach us via mobile, for example, which was certainly not the case before,” says Alpesh Karnik, SVP, IT, at ICICI Life Insurance.

Consumer expectations have also evolved, with easier access to information and online services. “Consumers today are more informed on the importance of investing in insurance products, so there’s much more of a pull factor when it comes to sales, but they also want to be able to get these products quickly and easily,” adds Alpesh. To meet the demands of these consumers, ICICI Prudential Life Insurance realized it needed to make its processes even faster and more efficient. Looking to upgrade its infrastructure, the company turned to Google Cloud.

“The biggest benefit of using Recognic and Vision API is that it eliminates the initial waiting time, which can result in drop-offs. Now customers can know immediately whether their documents are sufficient, or if they need to revise or submit any others.”—Alpesh Karnik, SVP, IT, ICICI Prudential Life Insurance

Serving customers better by speeding up processes with Google Cloud

ICICI Prudential Life Insurance’s distributors were already using tablets to input customer data faster and more efficiently, but many of the company’s solutions still required a team at the back end to manually sift through documents for approval. This meant that customers needed to wait five or six hours, or sometimes until the next working day, to know if their documents were approved or needed revision.

That all changed after partnering with Google Cloud Premier Partner Searce to take advantage of its AI/ML powered automated document processing product Recognic, which is built on Google Cloud. Developed using the optical character recognition (OCR) capabilities of Cloud Vision, Recognic reads, understands, and validates documents at scale, enabling organizations that handle massive amounts of paperwork to digitize these documents and then accurately store and index them.

“Google Cloud has cut down the middle- and back-office work, leading to a 30% increase in the number of applications we can process in the same time span without the need for additional resources.”—Alpesh Karnik, SVP, IT, ICICI Prudential Life Insurance

“In the case of ICICI Prudential, the biggest benefit of using Recognic and Vision API is that it eliminates the initial waiting time, which can result in drop-offs. Now customers can know immediately whether their documents are sufficient, or if they need to revise or submit any others,” Alpesh adds.

Alpesh explains that if the details on the application form match the documents provided, the case doesn’t need to go to the underwriter for further checks and can go directly to policy issuance. “Google Cloud has cut down the middle- and back-office work, leading to a 30% increase in the number of applications we can process in the same time span without the need for additional resources.”

ICICI Prudential Life Insurance is also working with Searce to build deep learning models into Recognic so that it can overcome template barriers and input data from a variety of forms. This is particularly helpful for financial and medical documents underwriting because unlike a passport or driving license, financial documents have a higher structural complexity.

As customer data becomes more important in the work of ICICI Prudential Life Insurance, so does protecting it, and the company is taking every measure to safeguard the security and privacy of its customers’ information. “Details of customers’ contactability are automatically removed by Google Cloud after processing is complete. This step in the workflow gives us the confidence that data is not stored at any level of the optical character recognition process,” says Alpesh.

Partnering with the right teams for dedicated support

In achieving the best solution for its business goals, ICICI Prudential Life Insurance recognizes the importance of its decision to work with partners that truly understand the insurance business. “There are many intricacies involved in this business, and it’s clear that both Google Cloud and Searce really took the time to understand our underwriting processes before coming up with a solution,” says Alpesh. He adds that during the implementation process, all findings were well documented and queries were responded to quickly.

“We didn’t want to take any shortcuts deploying Recognic, but at the same time, we didn’t want to draw out the implementation process. The excellent support from both Google Cloud and Searce throughout the journey was reassuring for us as they were always thinking ahead.”

Future-proofing the organization through machine learning and AI

In the coming years, Alpesh foresees the insurance industry to be even more agile than it is today. “I doubt elaborate processes such as underwriting or operations checks will need to be done manually in the future. Everything will be done through machine learning and AI.” In light of this, ICICI Prudential Life Insurance is doing everything it can to prepare, as customers’ expectations are set to keep evolving. “We have to be prepared for the future, and I believe that with Google Cloud, we can do it.”

About ICICI Prudential Life Insurance

ICICI Prudential Life Insurance aims to lead the Indian insurance field through quality products and a hassle-free claim settlement experience. A customer-centric company, it offers long-term savings and protection plans to meet customers’ needs at every stage of life.Industries: Financial Services & InsuranceLocation: India

About Searce

Searce is a niche cloud consulting business with futuristic tech in its DNA, focused on “realizing the Next in the Now” for its clients. Specializing in cloud data engineering, AI/ML, and ad

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